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Reinventing the Fashion Business Model

If you’re a Project Runway enthusiast, you know that “in fashion, one day you’re in, and the next day, you’re out.”


Host and model Heidi Klum speaks to the relevance of the contestants’ fashions on the show, but it also applies to the central theme three experts discussed on a recent SAP Game-Changers Radio broadcast entitled, Reinventing the Fashion Business Model. The panelists believe that most fashion brands know they have to innovate in order to meet the needs of their customers, and the most successful ones are blurring the lines in their supply chains and weaving customer data into the fabric of their business strategies.

Branding disparities are part of the fashion retailer’s biggest challenge today. Many companies are trading products under different names, cataloguing products with different style numbers, and communicating to their customers in slightly different ways. Brands need to be close to their customers, and one of the ways to cultivate that relationship is by having digital at the core of their business models. For Jeff Goldberg, managing director, North America Retail at Accenture, this means brands must have “[c]onsistent, harmonized information across your company [that’s] connected in a way that’s easy to communicate and collaborate with customers, suppliers, and ever more important, your associates.”

Good infrastructure isn’t just about ease in communication, or in other tactical methods of connecting with the customer. It’s about getting the data to help businesses do it in the most effective way. “The more we can actually get one truth and systems and processes and data that’s simple, then tell the story, then people have more time to actually work on analyzing to come up with better ideas,” said Matt Marcotte, founder of M2 Collaborative. For him, it means businesses that invest in their infrastructure and understand the data they collect will be freed up to do more innovative things that meet their customers’ needs.

The source of one truth has to be integrated into every part of the business, from manufacturing to purchase, with the customer at the center of every decision along the way. Businesses need to have “one view” of their customers through their supply chains. “[Brands that do] can truly unite that customer sentiment, that customer feedback on the runway, at the fashion campaign all the way back to the supply chain so they can be much more responsive and deliver that experience much more quickly,” said Matt Laukaitis, managing director, SAP Retail in the U.S.. “[C]ustomers want to make sure that the brands they choose to shop with understand who they are, and the brand needs to make sure that they are extremely relevant to that customer in the moment that customer is making a decision, or thinking about making a purchase.”

But what happens when the customer wants to make that purchase immediately? Brands have to be on the ready to meet that demand, especially in light of new players in  the fashion retail space that are agile enough to keep up in the world of the Primarks, Veras and Etsy shops. At their core, businesses that are doing this are “reinventing the supply chain,” according to Laukaitis.

The profile of fashion brands that will still be around after this season to walk the runway? “The companies that really understand their customers, that know how to use data to tell stories, to create personalization, customization, a relationship with that customer, those are the ones that will win,” said Marcotte.

The fashion retail model will change again with developments in augmented reality, among other trends. What’s that mean for fashionistas coveting a faux leather jacket from a recent runway show? The fabrics may one day soon be grown in a lab which helps get the product to the customer quicker, according to Marcotte.

Listen to the entirety of this Digital Industries: Changing the Game Radio broadcast, hosted by SAP’s Bonnie D. Graham, here

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