WE DON'T NEED (more) CLOTHES / by @agalorda

WE 9 KEY QUESTIONS FOR THE FASHION INDUSTRY DON’T M ORE NEED CLOTHESBY ÁLVARO GONZÁLEZ-ALORDA @agalorda

Before I present these slides to students, I would /agalorda like to know your @agalorda opinion. Join the conversation!

GLOBAL UNCERTAINTYSUPPLY CHAIN CONSTRAINTSCONSUMER SHOPPING MOODA NEW OPPORTUNITYJOIN THE CONVERSATION

The world has become an extremely fast-‐moving place.

The global economy is struggling.

The slowdown in Europe is here to stay (for a while).

We’ve got a situation… and it’s entirely unpredictable. Where will demand come from? #1

This global recession has and will continue to reduce sales.

In the short run, the luxury customer is the most reliable spender. Should brands focus on them? #2

GLOBAL UNCERTAINTYSUPPLY CHAIN CONSTRAINTSCONSUMER SHOPPING MOODA NEW OPPORTUNITYJOIN THE CONVERSATION

The spike in cost of utilities will erode the margins of companies that rely heavily on electricity.

Pricing volatility of raw materials make suppliers and buyers very cautious. Speed to market is at risk.

Despite their economic slowdown, wages are rising…

…putting the cost advantage of manufacturing in China at stake.

Should brands pass on the cost increases to their customers in a recessionary environment? #3

Finding new factories is hard as it has ever been, given the lack of manufacturing skills..

Sourcing from alternative Asian countries might be an option. But infrastructures are not so efPicient. BANGLADESH INDIA VIETNAM CAMBODIA SRI LANKA INDONESIA

Some domestic producers are shifting towards supply to the domestic market in China.

By 2015, it might be just as cheap to make things in the US as to make them in China and ship them back.

Levering internationally the “High Street” model is not the most effective cost strategy to compete…

…with the growth of the ecommerce, which demands high-‐level service for delivery and returns.

Margins are diminishing due to a growing demand for lower prices.

Are some long successful fashion business models #5heading for the cliff?

GLOBAL UNCERNTAINTYSUPPLY CHAIN CONSTRAINTSCONSUMER SHOPPING MOODA NEW OPPORTUNITYJOIN THE CONVERSATION

We will have been controlling our buying impulses for so long that…

…by the “end” of the crisis, our approach to fashion will be more rational.

What used to be considered as a celebration, nowadays may be regarded as plain obscenity...

…given the current unemploy-‐ ment rates and the growing number of struggling families.

In this context, one wonders: Do I really need 60 pairs of shoes? #6

The new shopping mood is creating new habits. Fashion won’t be so ‘right-‐side’ in our brain. f f

Sewing your own clothes might start to be ‘cool’.

And clothing exchange could be the next disruption.

Besides, our closets can barely store the insane amount of clothes we’ve bought in the pre-‐crisis years.

And despite marketing efforts to reactivate consumption, we know…

…we don’t need more clothes. Do we? #7

However, brands try to fascinate us with repetitive expensive formulas,

THE SARTORIALISTwhile our attention moves towards new low-‐budget fashion phenomena.

A new middle class is growing in the emerging markets: 2 billion people expending $6,9 trillion annually.

And they live in a dozen emerging nations, not only in the fast-‐growing BRIC countries.

These new spenders offer an opportunity for early winners to gain lasting advantages.

But multinational companies face challenging competition from local players with growing market share.

Should brands replicate business models designed for developed countries in the emerging ones? Or… #8

…meeting the needs of these new consumers requires #9a different course?

Join the conversation at: /fashionopenclass /agalorda @agalorda

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WE DON'T NEED (more) CLOTHES / by @agalorda

by Alvaro González-Alorda on Mar 19, 2012

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WE DON’T NEED (more) CLOTHES / by @agalorda Presentation Transcript