The POSSEN Case Study FINAL -...

Reviewed and approved (December 2010).

The POSSEN MADE‐TO‐FIT FASHION Case Study

November 2010

João José Pinto Ferreira

[email protected]

What is fashion?

Is it necessary or can we live without it?

Is it possible to bring High‐Tech to a traditional business such as fashion?

Can you imagine what sort of a business model could lead to customized fashion for the masses,

leveraging technologies such as the Internet?

Acknowledgements: The author of this document thanks Bas Possen for his most kind availability to contribute to the construction and revision of this Case Study, as well as his most kind permission to make its

contents public.

DEIG DEPARTAMENTO DE ENGENHARIA INDUSTRIAL E GESTÃO JJPF.2010 | 2/12

Clothing, Fashion, and Society “The invention of symbolism was a crucial moment in the history of the human species. The ability to use symbols indicates an ability to think abstractly; when such symbols are created with artistic intent, they indicate the ability to appreciate ‘beauty”. Still quoting the same book, it is worth noting that “’Fashion is a universal principle, one of the elements of civilisation and social custom’ (…) fashion is ‘clothing designed primarily for its expressive qualities, related closely to the short‐term dictates of the market.’ (…) Clothing, then, is an important element of social life and consists of taking natural or synthetic material and converting them into wearable items”. These paragraphs, quoted from the 1st chapter of the book “Designing clothes: culture and organization of the fashion industry”1 by Veronica Manlow, have most certainly always been present in the minds of fashion entrepreneurs over the ages, just as they have also been present, for sure, in the mind of the founder of POSSEN:

“For more than 40 years Possen Made‐to‐Fit Fashion has had a passion for tailor‐made suits, shirts and shoes for ladies and gentlemen and has developed the perfect mix between craftsmanship and innovation. High quality tailor‐made fashion for everyone, promoting the Possen philosophy: EVERYONE BESPOKE!” (text available on the POSSEN.COM website, August 2010)

In a made‐to‐fit or custom‐fit industry, the fashion designer or even each independent consumer is given the chance to lay out his or her own concept in a particular piece. Quoting K. Cho2 “A designer’s intent directs him or her to project the formless subjects in his or her head onto a design work. The intent leads to a concept—the basic idea that unites all components together for a common ground.”(…) “Designers observe the surrounding world with sensitivity. Visible objects found in nature and the materials of the built environment often inspire designers’ creative processes.”

The symbolic weight of fashion has also been recently stressed by Newsweek (Feb 8, 2010) as is stated in the short article “No Two Alike” that “For the ultimate in exclusive shopping, men are increasingly turning to bespoke couturiers for custom‐fit suits, shirts, ties and shoes”. It is in this scenario of clothes as a symbol and as an essential social element that the history of POSSEN unfolds.

We shall see in this case how POSSEN was able to introduce an element of novelty to the symbolic weight of fashion in the way that it chose to approach new as well as existing markets. That is, POSSEN is innovative in its decision to leverage, for example, existing (body scan) technology as well as in its decision to have one‐of‐a‐kind supply‐chain management. We shall examine how POSSEN innovates by leveraging existing and hereto unutilized (Internet) technologies.

1 Transaction Publishers, 2009 2 KyeongSook Cho. Cultural Practice as a Methodology for a Fashion Designer's Self‐Expression and a New Design Possibility. Family and Consumer Sciences Research Journal (2009) (37) pp. 489‐503


POSSEN’s History, Present and Future POSSEN’s history goes back to the 1960s when the entrepreneur William Possen, master tailor at 24 years old, opened the first store “Possen Fashion” in Brunssum in the Netherlands, targeting the large menswear business in the high segment. In 1972, Possen Fashion addressed for the first time the ladies’ high fashion segment, and in 1973 POSSEN started addressing the childrens’ high market segment with the label “Possen Young Fashion”.

It was not until 1995 that the two brothers, sons of William Possen, Tim Possen (with a background in fashion) and Bas Possen (with a background in international consulting and finance), joined the board of Possen Fashion, and the 2nd generation of the leadership of the company became active. POSSENs’ vision was then set to “Leverage technology to build value for individual customers of Possen Made‐to‐Fit Fashion via innovative web‐ based chain integration connecting costumers, retailers and manufacturers of clothing and suppliers of materials.”

