10 Top Takeaways from Magic 2017 August 17 2017 · 10 Top Takeaways from Magic 2017 The FGRT team...
13
1 August 17, 2017 Deborah Weinswig, Managing Director, FGRT [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2017 The Fung Group. All rights reserved. 10 Top Takeaways from Magic 2017 The FGRT team attended the Magic conference in Las Vegas on August 14–16 this week. The event covers the men’s, women’s and children’s apparel, accessories and footwear markets. There was a lot of positive energy about the transformative changes taking place in retail. Many of the sessions were geared towards new brands, providing roadmaps and how-to guides on navigating through the fashion space, and emphasized providing a unique and differentiated product offering. The resounding theme we heard throughout the conference is that getting products to customers faster is imperative, and the current fashion cycle is out of date. Retail is not dead; it is just different! Here, we share our 10 top takeaways from the three days. 1) Retail isn’t dead, it’s just very different! 2) Sourcing is strategic and requires collaboration and innovation, now more than ever. 3) Data from social media can help retailers make better and faster decisions, including trend and inventory forecasting. 4) Fit is critical in apparel sales, even more important than fashion or style. 5) Robots, over time, can be taught to manufacture apparel, and domestic production can be made economical using lean manufacturing and management. 6) Fashion is seasonless and more casual, creating opportunities for fashion innovation. 7) The product development cycle must be shortened in order to remain competitive. 8) China is no longer a one-stop shop for sourcing; things are more complicated now. 9) The go-to sourcing destination: Vietnam continues to lure US firms. 10) The final takeaway consists of comments the FGRT team picked up while attending seminars and meetings at Magic 2017.
Transcript of 10 Top Takeaways from Magic 2017 August 17 2017 · 10 Top Takeaways from Magic 2017 The FGRT team...
1
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
10 Top Takeaways from Magic 2017
TheFGRTteamattendedtheMagicconferenceinLasVegasonAugust14–16thisweek.Theeventcoversthemen’s,women’sandchildren’sapparel,accessoriesandfootwearmarkets.Therewasalotofpositiveenergyaboutthetransformativechangestakingplaceinretail.Manyofthesessionsweregearedtowardsnewbrands,providingroadmapsandhow-toguidesonnavigatingthroughthefashionspace,andemphasizedprovidingauniqueanddifferentiatedproductoffering.Theresoundingthemeweheardthroughouttheconferenceisthatgettingproductstocustomersfasterisimperative,andthecurrentfashioncycleisoutofdate.Retailisnotdead;itisjustdifferent!Here,weshareour10toptakeawaysfromthethreedays.
1) Retailisn’tdead,it’sjustverydifferent!
2) Sourcingisstrategicandrequirescollaborationandinnovation,nowmorethanever.
3) Datafromsocialmediacanhelpretailersmakebetterandfasterdecisions,includingtrendandinventoryforecasting.
4) Fitiscriticalinapparelsales,evenmoreimportantthanfashionorstyle.
5) Robots,overtime,canbetaughttomanufactureapparel,anddomesticproductioncanbemadeeconomicalusingleanmanufacturingandmanagement.
6) Fashionisseasonlessandmorecasual,creatingopportunitiesforfashioninnovation.
7) Theproductdevelopmentcyclemustbeshortenedinordertoremaincompetitive.
8) Chinaisnolongeraone-stopshopforsourcing;thingsaremorecomplicatednow.
9) Thego-tosourcingdestination:VietnamcontinuestolureUSfirms.
10) ThefinaltakeawayconsistsofcommentstheFGRTteampickedupwhileattendingseminarsandmeetingsatMagic2017.
