From Catwalk to Coathanger, Professor Neil Towers

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  • 1. 8th International ConferenceRetail Management The Road Map to the New EuropeFrom Catwalk to CoathangerProfessor Neil Towers

2. Agenda1. Challenges for the Coathanger2. Retailing, post 20043. Responsive Retailing ChallengesProfessor Neil Towers 3. The Catwalk Influences high street trend as opposed topurely for luxury brands Democratisation Fashion for allProfessor Neil Towers 4. Professor Neil Towers 5. Old Textile World Professor Neil Towers 6. OLD TEXTILE WORLDQuota ConstraintsLarge Textile Capacity in US & EuropeDispersed Garment ManufacturingHuge Shipments of Semi-Finished GoodsInefficient Supply ChainsOvercapacity & CyclicalityDemand Growth Mainly US & EuropeProfessor Neil Towers 7. Typical call to arms:Can Turkey competeagainst China?Professor Neil Towers 8. Fashion Supply Channels Significant power shift in past threedecades in the UK Power move from manufacturer /intermediary domination Channel domination in favour of retailer :power in distribution (Hines, 2007) 9. Fashion Retailing Market Structure Distribution Fragmentation dominated innumerical terms by single-outlet, familyowned businesses Significant decline in numbers in past 10years by 40% Significant in volume, not however interms of market share levels 10. New Textile World1. Challenges for the Coathanger Professor Neil Towers 11. Fashion Retailing Market StructureMarket Concentration :- Clothing specialist chains : account for68% of clothing spend Remainder department stores, mailorder and food retailers Concentration of power : top 5 retailershave a combined share of 43% in 2006(Mintel, 2006) M&S : 15% market share 12. Fashion Retailing Market StructureConcentration why and how? Scale : number of outlets / nationalcoverage Customer patronage volume Own-brand domination Multi-segment coverage / diversification Multi-channel participation Adoption of a strategic managementapproach 13. Multi-Channel Distribution Rapid change in perspective in pastdecade with respect to viability andpotential Current challenge relates to multi-channelintegration Strategic advantage will emerge throughhigh brand / service delivery in a cost-efficient manner Basis for international brand developmentand expansion 14. New Entrants Supermarket and discount retailers ; pureinternet players Impact upon attitude but also participationin clothing consumption Emergence of consumption polarisation :Prada-Primark effect Price deflation Increase in clothing sales volume butdecrease in value terms 15. Global Apparel Exporters(Excludes EU, US and Canada)45.7%Source: World Bank 2005Professor Neil Towers 16. Professor Neil Towers 17. Rise of fast fashion Rapidly changing collections of high-fashiongarments the speedy replication by high streetretailers of the latest fashion (catwalk) inspiredranges up to 20 collections per year Dependent upon short lead times and limitedavailability Ability to refresh ranges in store is dependentupon supply chain flexibilityProfessor Neil Towers 18. 2.. Retailing, post 2004Responsive and FlexibleRetailer + Supplier:From Catwalk to Coathanger Bring on Sheila and Fred Professor Neil Towers 19. Fashion Supply, post 2004Loss of quota protectionSupply chain concentration Global sourcing but fewer producer countries Number of suppliers will continue to fallLogistics factorsSocial & labour IssuesNon-competitive producers will sufferPrices drop, volumes rise Professor Neil Towers 20. Globalisation of the Supply Chain Move away from vertical integration of the textile-apparel pipeline towards use of flexible globalsubcontracting relationships e.g. Nike, Zara, The large-scale shift of labour-intensive garmentmanufacturing operations of Western retailers todeveloping countries with lower labour costs e.g.China, Cambodia, Vietnam e.g. Top Shop, H&M Fashion