8th International Conference on Retail Management - "From Catwalk to Coathanger
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8th International Conference on Retail Management - "From Catwalk to Coathanger
- 1. 8th International Conference Retail Management The Road Map to the New Europe 'From Catwalk to Coathanger' Professor Neil Towers
- 2. Agenda 1. Challenges for the Coathanger 2. Retailing, post 2004 3. Responsive Retailing Challenges Professor Neil Towers
- 3. The Catwalk • Influences high street trend as opposed to purely for luxury brands • Democratisation – Fashion for all Professor Neil Towers
- 5. Old Textile World Professor Neil Towers
- 6. OLD TEXTILE WORLD Quota Constraints Large Textile Capacity in US & Europe Dispersed Garment Manufacturing Huge Shipments of Semi-Finished Goods Inefficient Supply Chains Overcapacity & Cyclicality Demand Growth Mainly US & Europe Professor Neil Towers
- 7. Typical call to arms: Can Turkey compete against China? Professor Neil Towers
- 8. Fashion Supply Channels • Significant power shift in past three decades in the UK • Power move from manufacturer / intermediary domination • Channel domination in favour of retailer : power in distribution (Hines, 2007)
- 9. Fashion Retailing – Market Structure • Distribution Fragmentation – dominated in numerical terms by single-outlet, family owned businesses • Significant decline in numbers in past 10 years – by 40% • Significant in volume, not however in terms of market share levels
- 10. New Textile World 1. Challenges for the Coathanger Professor Neil Towers
- 11. Fashion Retailing – Market Structure Market Concentration :- • Clothing specialist chains : account for 68% of clothing spend • Remainder – department stores, mail order and food retailers • Concentration of power : top 5 retailers have a combined share of 43% in 2006 (Mintel, 2006) • M&S : 15% market share
- 12. Fashion Retailing – Market Structure Concentration – why and how? • Scale : number of outlets / national coverage • Customer patronage volume • Own-brand domination • Multi-segment coverage / diversification • Multi-channel participation • Adoption of a strategic management approach
- 13. Multi-Channel Distribution • Rapid change in perspective in past decade with respect to viability and potential • Current challenge relates to multi-channel integration • Strategic advantage will emerge through high brand / service delivery in a cost- efficient manner • Basis for international brand development and expansion
- 14. New Entrants • Supermarket and discount retailers ; pure internet players • Impact upon attitude but also participation in clothing consumption • Emergence of consumption polarisation : Prada-Primark effect • Price deflation • Increase in clothing sales volume – but decrease in value terms
- 15. Global Apparel Exporters (Excludes EU, US and Canada) 45.7% Source: World Bank 2005 Professor Neil Towers
- 17. Rise of ‘fast fashion’ • Rapidly changing collections of high-fashion garments – the speedy replication by high street retailers of the latest fashion (catwalk) inspired ranges – up to 20 collections per year • Dependent upon short lead times and limited availability • Ability to refresh ranges in store is dependent upon supply chain flexibility Professor Neil Towers
- 18. 2.. Retailing, post 2004 Responsive and Flexible Retailer + Supplier: From Catwalk to Coathanger „Bring on Sheila and Fred‟ Professor Neil Towers
- 19. Fashion Supply, post 2004 Loss of quota protection Supply chain concentration Global sourcing but fewer producer countries Number of suppliers will continue to fall Logistics factors Social & labour Issues Non-competitive producers will suffer Prices drop, volumes rise Professor Neil Towers
- 20. Globalisation of the Supply Chain • Move away from vertical integration of the textile- apparel pipeline towards use of flexible global subcontracting relationships e.g. Nike, Zara, • The large-scale shift of labour-intensive garment manufacturing operations of Western retailers to developing countries with lower labour costs e.g. China, Cambodia, Vietnam e.g. Top Shop, H&M • Fashion products sourced from responsive UK/EU/Asia suppliers with high customer service capability eg. Benetton, Paul Smith Professor Neil Towers