2
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
1.RetailIsn’tDead,It’sJustVeryDifferent!ThissessionwaspartoftheNationalShoeRetailersAssociation’s(NSRA)educationconference,andthespeakerwasJamesDion,FounderandPresidentofChicago-basedDioncoInc.Dionisalsoaninternationally-knownspeaker,retailconsultantandauthor.DionbeganhisremarkswithaquotefromaWalmartCOOassayingtherehasneverbeenamoredisruptivetimeinthehistoryofretail,however,thereisnogoingback—wecanonlygoforward.Hethendeliveredapresentationtitled,“DoomandGloom,”inwhichhediscussedthenumerousdisruptivecontributingfactors,includingstoreclosings,desperateactionsbydepartmentstores,e-commerce,anover-malledUS,discountstores,ashrinkingmiddleclass,pressurebysuppliersandconsumers’changingpressures.DionthenintroducedRetail3.0,whichincludesofferingfoodandbeverageincombinationwithapparel,savingconsumers’attentionthroughintelligentadvertising,seizingattentionthroughauthenticstoresandthemindshiftrequiredtoleveragetechnologysuchasaugmentedreality(AR).Heforecaststhatfuturestoreswilloccupysmallerspacesandwillserveasshowrooms,fittingroomsordrop-offpoints.Finally,onapositivenote,DionnotedthatmillennialsandGenZersprefervisitingphysicalstoresandthatconsumerspendingremainshealthy.
2.SourcingIsStrategicandRequiresCollaborationandInnovation,NowMoreThanEverInthepanel,“SourcingShakeUp:HowtoSteerYouWayThrough2017&Beyond,”executivesfromleadingretailersdiscussedthecurrentretailenvironmentandthechallengesandcomplexitiesofsourcing.RajivMalik,SVPofProductsandSourcingatKohl’ssaidthatcost,qualityandon-timedeliveryweretraditionallythestandardsthatwereusedtomeasureperformance.Today’senvironmentismorecomplexanddynamic,addinginagility,speedtomarketandtechnology.EdGribbin,PresidentofAlvanon,saidthatalthoughfromamacroeconomicperspective,wearelivinginastableenvironment,theenvironmentismorecomplicatedfromaretailperspective.Forexample,millennialsare83millionstrongandthisgenerationpreferstorentclothesthanbuy;theywanttobuyahouse,butdonotwanttobuyacar.HealsopointedoutthatAmazonhas16primelabelsthatdidnotexistayearago.
Source:FGRT
3
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
ThePanelistsdiscussedsourcingandhowittoucheseveryorganization,anditsneedtobestrategicallycollaborative,andinclusiveofeverypartoftheprocess.CharlesMcMurray,SeniorDirectorofBrandedProductDevelopmentandGlobalSourcingatCabela’s,said,“ThankyoutoAmazonforthedisruption.”Headded,thatAmazonisalogisticscompanywithadigitalplatformforselling,andthattheyhavetappedintobabyboomersandthedigitalgenerationwithdifferentneeds.Hesuggestedthatifyoucannotbeatthem,jointhem,andlooktowhoAmazonissourcingwithandcollaborate.Theotherwayisonproductdifferentiation,hesaid.
Sourcingtransformationstartswithasourcingstrategy,accordingtoMichelleMatthews,VP/DirectorofGlobalSourcingatMonarchGroup.Retailersneedstofigureoutwhattheprojectionsaretodeterminewhattheywillneed,andtakeaholisticviewoftheorganization.McMurrayaddedthatsourcingisaservicetothecustomerandasagroup,inordertotransform,sourcingneedstochallengecurrentbusinessmodelstogetcross-functionalalignmentandgetoutsidecounselforapanoramicview.Malikaddedthattechnologyinnovationisontheforefront,andleveragingPLMsoftwaredataisverypowerfulandthatautomatedsewingisrapidlyprogressing.Technologyforfitisevolvingandhepredictsthatwewillseeitbeforedriverlesscars.