When asked about POSSEN present and future, Bas Possen revealed that: “in the period 2007 – 2010 the sales volume has been growing each year at a minimum of 20% (no actual numbers can be given, but annuals sales comprise thousands of customized garments for thousands of individual customers) and this growth is expected to continue until 2012; the target markets are business and smart casual clothes for men and ladies in the age range 25 – 65. There are different promotion strategies and collection presentations per sub age group. Regarding Strategy, POSSEN will focus its growth strategy on three areas:

I. For all relevant regions in The Netherlands and the border areas with Belgium and Germany to sell licenses to operate and exploit the POSSEN concept (franchise model).

II. To expand the deals/business with large and medium‐sized companies where POSSEN can offer its services and products to a significant number of employees.

III. To remain the most innovative retailer in the market by regularly introducing new (technological) innovations, such as web based 3D product configuration and virtual try‐on, style‐advice tools, et cetera (to get free publicity to attract early adaptor customers and to learn how to improve logistics and customer acquisition).”

POSSEN brings High‐Tech to a Traditional Business In 1999 POSSEN launched POSSEN.COM, a fashion company specializing in mass customized fashion for ladies and gentlemen. In 2000 POSSEN.COM opened in Amsterdam the world’s first fashion store using a 3D body scanner to create a “digital twin” of the customer’s body, soon followed by more stores in Amsterdam, in The Hague and in Maastricht. Stores with no ready‐to‐wear clothes and completely focusing on creating “your own fashion product” at a competitive price (comparable to ready‐to‐wear), with the best quality available as well as with reliable and short delivery times.


In the stores, so‐called Fashion Rooms, as well as in the e‐store of POSSEN.COM, customers can use the world's first on‐line suit "configurator" to order/reorder their made‐to‐fit suits. As illustrated, all of this activity was developed a decade ago at a time when about 1/3 of the inhabitants of the developed world had Internet access. In 2000, POSSEN.COM committed itself to the next step by aiming to introduce one‐of‐a‐kind supply‐chain management. This would materialize in the involvement of POSSEN in the European Project MyFashion.eu. This project was submitted in April 2001 and the project had its kick‐off meeting in April of 2002.

In 2001 POSSEN.COM made another considerable investment in building and launching the World's First Mobile Fashion Room, a huge truck designed as an exclusive shop with a body scanner, coffee corner, fitting rooms and a restroom, and subsequently started visiting companies, events and institutes within The Netherlands, Germany and Belgium to scan as many Europeans as possible and to motivate them to choose customized fashion. For corporate clients where POSSEN is allowed to promote on the Intranet and physically within the office building, POSSEN offers its customized fashion with a discount (thus making it even cheaper than comparable ready‐to‐wear clothes from brands such as Hugo Boss or Armani). Corporate clients can either pay for the customized clothes as an extra perk for their employees or the employees pay themselves.

Also, with the Mobile Fashion Room POSSEN.COM was able to address a new market segment, customized corporate wear (uniforms) for big companies such as airlines, retail chains, hotel chains, banks.

POSSEN.COM Products “Quality and freedom of choice are the characteristics of our assortment: Tailor‐made suits for gentlemen; Tailor‐made suits for ladies; Tailor‐made shirts for gentlemen; Tailor‐made blouses for ladies; Tailor‐made overcoats for ladies and gentlemen; Tailor‐made shoes; Luxury accessories”.

Leveraging Technology The introduction of technology to the traditional made‐to‐fit business was achieved not only through the introduction of the 3D Body Scan and the first on‐line suit "configurator”. Striving for leadership, POSSEN.COM was able to integrate its suppliers and provide them with extra value for them to fit seamlessly into the innovative business model. POSSEN.COM Fashion Consultants are the experts in each store who personally receive each customer and try to perceive their needs and provide assistance and guidance in both fashion issues and on the most adequate fabrics for the desired exclusive piece. Each POSSEN.COM retail store has usually more than one of these experts in residence. The whole buying process involves the fashion assistance phase that is followed by the 3D Body Scan, the suit configuration and fabric selection, the process then ending with the selection of accessories.


Despite the 3D Body Scan the suit configuration still has a manual component, with the registration of fine adjustments needed. Following the fabric selection the fabric supplier becomes the focus, with the actual fabric sample so that the customer can actually sense and feel it in his or her hands and on his or her skin. At POSSEN.COM this step is taken a step further. In fact, POSSEN.COM negotiated with its suppliers the on‐line access to their inventory and with the manufacturer access for the submission of a production order of a one‐of‐a‐kind piece. This means that the actual order is submitted on‐line to the fabric supplier and the actual production order is submitted online to the manufacturer. The customer is finally given, on‐the‐spot, information regarding fabric availability and a delivery date for the finished product.

