Refreshed for 2022, our regular analysis selects one or more news stories from fashion technology, and presents The Interline‘s take on why they matter to our global brand and retail audience – as well as what they might mean for the longer-term future of fashion. As always, this analysis is also delivered to Interline Insiders by email – and signing up continues to be the best way to get a fresh look at the fashion technology news, completely free, in your inbox.
Behind a complex economic prediction, an age-old fashion problem is hiding in plain sight.
For a while now, the supply chain has been fashion’s bottleneck. This could be about to change, but with some unexpected outcomes when its effects combine with rising inflation and a burgeoning cost of living crisis.
Outside of some noteworthy exceptions – caused by COVID outbreaks, associated lockdowns, and localised energy blackouts – retailers have largely been able to start sourcing finished product again, and brands have been able to work with manufacturing partners to create garments, footwear, and accessories from scratch.
And while retail trends are highly variable depending on region (Australia is beating forecasts, while the UK high street is heading in the opposite direction) the fashion sector has generally been able to keep retail stores open, trading, and shifting product into consumers’ hands.
In between those two extremes, the problem has been in the middle; logistics networks struggled to carry the capacity they were being asked to carry, with delays and rising prices being the immediate result.
But that bottleneck was not destined to last forever. Over the last few weeks, evidence has been mounting that freight companies who had been investing to scale up their operations are starting to see results. From buying up land to expand container storage space, to dropping per-container prices for specific countries in support of inflation-battling policies, shipping operators are keen to keep business flowing, and while worldwide container prices are still rising and the schedule reliability of sea freight remains near its lowest ebb, this combination of incentives and expansions could be helping to ease some supply chain pressure.
As this week’s news demonstrates, though, that easing may end up exacerbating a problem rather than solving one. According to (reluctant) celebrity hedge fund manager Michael Burry, there are indicators to suggest that markets – especially the USA – could soon experience the so-called “bullwhip effect,” where the critical pain point becomes excess supply rather than a shortage.
In brief, the bullwhip effect was perhaps best defined pre-2000s as “exaggerated order swings” created by an inaccurate picture of demand at one end of the value chain leading to an over-compensation in supply at the other that manifests itself once that supply reaches its eventual downstream destination.
To put it in a direct fashion context: due to uncertainty in discretionary spending, and persistent bottlenecks in distribution, brands and retailers likely over-ordered. Now, those orders are making their way through to retail and the end result, naturally, is retailers needing to hold even more inventory than usual.
This would be a problem by itself, but one that fashion could manage with the tools it already has at its disposal to manage overstock: discounts and, eventually, disposal. The scale of the problem, though, could be quickly compounded by inflation; shoppers are potentially buying even less than usual, and distribution centres could be filling up.
Whether or not this phenomenon will last long enough to overwhelm fashion’s usual methods of dealing with overstock is an open question, but a more pressing consideration for the industry is why unsold product is such a common occurrence to begin with. The Interline has previously examined some of the root causes, but it will be important for fashion to dwell on them this week, since full-price sell-through could soon be even harder to achieve than before by using traditional methods.
And in a week when the British Fashion Council has doubled-down on calling for brands and retailers to take action on supply chain challenges, a better place to start might be to examine the miscalibration of demand and supply that’s taking place on either side of the bottleneck – before that bottleneck opens up and the bullwhip effect strikes fashion harder than other industries that have less excess inventory on their books.
And the best from The Interline:
Since our last analysis, we have published a raft of different exclusives, as well as several entries in our “PLM Conversations” series, extracted from the popular 2022 PLM Report.
First, we partnered with connected products experts Blue Bite to discuss the importance of building future retail and consumer engagement strategies with the right foundation: item-level identity. From an entirely new sales channel – product commerce – to the secondary market and ongoing consumer journey, a lot can be architected from a single starting point.
Next we published our latest exclusive feature from Tiffany Lung, a top retail influencer, and one of The Interline’s senior contributors. In this piece, Tiffany looks beyond the Metaverse hype cycle to ask how real-time digital experiences are going to redefine the way we shop.
Following that, we announced that The Interline (specifically our Editor-in-Chief) will be speaking at Premiere Vision Paris next week! On Tuesday 5th at 5PM CEST, Ben Hanson will break down why digitisation is driving the future of fashion for a live audience, and post-show he will also be setting out his thoughts.
In an exclusive op-ed, Rinat Homossany Perry sets out to uncover what the decentralisation of fashion could mean for both consumer’s digital identities, and for the overdue potential of truly digital stylists, powered by machine learning.
Next we introduced the first in an already-hyper-popular series of exclusives written for The Interline by The Digital Fashion Group. Designed to help readers make sense of the Metaverse, this series will bring in the perspectives of various leaders in digital fashion and real-time visualisation to create a multi-angle primer on one of fashion’s most hotly-debated topics. The first instalment is available to read today, with more coming very soon.
Related to the Metaverse conversation, we featured another exclusive piece from a very different perspective: the role of data privacy in creating brand trust in an increasingly digital industry. Written by data privacy expert and lawyer Heidi Saas, this feature tackles the subject head-on, and contains a lot for brands wishing to push the digital envelope further to consider.
Next we released the latest article from Darya Badiei, which included perspectives from several designers on the evolving role of creative teams in building products with sustainability in mind. In many ways this mirrors the journey that “design to cost” asked creative teams to embark on – mandating that end-stage product outcomes become part of the initial design process. This feature makes a compelling case for why genuine sustainability will need to begin on the artboard.
The last of our exclusive editorial features examines the enduring role that digital fashion shows are playing even now that travel has returned. Featuring interviews with the Founder of Digital Fashion Week NY, and creative designer and digital artists Gary James McQueen, this article is essential reading for anyone considering the future of real-time visualisation and interactivity for fashion.
Finally, our PLM Conversations continue, with exclusive interviews with figures from major vendors Aptos, PTC, Backbone, Centric Software, Bamboo Rose, Coats Digital, and CBX. All of these are taken from our PLM Report 2022, which also contains market analysis and much more.
Next week look for a new contributor joining The Interline, an exclusive feature examining the future of brand cachet and consumer awareness in the Web 3 era, a high profile interview on the future of materials, and initial thoughts from Premiere Vision Paris!