3.DatafromSocialMediaCanHelpRetailersMakeBetterandFasterDecisions,IncludingTrendandInventoryForecastingThespeaker,WendyK.Bendoni,AssistantProfessorandChairoftheFashionMarketingDepartmentintheSchoolofBusinessatWoodburyUniversityandaninternationalretailtrendforecaster,discussedconsumerbehaviorinrelationtosocialmedia,andhowthedatacanbeusedfortrendforecastingformakingbusinessdecisions.Driversofconsumerbehaviorintheonlineworldincludesocialconfirmation,visualconsumption,instantgratification,thesharingeconomy,insta-fashionanduber-connectedconsumers.BendonicommentedthattheaverageAmericanspendsfivehoursadayontheirsmartphone(uponehourfrom2016).Onlinecontributorsstartedasbloggers,andnowconsumersofdigitalcontentcanbeanalyzedas“tribes.”Theyseeksocialconfirmationonline,aremoreaccustomedtosearchingforthingsvisuallyandbenefitfromthepowerofacollectivevoice.
Source:Affinio.com
4
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Therearenewtoolsonthemarket,suchasAffinioandEdited,thatempowerresearcherstosiftthroughtheenormousamountofsocialmediadata,forexampleanalyzingattendeesofmusicfestivalssuchasCoachella.Inparticular,thereareatotalof32millionfestivalattendees,ofwhich15millionaremillennials,and“thefestivallook”hashardlychangedin12years,whichoffersanopportunityfornewfashions.Bigdatacanbeusedtopredicttrends,determinewhichproductsaresellingoutanddeterminetheoptimaltimetointroducenewproducts.
Fashwireisanotherdigitalplatformthatprovidesaninteractivelinkbetweenfashiondesignersandconsumers,anddrivesuserparticipationwithacurateduserexperienceandrobustrewardsprogram.Usersgivetheirpreferencesviaa“swiperight,swipeleft”model,andarerewardedwithdiscountsfrome-tailers,independentspecialtystoresandlargerretailers.Designersgetreal-timefeedbackonuserpreferences.
Source:Fashwire.com
TheFashwireplatformalsoservesasacommunitywhereusersarefreetoexploreanddiscoverstylesfromthedesigners’collectionsaswellasinspireotherswiththeirownpersonalstyles.SimilartoInstagram,usersofFashwirecanfollowotherFashwireusersanddesigners,likeandcommentontheiroutfits,linkingeveryonetogetherthroughoneapp.
4.FitIsCriticalinApparelSales,EvenMoreImportantthanFashionorStyleThisseminartookplaceasapaneldiscussiontitled,“FoundationsofFitforFashion.”Fitiscriticalinapparelsales,evenmoreimportantthanfashionorstyle.EdGribbin,Presidentofretail,apparelandfashionconsultingfirmAlvanon,discussedaestheticversustechnicalfit.Helearnedaboutfitfromhisstintintheuniformindustry,whichmustfiteveryone,versusinretail,whichcanonlyoffersixtoeightsizes.Eventoday,retailersareconstantlystrugglingwithfit.
5
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Source:FGRT
Inappareldesign,thereisaconstantconflictbetweenthecreativeandtechnicalteamsduetoaninherentlackoftrust,andthereisnoclearownershipoffit.Moreover,therearedifferentdefinitionsoffit:aesthetic,commercial,technicalandpersonal.Productdevelopershavetoknowwhotheyaresellingtoandwhotheywanttosellto.Developersneedafocused,targetdemographic,asinglecorebodyandimplementtherighttools.Yet,designersandmerchantsdifferontheideaof“fitintent.”Itiscriticalthattherolesandresponsibilitiesbeassignedandacceptedwithintheorganization.
CrystalButtonisSVPGlobalSourcingandTechDesignofFullbeautyBrands,acatalog-drivenwebbusinessdedicatedtotheplus-sizecustomer—bothmenandwomen—inabroadrangeofcategories.Thecompanyproduces5,000private-labelitemsperyear.Herremarkscenteredonthecommunicationoffitand3Dfitting.Thecompanycreatedaninternaltooltoworkwithitsproductlifecyclemanagement(PLM)systemtomanagetheintentofagarmentandfit,ultimatelyleadingtocatalogandwebpages.Forexample,thecompanyhassixsilhouettesfortops,suchasshaped,straight,relaxed,A-line,trapezeandfit&flare.Therearealsooptionsforsleevelengthsandsleeveshapes.Thistoolhasreducedreturnratesandconversionrates,asthecustomerhasamoreconsistentandreliablefit.Buttonthenturnedto3Dfitting.Virtualfittingspeedsuptheoverallprocess,reducesthenumberofsamples,providestheopportunitytoviewthegarmentonanavatarandstrengthenspartnershipswiththefactories.
