The document discusses how the fashion industry is adapting to meet the demands of omni-channel retail and empowered consumers. It introduces the concept of "omninomics" - how the fashion value chain has evolved into an interconnected network to collaborate and provide seamless shopping experiences across channels. It provides examples of how companies like Bonobos are personalizing experiences through both physical stores and digital channels to better understand customers, create improved products, and drive higher online conversions. The key is for all partners across the value chain to work together using shared data to quickly get the right products to consumers through their preferred channels.

1. Fashion
Omninomics—Creating
a more connected value chain
The fashion industry is undergoing the biggest change since the industrial revolution: Today’s consumers prize
instant convenience and authenticity. They want innovative new products, instantaneous information, to
comparison shop, easily return items that don’t fit, and always get the best deal.
You must be sure that your value chain is ready to meet the challenges of omni-channel retail. It’s likely that your
supply chain has evolved from a linear push into a global value chain network of different companies, sometimes
hundreds of companies, that are working together to innovate, to respond to orders, fulfill and deliver on customer
commitments, and react to disruptions in supply.
How can these companies collaborate to create a seamless experience for shoppers? How should omni-channel
customer insights fuel this network? This paper on “omninomics” will help you answer these questions.

2. 2Omninomics Industry Perspectives
3 What is omninomics?
4 Omninomics in action
4 How a new breed of consumers is
changing the value chain
6 How to create a more collaborative
value chain
10 Recommendations
12 Why the strength of your network
matters
Table of Contents

3. 3Omninomics Industry Perspectives
What is omninomics?
Omninomics refers to how omni-channel retail and the
fashion value chain have evolved in tandem to
become an interconnected network that includes
design, source, manufacture, distribute, and retail. This
concept is an extension of omni-channel shopping, a
multichannel sales approach where consumers can
experience a seamless shopping experience whether
they are in a brick-and-mortar store or using their
personal computers or mobile devices.1
Omni-channel retail sales are on the rise, making it
more important than ever to understand how your
industry is changing. Having doubled every 4 to 5
years since 2001, omni-channel sales are expected to
grow to become a $1.8 trillion market by 2016 and $7
trillion by 2025.2 Forrester defines these sales as
"transactions that are touched by any digital medium,
but not completed through the Internet."3 In addition,
they are the result of "preshopping," where consumers
research the products they want to buy, perhaps on a
mobile device or in a store, before making a purchase.
As omni-channel shopping brings consumers closer to
the value chain, fashion companies must move toward
new business models that are more collaborative,
consumer driven, responsive, and quick. Success
requires all value chain partners to work together to
get the right products to where consumers want them,
as quickly and efficiently as possible.
In this paper, we explore the concept of
omninomics—how your value chain collaborates to
get a product to a consumer in an ever-evolving
omni-channel market.
In previous papers on fashionomics and consumernomics,
we charted the first steps in this journey to omninomics:
■ In Freak’n Fashionomics—The new economics of
fashion, we explored how the fashion industry was the
economic driver in economies around the globe, from the
label maker to the button maker to the brand and retailer
who move and sell their products. We also looked at the
evolving economics of the industry.
■ In Consumernomics—The plan is there is no plan, we
delved into how the powerbase of the fashion industry
went from mass production, where the market was not a
constraint, to the retailer being the channel master, and
today’s world, where the consumer is in control, and
everyone along the value chain has to keep up.

4. 4Omninomics Industry Perspectives
Omninomics in action
The retailer used to be the end point of the value
chain—where the product met the consumer. Today,
new channels and online tools have given the
consumer the freedom to choose where they make
purchases from anywhere along the value chain and
using a myriad of new touch points. This presents a
host of new opportunities—and challenges—for
fashion companies.
For some, it could mean using the brick-and-mortar
store as a showroom where customers can discover
the styles and sizes that work best for them before
they make purchases online. A third-party logistics
provider could then fulfill the order using one of your
distribution centers or work directly from your
manufacturing plant—and drop ship. Or you could use
your online channels to drive customers to your stores
through loyalty programs, discounts, and other
promotions or offer them the opportunity to complete
their transaction online and choose home delivery or
one of a number of different pickup locations.
It all comes down to knowing what your customers
want and how to get it to them.
How a new breed of
consumers is changing
the value chain
There are roughly 80 million Millennials in the US,
spending approximately $600 billion each year. They
aren’t just teens—Millenials are young adults in their
20s and 30s.4 As Accenture notes, “Many have
careers, are raising kids and live in their own homes.
While Millennials are already a potent force, they will
truly come into their own by 2020, when we project
their spending in the United States will grow to $1.4
trillion annually and represent 30 percent of total
retail sales.”5
These Millennial “shoppers are now willing to interact
with retailers on a number of different social networks
in order to find information on deals, products and
contests,” observes Fashionbi.6 All it takes is a
computer and a subscription to Amazon™ Prime. But,
Millennials as a group are not as label-obsessed as
shoppers in the past. Millennials are often more
interested in the style than the brand—and will look for
a cheaper option elsewhere.7 And it’s not just
Millennials; all generations are adopting omni-channel.
So how can you stand out?

