The rate of change has never been greater — or faster — for the footwear industry, with new challenges popping up every day in nearly all corners of the business, from navigating cash crunches and supply chain issues to understanding the latest technological advances. In its new “Ask An Expert” series, FN will ask industry leaders — all solutions-based providers — to take on some of the most timely topics.
Business predictions for 2020 have been disrupted for companies throughout the industry, and planning for future seasons is equally uncertain. To survive this pandemic and beyond, it will be critical for businesses to respond fast to shifting consumer behaviors.
Célia Poncelin, chief marketing officer at forecasting firm Heuritech, spoke to FN about where brands should look for trends and how to take better advantage of the ones they find.
Watch on FN
FN: Many brands are struggling with current inventory issues that they need to address before they can prepare for next season. From your trend analysis, what advice do you have to help manage overstock?
Célia Poncelin: For our current situation, it would be to either reallocate stock from physical shops to e-commerce channels or to reallocate geographically to areas like Asia; most of the countries there are not in lockdowns. Alternatively, keep some of it for the same time next year. But primarily it has to be increasing e-commerce because we can see that the e-commerce space is continuing right now. In France, Amazon is currently closed because of pandemic legislation and it’s interesting to see how people are shifting towards other e-commerce platforms that are now gaining market share.
FN: What are some ways brands can introduce more efficiency into their product development process?
CP: This situation has taught us that we cannot depend on China anymore. During the month of March, many stores no longer had clothes because China was in lockdown. On the other hand, 30% of the world’s clothing production is never sold, it is just wasted. So it doesn’t make any sense. I think the answer is to localize production and time to market. Brands that have a very quick time to market are more reactive — of course. When you create a design, make sure that you have the right style by producing it and putting it into the relevant market quickly to see if consumers are buying it. And if they are, then create it at scale.
FN: Production efficiency doesn’t just have financial incentives but sustainable ones, too. What has your data analysis shown about the role of sustainability in the new retail landscape?
CP: Sustainability has been a keyword for years now and the pandemic has not changed the way we do it; it has just accelerated it. We’ve done some research into sustainable fashion, showing that the consumer really wants more. The hashtag “sustainable fashion” grew by five times in the last three years. For brands, we think of it as a circle of producing very locally. If you see that a certain trend is emerging in Japan, then you produce it in Japan and then test it on the market. That’s really sustainable fashion: producing the right amount of quantity.
FN: What impact can forecasting technology have for brands that have a strong design aesthetic and are not as concerned with trends?
CP: Our take on that is that we just want to back your intuition with data; we don’t want to replace it or use AI as a machine to dictate it. You can never teach AI to create the next big design, but it can reduce the risk of failing with a bold new style. The goal is to increase sales and to decrease costs by giving the right clothes to the right audience, optimizing production and allocating the stock depending on geography. Recent McKinsey and BCG research found the same conclusion: a forecasting error could be avoided by 50% with AI and that we can optimize inventory between 20-50% for big brands.
FN: For brands that aren’t able to invest in a forecasting solution right now, how can they introduce some trend analysis into their business?
CP: Be aware of the trends that are popping up on social media; we’ve seen that 20% of posts from COVID-19 are related to fashion. Most of the social listening tools that we use today are just reacting to what’s happening but you cannot anticipate, especially when you have two years of time to market or one year time to market. It’s already too late.
When it comes to Heuritech, we have launched a free program for small brands where they can access our reports during COVID-19. There is a lot of good media that brands can follow as well to get a sense of the fashion industry. That’s why we are divulging some of our data on Instagram. I think the question is just being able to pinpoint the right data for you; if you have some curation expertise, you can curate yourself some of the trends.