MarkCharlton,VPofTechnicalServicesatCalvinKlein,offeredapresentationtitled,“UnpackingFit.”Hisremarksbeganwithfitbeingafunctionofbodytype,comfortboundaries,easepreferencesandpersonaltaste.Successiswhenaconsumertriesonagarmentandcomments,“yes,itfits.”Theindustrymanagesexpectationsbyhavingtheconsumertryonthegarmentsanddecidewhethertheyfit.Oneportionoffitisscience—bodytypesvary.Oneportionisart—isagarmentbespokeormeanttofitarangeofpeople?Otherfactorsaffectingfitincludeglobalization,homogenization,obesityande-commerce.Thereisaninterestingcomparisonbetweenreturningfoodinarestaurantandreturningapparel—somehowtherestaurantdoesabetterjobof
6
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
managingexpectations.Insummary,fitisartxsciencexcommunication(thisisthemostimportantpart.)
5.Robots,OverTime,CanBeTaughttoManufactureApparel,andDomesticProductionCanBeMadeEconomicalUsingLeanManufacturingandManagementThissessionconsistedoftwopresentationstitled,“Robots,Automation:MadeinUSASourcing.”ThefirstpresentationwasgivenbyDr.MikeFralix,PresidentandCEOofClothingTechnologyCorporation[TC]2andTechnologyEvangelistforSoftWearAutomation,whichmakesautomatedsewingrobots.Dr.FralixdiscussedIndustry4.0,whichfollowedIndustry1.0(mechanizationandsteampower),Industry2.0(massproductionandtheuseofelectricity)andIndustry3.0(theuseofcomputersandautomation.)Industry4.0employstheInternetofThings(IoT),thesmartfactoryandmachinesthatcantalktoothermachines(andalsotohumans.)Hediscusseddisruptivetechnologiessuchas3Dprintinganddriverlesscars.Heclosedwithapredictionthatin18months,machineswillbeabletoassembleanentireT-shirt(whichisoneofthemostdifficultgarmentstomanage).
Source:SOURCINGatMAGIC
Thesecondspeaker,WillDuncan,CEOofapparelprocessimprovementconsultancyWillDuncan&AssociatesandExecutiveDirectorofSEAMSAssociation,discussedthegoalofthe“lights-out”factory,whichwillrequirenohumanworkers.Hecontinued,comparingatraditionalgarmentfactorywithoneusingleanmanufacturing,whichusesflexibleworkstationsandworkers,lessinventoryandlessfloorspace,resultinginhigherquality,betteremployeeinvolvementand,ofcourse,lowercosts.Leanmanufacturingtechniquescanbeappliedtomanagementandaswellasadministration.
HeintroducedtheReshoringFashionInitiative,whichaimstoreintroduceleanmanufacturingandbringmanufacturingandassociatedjobsbacktotheUSfrom
7
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
overseas.HecitedanarticleestimatingChina’scostadvantageatjust4%,duetohigherproductivityintheUS,whichisasmalladvantage.Duncanconcludedhisremarkswith“Ifallowedtodevelopandsucceed,theReshoringFashionInitiativewillcontributetobrands’andretailers’bottomline,whilebringinghigh-qualitymanufacturingtoareashardhitbythelossofjobsinrecentdecades.”