5. 5Omninomics Industry Perspectives
The consumer now has an endless number of options to research new products. With more digital channels opening up each year, consumers have all of the
information they need—anytime, anywhere, day or night.
Reach more consumers with
an omni-channel strategy
Today’s consumers can flip from one channel to the
next with unprecedented speed and ease, while
mobile computing makes them more connected than
ever before. Thanks to the digital nature of today’s
shopping channels, along with the rise in social media,
the fashion world now has access to a wealth of
customer data that can be captureed and acted
on—while also providing a positive experience.
All parties along the value chain need access to the
same information across every interaction touch point,
from browsing and shopping online or off; to making a
purchase at a retail outlet, web storefront, or vending
machine; to the delivery of goods. With an
omni-channel presence, fashion companies can
optimize the connection of demand to supply by
using customer data to inform their manufacturing
processes—and dramatically improve the speed of
delivery, demand planning, stock replenishment, and
price competitiveness.
The journey from product to consumer
• Purchase in store
• Click and collect in store
• Click and collect at drop-off point
• Home delivery
• Drop ship by supplier
• Retail outlets (own stores,
outlets, store in store,
franchise, pop-up store)
• Web storefronts
• Mobile devices
• Kiosks
• Wholesale
• Vending machines
• Vendor managed inventory
(VMI)
DELIVERY
PURCHASE
• Social media
• In-store
• Catalogues
• Internet search
BROWSE OR SHOP

6. 6Omninomics Industry Perspectives
How to create a more
collaborative value chain
In today’s digital age, information can travel quickly
around the world. Creating and moving your
merchandise in this environment, however, means
dealing with shrinking lead times and extra effort to
compensate for the complexity and speed necessary
to stay ahead of today’s evolving needs. Here’s what
you can do to keep up:
Personalize your experiences
to create better products
Shoppers are increasingly willing to walk away from
the store without the instant gratification of making a
purchase because they know they have greater
choice than ever before. But, if they’ve experienced
what the brand has to offer, while also gaining
information on sizing, styles, fit, and look—the
opportunity has not been wasted. With this
information, they can make their purchase online and
continue to do so whenever they need a new pair of
trousers. That’s the model the eCommerce men’s
retailer Bonobos® has built its brand on.
Bonobos began with a simple premise: Off-the-rack
men’s trousers should still fit like they were custom
made. The costs associated with running a retail store
were going to be too high for a startup brand to
produce such a high-quality product consistently,
however. The answer was to go digital. By launching
as an eCommerce company, Bonobos could focus on
creating a high-quality product and brand, while
building up a solid customer base.
In the next step, Bonobos opened up what it calls
“guideship” stores to attract new customers. At its
brick-and-mortar locations, shoppers get one-on-one
personalized service, the ability to try-on new styles to
find the perfect fit, and a showroom to browse and
explore. What they don’t get, however, is the ability to
make a purchase. Bonobos’ stores are almost entirely
inventory free.8
For Bonobos, not having to supply the store with lots
of merchandise has reduced its inventory costs and
sidesteps the problems of inventory allocation. This
frees up more money for what truly matters to a
Bonobos customer—getting the best designed, best
sourced, and best fitting pants possible. Bonobos’
superior marketing strategy frees the company up to
focus on creating a better product. And, when
shoppers know exactly what they want, the chances
of returns from online purchases are lower. The
conversions are also higher, because the shopper is
completely informed and ready to make a purchase.
No matter how you slice it, the challenges of
inventory allocation are largely the same in the
omni-channel
environment.

