What can we learn from these RESILIENT Companies?
These companies anticipated and started working on their actions ahead of their peers. They were exposed to top-line hits like others.
Their willingness to move early made them far more likely to successfully weather economic shock.
They built a lot more flexibility in their investment-planning and operations in addition to pursuing continued earning expansion. They reduced debt significantly by the recession hit its peak while their peers in the market increased their debt.
It is not pruning jobs as much as business prudence and timeliness that helped the resilient companies to perform ahead. “Cost Cutting” may end up inadequate in this environment for earnings growth.
The authors strongly recommend companies turning to digital tools and advanced analytics to bolster productivity and drive growth.
What Specific Actions Fashion Companies can take?
One of the key investments in any fashion business is “Inventory” which devalues with time which makes it all the more challenging. Long lead times in many cases pose a challenge on flexibility.
We recommend the following actions for any fashion brand/retailer
1. Plan your growth carefully (out of stock is better than overstock).
2. Do not place full orders in advance (keep a good % of in-season OTB (open to buy) for response) – quantum depends on your ability to respond.
3. Build a close to the season response capability. If you don’t have one, this is the time. Build partnerships which can bring this capability. You may consider reducing offshore (long lead time) ordering (time is more precious than product cost)
4. Use advanced analytics and intelligence in deciding your product range and placing the right-quantity bets. Keep consumer at the centre of your decision making. A 10% increase in forecast accuracy can impact your earnings by 30-40%.
In our WTS’s 150th edition, Fashion’s MoneyBall Moment article, we covered in detail how Analytics can be your competitive advantage. This article also talks about the analytics maturity model. You can see for yourself where you stand and start taking actions forward.
5. Absorb/Adopt wholesale orders with caution, your partners also do not know what is coming up, educate them and move in together. More you push more there can be a backlash when the demand slumps.
6. Relook at your portfolio and re-align for the time ahead. Build a data-driven competitive intelligence for a relevant response. In recessionary periods, there will be price sensitivity across the spectrum of offerings. Equip yourself with data-driven pricing intelligence in the marketplace. It will be critical to have the intelligence of what consumers are buying rather than what all is out there. Stylumia’s MIT (Market Intelligence Tool) bridges this need gap of knowing real-time trends of products and prices in local and global markets including future signals and current trends with one of its kind proprietary demand-sense.
7. Eliminate all forms of waste. Most ignored is “Time”. Reduce decision-making time with data.
We at Stylumia, through our predictive solutions, enable fashion brands and retailers stay on course with the demand-sense to ensure that they are not only Recession-Resilient but always Resilient. If you would like to be one of those Resilient companies beating the downturn and also outperform when the market recovers, please reach out to us.