6.FashionIsSeasonlessandMoreCasual,CreatingOpportunitiesforFashionInnovationWeheardfromseveraldifferentretailersandcompaniesinvolvedintheretailspacethattheseasonsarebecomingblurredandthatconsumersarenolongerfollowingfashionrules.Someexamplesincludeseasonlessclothingwheretherearenolimitationsintermsofstyle,colorandmaterials.EdGribbin,PresidentofAlvanon,aretail,apparelandfashionconsultingfirm,suggestedthatwithfastfashion,therearenoseasons,withproductflowingintostoreseverytwoweeks,ratherthanthetypical,fall,winter,springandsummer.Forexample,bootsareworninthesummerwithdresses,traditionalwintermaterialssuchasvelvetandbrocadearenowfeaturedinsummerstyles,andpastelcolorsarewornallyearround.
AccordingtomarketresearchfirmtheNPDGroup,themostsuccessfulshoebrandshaveseasonlesssilhouettes,includingsneakers,mules,strappysandalsandankleboots.Forexample,thetopgrowthsilhouettesyear-to-dateJune2017includesneakers,comprising63%ofgrowth,fashionsportslides(18%),strappysandals(11%),ankleboots(9%)andmules/clogs(4%).
Seasonlessdressingisalsocreatinginnovationinthefashionspace.AccordingtotheNPDGroup,thereisinnovationinfootwearwithhybridsincluding“EspadrilleSneakers,”NikeAirHuaracheGladiators,”andpeep-toeboots,tonameafew.
Consumersarealsoincreasinglymorecasualandareseekingeaseandcomfortintheirwardrobe.Thistrendisevidencedeverywhere—withMen’sFashionfeaturinganarticleon“10waystowearsneakerswithsuits”andthesneaker-with-everythingtrend.PanelistSteveHawkins,SVPofSalesforAmericanTextile&ApparelofGrupoKarim’s,alsohighlightedthatthetrendintheUSismorecasualthanever.Hesaid“Billionairesaregoingtoworkwithhoodiesandflip-flopson.Itisn’twhatitusedtobe.”
7.TheProductDevelopmentCycleMustBeShortenedinOrdertoRemainCompetitiveInapanelpresentationtitled,“YouWantFasterFashion?You’reCloserThanYouThink:SourcingfromTheAmericas,”EdGribbin,PresidentofAlvanon,suggestedthatthereasonthatretailersarestrugglingandthattherehavebeenmorebankruptciesin2017thansincetheglobalfinancialcrisis,isthattheproductdevelopmentcycleisbroken.Today’sprocurementprocesshaschangedbasedonconsumershifts;consumersaretechnology-drivenandunpredictable,andassoonasatrendhits,theywanttobeabletopurchaseitimmediately.Today,retailersareoperatingonacycletryingtopredictwhataconsumerwantstobuy18monthsfromtoday,whereasaresponsivesupplychaincanrespondwithin2–3weekstocapturethatdesire.
8
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Source:FGRT
Gribbindescribedfast-fashionretailerZara’svalueproposition,whichisnewnessandscarcity;onceitsproductisgonefromthestores,itisgone.GribbinhighlightedasurveyperformedbytheNPDGroupthatfoundthattheaverageshopperthatisbrandloyalvisitsthestore4.1timesperyear,whereastheaverageZarashoppervisitsaZarastore17timesperyearbecausetheyareafraidtheyaregoingtomisssomething.AccordingtoGribbin,65%ofZara’sproductionisbasedonproximity—allofitsproductscanbedeliveredfromthefactorybyairwithinonedaytoanyofits4,400stores.Zarahasthehighestinventoryturninthebusiness,andGribbinemphasizedthattakingalessonandshorteningthefront-endtimeacompanytakes“fromdesigntoontheback”willsavemoneyonmarkdownsinthelongrun.
Retailerswillhavetotransformthemselvesinordertobecompetitive.SteveHawkins,SVPofAmericanTextile&ApparelofGrupoKarim’ssaidthatreducingturnaroundtimestakesalotofcollaborationandcommunicationbetweentheretailersandfactoriesbecausethefactorieshavetoplanforequipment,staffingandoverallinfrastructureneeds.