7. 7Omninomics Industry Perspectives
Improve inventory
allocation by learning why
items are returned
Shifting inventory from one channel to other is a
complex challenge to manage efficiently. The
shoppers are there, and you need to be able to match
your inventory to their demands. "Omni-channel
shoppers exhibit a tendency to shop more frequently
and spend almost 3.5 times more than regular
shoppers. In-store conversion rate amid multichannel
options is four times higher than online-only
conversion rates. If the in-store pick up option is
available for online orders, retailers can realize 7%
higher net sales," observes Forbes.9 That's good
news. But because of the high logistics and returns
costs, online is by nature a low-margin business.
Why do people return goods? For retailers like
Zappos®, it's because shoppers are encouraged to
buy a pair of boots in two different sizes and return the
pair that doesn't fit. Returns are a part of Zappos’
business model. For the convenience of shopping
online, Zappos must factor in the inconvenience of not
being able to try on an item before it’s purchased.
Returns still need to be mitigated, however. That’s why
Zappos offers extensive information on its site about
sizing, including charts and information shoppers can
use as they're still researching a purchase. Videos
also help to show off the look and feel of a pair of
boots. However, sending out more than one sizes
increases the chances of retaining a sale.
When it comes to returns, you must factor in the
expenses related to storage, packaging, and the
delivery of online orders, as well as the sales mix.
Online often accounts for weaker margins compared
to brick-and-mortar. Are there products that should be
sent directly from the supplier? Do you use a
third-party logistics company for deliveries? Or, do you
rely on an OEM manufacturer that not only operates
with vendor-managed inventory (VMI), but can take
the product to the consumer's door? Do you need to
factor in different prices for different delivery times?
No matter how you slice it, the old challenges of
inventory allocation remain largely the same in the
omni-channel environment. What’s changed is how
demand for eCommerce orders can be less
predictable than in physical retail or wholesale stores.
When facing increased eCommerce or omni-channel
inventory demands, companies must also decide what
channel takes the highest priority for fulfillment. And
where do you hold merchandise inventory? What if
shipping an eCommerce order means limiting the
supply that a retail store has? Between the costs
associated with leasing or renting a space, staffing,
and other costs, retail stores are much more
expensive to maintain. But that doesn't necessarily
mean they have the strongest demand for certain
styles or the lowest margins.

8. 8Omninomics Industry Perspectives
The value chain is not a chain—it's a network. And a more collaborative network between the brand, suppliers, manufacturers, and retailers can give today's
fashion companies the flexibility they need to thrive in an omni-channel information environment.
Tap into your inventory
all along the value chain
The value chain needs to be closer to the consumer,
so you can make and ship your products to and from
anywhere. Are your consumers using their retail
locations as showrooms?
Do they want to purchase online and pick up an item
from a locker? Who delivers to the location where the
consumer physically takes ownership? How can you
make this experience seamless for consumers?
By creating a more collaborative value chain network
that uses the information you gain from the
omni-channel and information technology, you can
anticipate the desires of today’s shoppers and make
more cost-effective decisions about trends, demand,
and your inventory.
Create a more collaborative value chain network
RETAILER
MANUFACTURER
SUPPLIERS
3PL
RETAILER
SUPPLIERS
SUPPLIERS
BRAND
SUPPLIERS
Value Chain Network
Global Commerce Network | GT Nexus

9. 9Omninomics Industry Perspectives
When creating this value chain network you need to
be asking questions like: What does the consumer
want? Does the consumer still want to shop? Yes. Do
they still want to go and see the product in stores?
Yes, but for many, the store has become a showroom
and one of many potential purchase points rather than
the place where all sales transactions are executed.
To help match inventory supply with demand in the
omni-channel environment, third-party logistics
providers and information technology can help fashion
companies to create common inventory systems
across all of the channels that they must monitor.
“A common, not siloed, system, such as an ERP,
determines from which channel to pull orders based
on the delivery ZIP codes or the option the customers
choose (store pickup, direct-to-consumer home
delivery). With this visibility, retailers can better
understand inventory locations and fulfillment times,
leading to lower inventory carrying costs and faster
deliveries,” observes RIS.10 With the right visibility into
your inventory, you could even sell products as
they’re on ocean liners in transit.
In omninomics, the consumer determines what you’re doing, not the other way
around. By listening to the consumer—getting closer to them—you can
create better strategies for
meeting consumer needs.

10. 10Omninomics Industry Perspectives
Recommendations
The value chain is the foundation of omninomics. Its
creation and execution drive the performance of your
design, sourcing, manufacturing, manufacturing,
inventory allocation, warehousing and distribution
operations. To meet the needs of Millennials and
other generations of shoppers, you should:
1. Collaborate in real-time with your value
chain—Connected global commerce across your
value chain network is the real key to success. You
can always find a cheaper solution to meet your
needs, but the lowest cost supplier is likely to be the
slowest as well. Not only does geographic distance
add lead-time, but manufacturing centers in low-cost
countries often compensate for low margins with full
capacity utilization. That’s risky behavior. Instead,
source your components where they can be created
best—at the best cost and with flexibility and reliability.
Collaborate with your value chain to bring these
components together for assembly in a place close to
your markets. Gaining 90 days advance knowledge of
what the customer wants is worth the air freight, if
you’re selling out in minutes—especially if you’re
actually getting your products into customers’ hands,
not just to the distribution center or retailer. Look for
suppliers that are willing to be connected into your
network. Inventory visibility and timely information are
key to meeting demand and satisfying consumers.
2. Treat your inventory as one single body to match
merchandise to demand—To supply all of the right
channels, you must look beyond the traditional
notions of fulfillment. Make to stock or make to
forecast aren’t going to cut it when consumers want
so much more. To make your inventory flexible, you
need to factor in your fulfillment rates, service levels,
air freight costs, and more.
All parties along your value chain need access to the
same information across all of your interaction touch
points, from print catalog, to web, to order entry
screen, to manufacturing and distribution center—and
even social media. Capturing and analyzing high
volumes of data in near real-time is vital. With an
omni-channel presence, you can optimize the
connection of demand to supply by using customer
data to inform your manufacturing processes. This
pipeline data can offer up-to-the-minute inventory
accuracy—and dramatically improve your speed of
delivery, demand planning, stock replenishment, and
price competitiveness.