products sourced from responsiveUK/EU/Asia suppliers with high customer servicecapability eg. Benetton, Paul Smith Professor Neil Towers 21. Lean & Agile Supply Lean for continuity products (26+ weeks) elimination of waste, including time, toenable a level schedule and achieve cost-efficiency Agile for fashion products (13 weeks orless) prioritising speed & flexibility to reducelead time & match supply to demandProfessor Neil Towers 22. Lean & AgileMixed Mode Supply Model 2004 FashionAgile Route TrendFabricsEuropean ForecastmanufacturersYarns Regional ConsumerDistributionCentreFabrics Overseas manufacturersRetailer CommodityYarnsLean Route Professor Neil Towers 23. Typical global fashion supplychainSeasonal (13 week) fashion AfricaIndia China UK UK Example of cotton knitted product for DKNY Professor Neil Towers 24. Supply Lines from S.E. AsiaSpinningMill Cotton Fields3,500 kmDyeing,Weaving &Knitting Shipment to UK6 8 Weeks Professor Neil Towers 25. Logistics & Infrastructure Professor Neil Towers 26. International Shipping 8 RTW vessels Emma Maersk: 11,000TEU Professor Neil Towers 27. Inaugural Lecture SeriesFrom Catwalk to CoathangerProfessor Neil Towers 28. Professor Neil Towers 29. Professor Neil Towers 30. Professor Neil Towers 31. Professor Neil Towers 32. Professor Neil Towers 33. But!!Professor Neil Towers 34. What Retailers WantAll Merchandise sold at full priceLess stock in store or in transitResponsive SuppliersSocial & Environmental ComplianceFast & On Time DeliveriesGood Margins & Profits Professor Neil Towers 35. What Suppliers Want Reliable Forecasts Long Production Runs No mid-batch changes Good Buyer Relationships No competition Acceptable Margins & Profits Professor Neil Towers 36. 3. Responsive RetailingChallenges 33% of merchandise is discounted Forecasts are often wildly wrong Many customers leave without buying Distance adds cost Logistics cost are rising Hunt for Margin leads to longer lead time, more errors, less reaction time, markdowns etc. Professor Neil Towers 37. Multi Channel RetailingSelling across more than one channelExamine goods in one channel, buy themin another and collect them from a thirdchannel, linked by a process of productdistributionOnline UK Clothing Sales2009: 26%2010: 35%2013: +50%Professor Neil Towers 38. Shirts: Retail ModelEx-China Ex-Turkey(C) Cost : $/piece15.1 18.6+3.5(P) Price Point: $120120(S) Sell Through % 65 80(m) Markdown ratio0.35 0.20(D) Discount rate0.5 0.5(G) Gross Margin83.9 89.4+5.5 Professor Neil Towers 39. Turkey can still competedespite 5x Chinas labour costif the merchandise is a fashion productand the delivery time to market is critical RETAIL MANAGEMENT CHALLENGE !!!INTEGRATEDSEGMENTATION, TARGETING &POSITIONING Professor Neil Towers 40. The Dynamic ResearchFramework, 2010The Agile Supply ChainDemand Chain ManagementCustomer Integration Management Components Process IntegrationAgileValueMerchandisingChainSupply Chain Management Virtual Integration Supply ChainStructure Network Integration Professor Neil Towers 41. I. Seasonal ProductSE Asia fashion supply chainSeasonal (13 week) fashionChinaChinaChina UK UK Thomas Nash Woven Jacket at DebenhamsProfessor Neil Towers 42. Made in ChinaProfessor Neil Towers 43. II. High Street FashionEuropean supply chain Short season (6 week) fashionWest ChinaIndia TurkeyUK UK Example of Per Una (M&S)Professor Neil Towers 44. Made in Turkey Professor Neil Towers 45. III. Luxury fashion UK supply chainLuxury fashion season (10 week) fashionChinaScotland ScotlandUK Edinburgh, UKProfessor Neil Towers 46. V neck CashmereFair IslePullover 159 Cashmere Scarf 95Professor Neil Towers 47. Agile MerchandisingSupply Model, 2010Fabrics Catwalk European manufacturersYarns Regional Retail Supply DistributionExperienceAttributesCentreFabricsOverseasmanufacturers CoathangerYarns Professor Neil Towers 48. QuestionsandAnswers Professor Neil Towers