8.ChinaIsNoLongeraOne-StopShopforSourcing;ThingsareMoreComplicatedNowApparelretailershavedecreasedtheirrelianceonChinaandincreasedtheirrelianceonotherpartsofAsiaformanufacturing.TherearefourchallengesintheChinabusinessenvironmentthataremakingsourcingmoreexpensive,accordingtoaPwCstudy:
1) Wageincreases:WageratesinChinaare2x–8xhigherthaninSoutheastAsia.Therehavebeenincreasesofapproximately8%inrecentyears,andgovernmentpoliciesconcerningminimumwageandsocialwelfarearebecomingstronger.
2) Realestateappreciation:Realestatevaluationshaveincreasedinthepastdecade,withrentalratesrisingasmuchas11%yearoveryear.
3) Renminbiappreciation:TheChinesecurrencyhasappreciatedbyapproximately25%relativetotheUSdollarinthepast10years.
4) Stricterenvironmentalregulations:Weareseeingincreasedgovernmentalregulationsbeingimposedonhigh-pollutionindustries.
9
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
TheresultofthesefourchallengesisthatthecostofsourcingfromChinaisgoingup.WeareseeingfashionmanufacturingmovingoutofChinatoSoutheastAsiancountries,includingThailand,VietnamandIndonesia.AccordingtoKlein,manufacturersarefollowinglowerwagesandloweroperatingcosts.ThechallengesthatneedtobeovercomebymovingoutofChinaincludelowerworkerproductivity,underdevelopedinfrastructureandculturaldifferences.Thefigurebelowwasbasedona2015benchmarkingsurveybytheUnitedStatesFashionIndustryAssociation(USFIS),whichshowsthetrendofretailersdecreasedrelianceonChinaandincreasedsourcingfromotherpartsofAsia.
9.TheGo-ToSourcingDestination:VietnamContinuestoLureUSFirmsThepanelistsincludedDr.ShengLu,AssistantProfessorfromtheDepartmentofFashionandApparelStudiesattheUniversityofDelaware;AvedisSeferian,PresidentandCEOofWorldwideResponsibleAccreditedProduction(WRAP);StevenDiBlasi,VPofGlobalSourcingforLanierClothes;andChrisWalker,ApparelProductionAdvisor/AuthorandVietnamGarmentInsider.
Source:FGRT
1. Vietnamisthesecond-most-usedsourcingbase,behindChina.However,Vietnamhasbecomeincreasinglyimportantoverthepast10years.Retailerscontinuetofocusonadiversifiedsourcingbasemodelinordertodiversifyrisk.
2. The“new”sourcingmodelisonewhereretailersuseChinaforthemajorityoftheirsourcingportfolio,typically30%–50%,Vietnamfor10%–20%,and“manycountries”fortherest,witheachcountryatunder10%each.
3. VietnamisverybalancedandoneofthemostcompetitiveAsiancountriesintermsof:i)speedtomarket;ii)sourcingcosts;andiii)compliance.
10
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
4. Vietnamremainsarisingstar,butUSfashioncompaniesaremorecautiousaboutthecountry’sgrowthpotential.Thisisduetotwoprimaryfactors:growinglaborcostsandthedefeatoftheTrans-PacificPartnershipagreement(TPP).
FactoriesinChinawillcontinuetoholdtheNo.1spot,dueto:i)speedtomarket;ii)capacity;andiii)theirverticalnature.
ReasonstobeinVietnam1. Compliance
2. Machineryinvestment
3. English-speakingmanagement
4. Pro-businessculture
5. Experienceingloballogistics
6. Vietnamhasmadeacommitmenttothetextileindustry;itiseasytogetinandout
7. Environmentalcontrols
8. Factoriesaremovingfromcitiestoruralareastoreducewagesandturnover
9. Increasinglyverticallyintegrated
ReasonsNottoBeinVietnam1. CompetitionforworkersfromSamsung,LG,Panasonic
2. Minimumwageincreasesofapproximately8%–10%(6.5%in2018);thepotentialtoincreasesocialwelfarepayments(thisisat24%)
3. RawmaterialsstillimportedfromChina,althoughmoreavailableinthecountry
4. Lackofmillsanddyeinghouses
5. Nofree-tradeagreementwiththeUS
6. Thefree-tradeagreementwiththeEUreducestheneedtosupplytheUS
10.CommentstheFGRTTeamPickedUpWhileAttendingSeminarsandMeetingsatMagic2017(SortedAlphabeticallybyCategory)
Apparel• “Thereisahugeopportunityindressyathleisurewear.”