11. 11Omninomics Industry Perspectives
3. Get closer to the consumer, so you can see what
they see and react how they want you to react—In
omninomics, the consumer determines what you’re
doing, not the other way around. By listening to the
consumer—getting closer to them—you can create
better strategies for meeting their needs. Just as
Zappos knows there’s no one-size-fits-all approach to
retailing shoes, there is no one approach to building
an omni-channel business strategy. If you’re truly
engaging with your customers, you can use this data
to inform your operations.
One strategy is to start with common items for the line:
fabrics and trim elements. Design a style around them
and put it out there. Your customers can lead you to
better designs. With the technology to capture and
analyze social media feedback and a flexible value
chain, you can adjust your manufacturing processes in
real-time to satisfy new demands—and get closer to
the consumer.
Another strategy is to utilize 3D design and sampling
technologies to ensure the proper fit of a garment.
You can shorten the time to the consumer, reduce the
number of physical samples, and save on your costs.
4. Use Big Data to help you create the next new
thing your customers are after—Sometimes all it
takes is a change of color, fabric, or trim to catch a
trend or extend the run of a flagging style. How can
you know? The operational data you need to is likely
already there, but perhaps you aren’t using it as well
as you could.
To fix this, create a central data repository for your
entire organization. Track, collect, and analyze the
data generated between your design teams, among
product developers and sourcing managers, suppliers
and buyers. You should also create a growing library
of reusable designs, together with the specifications,
BOMs, sourcing, costing, and construction details to
minimize the lead time for introducing variations on a
style or bringing an extra contractor up to speed when
you need added capacity.
A collaborative value chain, informed by omni-channel data, can help you anticipate
the desires of today's shoppers and make more cost-effective decisions about
trends, demand, and inventory.

12. 1 Daniel Newman, "The omni-channel experience: Marketing meets ubiquity," Forbes
(http://www.forbes.com/sites/danielnewman/2014/07/22/the-omni-channel-experience-marketing-meets-ubiquity/), July 22, 2014.
2 Sarah Mahoney, "Forrester: Cross-channel sales to reach $1.8 trillion," MediaPost
(http://www.mediapost.com/publications/article/230787/forrester-cross-channel-sales-to-reach-18-trill.html?edition=), July 27, 2014.
3 MediaPost.
4 Accenture, "Who are the Millennial shoppers? And what do they really want?" 2013.
5 Accenture.
6 Fashionbi, "Omni-channel retailing: The future trend in fashion and luxury industry, Part 2 of 2," May 2014.
7 Steve Olenski, "Only one quarter of American consumers are brand loyal," Forbes
(http://www.forbes.com/sites/marketshare/2012/03/26/only-one-quarter-of-american-consumers-are-brand-loyal/), March 2012.
8 Barbara Thau, "Why a store you've likely never heard of hints at retail's future," Forbes (http://www.forbes.com/sites/barbarathau/2015/07/08/bonobos/),
July 2015.
9 Trefis Team, "Urban Outfitters' omni-channel adoption and its pros and cons," Forbes
(http://www.forbes.com/sites/greatspeculations/2015/10/07/urban-outfitters-omni-channel-adoption-and-its-pros-cons/), Oct 2015.
10 Curt Bimschleger, "The omni-channel ecosystem: Where 3PL fits in" Retail Info Systems News
(http://risnews.edgl.com/retail-news/The-Omnichannel-Ecosystem--Where-3PL-Fits-In92840), May 2014.
Why the strength of your network matters
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For fashion companies, success in the omni-channel environment will require the creation of an interconnected
value chain network that works together on one common platform. In this network, companies will be able to
exchange information in near real-time to prepare for the needs of physical retail stores, as well as the diversity of
online and other sales channels. And, they’ll use customer data to supply the right channels with the right
merchandise and put the product in the hands of the consumer at the location and point in time they want to buy,
with the appropriate fulfillment options.
All players along your value chain must have shared goals, a share in the gains, and a shared fate. Through
co-innovation, an interconnected global commerce network, and collaboration, every business along the value
chain should have the same mission and the same stake. Everyone benefits and profits from the work each
player contributes.
In the omninomics world—your strength is in your network.