The urgency of grappling with multiple disruptions over the last two years forced retailers to deprioritize some aspects of the business. One of the bigger victims has been the product-to-market process — from creative inspiration to getting the right product into the hands of the consumer at the right time. Supply chain chaos upended the entire product-to-market process and shifted assortment, design, and buying decisions farther away from the consumer. The industry regressed even from the already-slow legacy processes that previously took six-to-nine months to now well over a year in advance of when the customer sees the product.
Troublingly for the industry, this is also a time when the consumer is more powerful than ever. Consumers have outgrown and rejected the age-old company-customer power dynamic and now control product narratives, making choices about what they want to buy and when based on information from sources that upend company marketing efforts. They have both power and agency to make purchase decisions based on constantly shifting trends, beliefs, and alliances.
It certainly doesn’t help that fashion has largely ignored the digital transformation steps necessary to embed agility and insights into core processes. Instead, there has been a tendency to leapfrog into experiments like the metaverse, betting that future revenue will come the virtual world versus product in stores and online. While looking to the future is useful, it is essential to a company’s survival to not forget fundamental operating principles.
This means that it has never been more difficult to build and deliver a compelling product assortment that aligns with the wants and desires of today’s consumer. And it’s not going to get easier. This year we hit a four-decade high inflation rate of 9%. And between ongoing geopolitical instability, there is a looming threat of recession. We know from past experiences of uncertainty and disruption — most recently during the pandemic — that these periods are when consumer preferences change faster than ever.
The regrettable result of all this mismatch has been bloated inventory levels across the industry, including for market leaders.
If retailers are to understand their all-powerful consumer and deliver product that appeals to this fickle but opinionated entity, they must go back and fix the basics of the product design process. How can they do that?
- Build speed and agility into processes: By streamlining processes, removing silos between teams, and partnering with suppliers, retailers can make accelerated decisions in time to meet unpredictable customer demands. Legacy organizational structures are not flexible, and this has worsened, with remote teams and competition for skilled resources driving costs up and effectiveness down. Many companies have lost the capability to throw people at the speed problem, which means that improving processes becomes more important than ever.
- Use real-time analytics to glean insights: When retailers make data-backed decisions that are connected to real financials, they can understand the impact of buying decisions – by category and SKU – on both profitability and inventory. In addition, they must create a way to incorporate customer insights into every step of the product-to-market process. Trends are no longer set four times a year, as the consumer is much more dynamic than that.
- Invest in digital transformation: Deploying digital transformation into end-to-end operations, from design to testing to joint supply chain planning, can make a real difference. For example, retailers can eliminate multiple weeks from the calendar by embracing start-to-end technology such as 3D sketching, designing, sampling, and testing. And through digitally enabled assortment and inventory planning, retailers can lower lost sales, improve their ability to chase back into sold-out goods, and reduce the need for markdowns.
- Align with customer values: Archaic processes have a massive impact on sustainability, and today’s consumers care about this. We no longer have the luxury of time or ignorance to fly hundreds of thousands of samples and even production volumes all over the world. Consumers will notice and respond with their dollars.
Battered by one problem after another, retail’s product-to-market process has regressed. But disruption is here to stay, which means that slow and gradual change will no longer cut it — a full reset is the key to delivering compelling assortment that the consumer will want to buy and will ultimately result in profitability and growth.