A few months ago, TFR commented about the merchandise lifecycle and how retailers, specially apparel ones, deal with stock managament. Following the value chain process, this article aims to describe one of the main areas within the business of fashion: Designing.
Designing (part 1/2)
The Design Department is probably the most creative area within the retail business (marketing would be the following one in my opinion, even if in many companies, this service is outsourced). According to Istituto Europeo de Design (IED), the designer is by definition an innovator of forms and functions, an interpreter and at the same time a precursor of emerging aesthetic lines and of contemporary functional requirements.
Artisanal vs Industrial Design
In fashion, there are mainly two types of designers. At the high-end segment, “fashion-artisanal” designers create the trends and are an essential asset for the business. They tend to be more product oriented than market-oriented. Alber Elbaz, Hedi Slimane, Alessandro Michele, Tom Ford or Raf Simons are part of this exclusive club that is represented by fashion luxury brands (and conglomerates).
Fashion designers create two collections a year that are presented in fashion shows around the world and a few months later the collection is available in stores. On the one hand, a businessman would say that this is a risky business model as you take the risk of producing without an accurate forecast and the current volatility could result in miscalculating stock situations (eg. fashion trends, weather extremes). Covid-19 was an unexpected “event” that impacted supply and demand, but 2022 is another example of high volatility with the war in Ukraine; record inflation levels; euro falling to equal U.S. Dollar for the first time in 20 years; price of raw materials and logistics increasing; etc. Uncertainty is the new normal… Back to designers and seasonality, another risk is fast-fashion competition that can be inspired by these high-end collections and launch similar clothes in 2-6 week lead time.
Other types of designers are the so-called “fashion-industrial” ones. Although they tend to be creative and have a sense of fashion, their impact is not comparable to artisanal designers, who had usually studied in the best fashion design schools (i.e. Parsons, FIT, Central Saint Martins, ESMOD, Marangoni…) winning top awards and gaining international recognition.
FASHION TRENDS ARE INSPIRED BY ARTISANAL DESIGNERS, INDUSTRIAL ONES ARE INSPIRED BY CUSTOMER TRENDS
When comparing these two types, it is important to understand what the business model is. Retailers like Inditex or H&M have thousands of stores across the globe (Inditex had 7.337 stores in July 2020 and 6.477 in 2021, according to its latest annual report). As Inditex states design demand more than just raw creativity. It also required accuracy, attention to detail, analysis, instinct, insight and simple human empathy to sense and understand changing customer trends and feedback from salespeople and stores.
If luxury companies make two collections a year fast-fashion brands are releasing more than 4 collections every year. ZARA, for example, releases more than 22 collections. In consequence, design goes from artisanal to industrial, shaping companies’ business models and their corresponding value chains.
The first model required excellent creativity, the second one, excellent operations.
Another important lever to impact leverage and stock turn is a capsule collection, that also creates FOMO and brings new customers to stores (eg Gucci x Adidas).