Decision Intelligence for fashion: new strategies to drive change

The COVID-19 crisis has greatly affected the most diverse areas, with the fashion market being the industrial area most affected by the pandemic. We have already talked about the three possible scenarios developed by Gartner for economic recovery. Developing new strategies with the support of Decision Intelligence is now necessary for fashion managers to handle risks and promptly react to change.

Experts’ forecasts have identified two possible corporate scenarios. The first one, named “Early Recovery”, is more optimistic and for 2021 it envisions a decrease in global sales for the fashion industry by 5%, compared to 2019. This estimate assumes a widespread, effective containment of the pandemic, which favours a quick regrowth for the global markets. The second scenario, “Later Recovery”, is more critical and estimates a decrease in global fashion sale by 10-15% compared to 2019. This calculation assumes that the pandemic will keep spreading, with hopes for an economic recovery (to be seen) not until 2023. Although both scenarios presume scarcely predictable economic conditions of fashion businesses, some important trends have already emerged during 2019.

Statistics before the pandemic have shown a 16% increase of online retail for made in Italy clothing. E-commerce came to play a relevant role for fashion during the pandemic, reaching nearly 30% of total sales. Thanks to Decision Intelligence systems, forecasting short-term trends and anticipating the buyers’ behaviour will be the two main drivers for the normalisation of the crisis and the survival in new, post-pandemic economic scenarios.

There are four main principles that fashion businesses will have to follow as to adapt to these new scenarios:

• An agile, flexible and resilient supply chain

The typically seasonal fashion model has been strongly impacted by the forced closure of retail shops, which caused entire collections never to leave the warehouses. Supply chains of the future will have to drastically and elastically change their structure to adapt to the changes brought upon by the pandemic. For the fashion industry, this entails modifying and reinventing the dynamics by which collections are produced and distributed as to have the possibility of changing the whole strategy during its course. This would avoid over-stock situations that would make this already complicated context even more difficult to handle.

• Demand-driven Supply Chain

The application of Decision Intelligence systems is the key factor to the recovery of fashion. Throughout 2021, continuous shocks to the supply chain are to be expected and fashion businesses and their managers will need to implement Advanced Analytics to inform their strategies. Thanks to these tools, these businesses will be able to foresee the demand’s behaviour and adopt a demand-driven model to accordingly tailor their production and avoid wasting relevant amounts of resources.

• A better user experience

As the data above showed, the fashion industry has (re-)discovered its digital dimension and e-commerce. The merging of the online and the offline dimension has paved the way for a new era, the “Onlife”, in which hybrid customer experiences take place in an environment where the user’s online activities merge with their everyday, real-life activities. Those fashion brands that will be able to develop new applications and systems to favour not only the purchase of their products, but also the sharing of the buying experience will be more likely to effectively react to such a change.

• Less is more: a sustainable future for fashion

COVID-19 has underlined the necessity to change the dynamics of productivity, for the fashion industry, and start to produce less in order to sell better. Once again, Decision Intelligence systems are strong allies when taking management decisions. These businesses have to show that they are able to best manage the available merchandise through flexible allocation and replenishment systems that consider both new products and leftovers from underperforming seasons. All this, in the context of environmental sustainability, but without overlooking the social dimension. As customers become increasingly aware of issues such as the employees’ well-being and the impact of widespread industrial shutdown on human life, business leaders have to foster the most ethical business practices so that their employees’ well-being will come before the mere business interests.

From fast to luxury fashion: future challenges

The future of fashion is determined by two possible challenges, which have technology as a shared element.

The first challenge concerns the strictly operative level. The businesses’ reaction to sales decrease and the unpredictable demand will involve producing in a more cautious way (leading to smaller quantities being produced). Once again, Decision Intelligence systems are strong allies when supporting management decisions. Indeed, businesses need to prove their ability to handle the available merchandise at its best through flexible allocation and replenishment that take into consideration both new products and leftovers from underperforming seasons.

This seems to be also the opinion of Helen Helmersson, Chief Executive of the H&M group, who recently declared that they have been working according to the logic of ‘producing only what they can sell’ and entrusting technology as an enabling factor, necessary to achieve such a goal, together with a circular logic and the re-use of products, towards a kind of fashion that is sustainable in all ways. 

The second challenge lies at the cultural level and entails a digital sprint to foster online sales and customer experiences. Decision Intelligence technologies and the digital sphere come to be valid allies in supporting change even in the case of Luxury fashion. Michael Burke, CEO of Louis Vuitton, has underlined the importance of digital acceleration and the use of Artificial Intelligence during the pandemic to boost online sales through e-commerce and improving the customers’ buying experience.

Ublique: the Decision Intelligence platform by Spindox

The peculiarities of the fashion industry were already affecting the market according to complex variables. From high seasonality, to long shipping times and the short life-cycle of the products, COVID-19 added a growing uncertainty and more complexity.

In this context, Ublique, the decision intelligence platform made by Spindox, presents itself as a valuable support system to business decisions. The suite of solutions for the fashion market entails the combination of four vertical modules dedicated to Demand Intelligence, Revenue Management, Transportation Planning and Warehouse Optimisation. This way, Ublique allows the market player to reshape its Supply Chain in favour the business itself, as shown by clients that have already integrated our technology into their own companies.