• “HowdowethinkaboutthemoveofNiketoAmazon?”
• “WewanttoworkwiththesupplierthatsuppliesAmazon(privatelabel).”
Consumers• “Weareusingabarbellstrategywithourcustomers.TheyareeitheraVVIP
(i.e.,veryVIP)orweletthemservethemselves.Itisdrivingthetoplineandmargins.”
11
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
• “Consumershavemoneytospend—wejusthavetomakeiteasyforthem.”
• “HowaboutChineseconsumersshoppingintheUS(fromChina)?Howdoweservethembetter?”
• “Wheredowegetthebestbangforourmarketingbuck?”
• “ThinkabouttheBonobosin-storeexperience—howcanretailadoptmoreofthat?”
E-Commerce• “Anonlineexperienceinthestoreiswhatconsumersdesire.”
• “Howdowedecreasereturns?”
• “Itisabigchangeintrendtopresentbyclassificationversusbrand.Presentingbyclassificationandbybrandisgettingdoubleexposure.”
• “Howdoweknowwhichinfluencerstopartnerwith?”
• “Incertaincategories,wearenowat30%–40%e-commerce.Ithasfarexceededourexpectations.”
Innovation• “Manyoftheseteststoresarestillretoolingatagreatexpense.”
Magic• “Ijustgotanewbuyer,”wasthemostfrustratingsentenceheardatMagic.
• “Iamtheanti-MarthaStewart.Weallhaveourimperfections,”saidonecelebrity!
RealEstate• “Shoppingcenterrealestateinvestmenttrusts(REIT)arejustgettingstartedin
turningthingsaround.”
Retail/PhysicalStores• “Whentheseretailersarecompingnegative5%eachyear,theirstoresare
actuallygetting5%biggereachyear.”
• “Whycan’tsomethingbedonewithalloftheemptyshopwindows?”
• “Weneedmoresee-now,buy-nowtodrivethetopline.”
• “Wethinkthereisstillalotofopportunityforpop-upstores.”
• “Whatpercentageofshoeswerenotondisplayandavailableforsale—Iaskedseverallargebrandswhentheyvisitedretailerstheyworkedwith.Theanswer:Atleast33%.”
• “Thereismoreopportunitytosupportretailersinthestockroomtodriveavailabilityofproduct.”
• “Thereisamovetoself-service,eveninhigh-enddepartmentstores.Theconsumerdoesnotseemtomind.”
12
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
• “Experientialretailisthefuture.”
Source:FGRT
Technology• “Mirrorsthatarepoweredbyartificialintelligence(AI)thatcanhelpyou
chooseyourwardrobeanddetermineyoursizearewhateveryretailer,brandandconsumerisstilldreamingofonalargescale.”
• “Weneedstandardsforshoppablevideobecausewhathappenswhenalloftheseappscomeoutatthesametimethatarenotcompatible?”
• “Thereisahugeopportunityforradio-frequencyidentification(RFID)infootwear.”
• “Beaconsarelessofafocus.”
• “Howcanwereallyuseaugmentedreality(AR)?”
• “Thefutureistrulyomnichannel.”
13
August17,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFGRTNewYork:917.655.6790HongKong:852.6119.1779China:[email protected],CFASeniorAnalyst
ErinSchmidtResearchAssociate
HongKong:2ndFloor,HongKongSpinnersIndustrialBuildingPhase1&2800CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,18thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com