- 21. Lean & Agile Supply • Lean – for continuity products (26+ weeks) – elimination of waste, including time, to enable a level schedule and achieve cost- efficiency • Agile – for fashion products (13 weeks or less) – prioritising speed & flexibility to reduce lead time & match supply to demand Professor Neil Towers
- 22. Lean & Agile Mixed Mode Supply Model 2004 Fashion Agile Route Trend Fabrics European Forecast manufacturers Yarns Regional Consumer Distribution Centre Fabrics Overseas manufacturers Retailer Commodity Yarns Lean Route Professor Neil Towers
- 23. Typical global fashion supply chain Seasonal (13 week) fashion Africa India China UK UK • Example of cotton knitted product for DKNY Professor Neil Towers
- 24. Supply Lines from S.E. Asia Spinning Mill Cotton Fields 3,500 km Dyeing, Weaving & Knitting Shipment to UK 6 – 8 Weeks Professor Neil Towers
- 25. Logistics & Infrastructure Professor Neil Towers
- 26. International Shipping 8 RTW vessels Emma Maersk: 11,000 TEU Professor Neil Towers
- 27. Inaugural Lecture Series 'From Catwalk to Coathanger' Professor Neil Towers
- 34. What Retailers Want All Merchandise sold at full price Less stock in store or in transit Responsive Suppliers Social & Environmental Compliance Fast & “On Time” Deliveries Good Margins & Profits Professor Neil Towers
- 35. What Suppliers Want Reliable Forecasts Long Production Runs No mid-batch changes Good Buyer Relationships No competition Acceptable Margins & Profits Professor Neil Towers
- 36. 3. Responsive Retailing Challenges 33% of merchandise is discounted Forecasts are often wildly wrong Many customers leave without buying Distance adds cost Logistics cost are rising Hunt for Margin leads to longer lead time, more errors, less reaction time, markdowns etc. Professor Neil Towers
- 37. Multi Channel Retailing •Selling across more than one channel •Examine goods in one channel, buy them in another and collect them from a third channel, linked by a process of product distribution •Online UK Clothing Sales 2009: 26% 2010: 35% 2013: +50% Professor Neil Towers
- 38. Shirts: Retail Model Ex-China Ex-Turkey (C) Cost : $/piece 15.1 18.6 +3.5 (P) Price Point: $ 120 120 (S) Sell Through % 65 80 (m) Markdown ratio 0.35 0.20 (D) Discount rate 0.5 0.5 (G) Gross Margin 83.9 89.4 +5.5 Professor Neil Towers
- 39. Turkey can still compete •despite 5x China's labour cost •if the merchandise is a fashion product •and the delivery time to market is critical RETAIL MANAGEMENT CHALLENGE !!! INTEGRATED SEGMENTATION, TARGETING & POSITIONING Professor Neil Towers
- 40. The Dynamic Research Framework, 2010 The Agile Supply Chain Demand Chain Management Customer Integration Management Components Process Integration Agile Value Merchandising Chain Supply Chain Management Virtual Integration Supply Chain Structure Network Integration Professor Neil Towers
- 41. I. Seasonal Product SE Asia fashion supply chain Seasonal (13 week) fashion China China China UK UK Thomas Nash Woven Jacket at Debenhams Professor Neil Towers
- 42. Made in China Professor Neil Towers
- 43. II. High Street Fashion European supply chain Short season (6 week) fashion West China India Turkey UK UK Example of Per Una (M&S) Professor Neil Towers
- 44. Made in Turkey Professor Neil Towers
- 45. III. Luxury fashion UK supply chain Luxury fashion season (10 week) fashion China Scotland Scotland UK Edinburgh, U K Professor Neil Towers
- 46. V neck Cashmere Fair Isle Pullover £159 Cashmere Scarf £95 Professor Neil Towers
- 47. Agile Merchandising Supply Model, 2010 Fabrics Catwalk European manufacturers Yarns Regional Retail Supply Distribution Experience Attributes Centre Fabrics Overseas manufacturers Coathanger Yarns Professor Neil Towers
- 48. Questions and Answers Professor Neil Towers