As the customer leaves the retail shop he/she knows that he/she will receive the exclusive Fashion Piece(s) on the agreed date and that it will be delivered to the agreed location. They will also know that, as soon as they need a new suit, they will be able to place the order on‐line on the POSSEN.COM web Point‐Of‐Sale. They will be able to reorder a similar suit but also, if they wish, a different one can be configured on‐line.

The key point is that a very complete and accurate customer record is created that will be of great use to the individual consumer and of course to POSSEN in the future. In the process of creating this perfect customer record and, more importantly, to achieve and enhance the customers’ trust and loyalty to make him or her come back for fast and for easy repeat orders, because this is what creates a valuable customer record, the see, feel, try experience plays a crucial role. Despite the advantages of innovative Internet technologies for visualization and logistics, the starting point is to touch the emotion and passion of a consumer for what he or she chooses (designs) and wears.

Reflection on MyFashion.eu Bas Possen is a shrewd entrepreneur with a very pragmatic approach to the introduction of technology in POSSEN’s traditional business. It is in this context that, as a result of this business integration realised during the Project Myfashion.eu POSSEN.COM, Bas revealed:

“In the scope of this project we wanted to reduce the gap between the Made‐To‐Fit end‐customer and the supply network by providing an integrated service for accessing the supply network both to the Fashion Consultant at the retailers, and to the end‐customer on the web. This enabled greater visibility for every partner in the supply chain, and value for everyone.”

“(…) but we wanted more, we aimed at having an integrated and networked POS system at POSSEN.COM that would enable distributed end‐customer order management (that is: order placement and end product collection) regardless of the retailers’ geographical location. This was achieved, and our customers really appreciate all that this flexibility implies, namely the possibility of on‐line re‐ordering.”


MyFashion.eu also allowed the end‐to‐end integration and collaboration of the supply chain namely by enabling instant due‐date negotiation between retailers‐producers and retailers‐suppliers, through the usage of a messaging system covering: 1) human‐to‐human (two persons interact, one at the manufacturer the other at the supplier); and 2) human‐to‐supplier agents (the software agent ensures the integration with the supplier ERP). MyFashion.eu also made possible the integration and supervision of business processes along the supply chain enabling the co‐ordination and supervision of the Supply Chain by the involved partners (end‐customers, retailers and manufacturers).

A Passion for Value Creation Bas Possen’s entrepreneurial passion for value creation is crystal clear in the way the company outlines its approach to POSSEN customers.

“We wanted to provide POSSEN customers with means to conveniently obtain personalised, high quality fashion products and services at affordable prices (compared to standard, off‐the‐rack fashion products) within reasonably short product delivery times.”

“(…) We were also aiming at ensuring that our end customers would obtain personalised products that provide a better fit. Moreover, we also focused on service, namely by ensuring personalised treatment such as fashion consultancy by fashion experts that will add value.”

“As part of the service, shopping convenience – one‐stop‐shopping – was also in our mind. Instead of visiting various points of sale in order to find a product matching end customers individual needs, customers can now get a complete outfit in one location and can benefit from easy reordering.”

When asked how value was perceived by their customers POSSEN’s CEO replied:

“Based on the very high rate of loyal customers (that come back for repeat orders at least once per year) combined with the fact that many existing customers recommend POSSEN to their colleagues and friends, this POSSEN value must be highly appreciated.” “One of our customers revealed her satisfaction to us by stating: ‘’Thank you so much for the outfit. At the event there were a thousand women in designer dresses that you can find in all the catalogues and in the restroom one of them said to me: “we all spent so much money on similar looking designer dresses and the one who gets all the attention is you in your perfectly fitting and very sexy white tuxedo.’’”

When asked about the company’s relationship with business Customers Bas Possen replied:

“For many years we have been the main supplier to the employees of companies such as the Royal Bank of Scotland, ABN.AMRO bank, PricewaterhouseCoopers and Deloitte. This has allowed us to advertise on their Intranets (which is very rare) as well as to use their facilities (rooms) to meet with their employees.”


POSSEN.COM Achievements POSSEN’s CEO summarized the following company achievements:

‐ New sales and marketing channels have been created. POSSEN is a multi‐channel player (showrooms, travelling tailors visiting customers, e‐store).

‐ Customer loyalty can be increased through improved knowledge about the end consumer and, therefore, competitiveness of traditional retailers is strengthened.

‐ Less capital is tied up in inventory due to the make‐to‐order model. ‐ Decreased product return rate through optimal fit. ‐ Direct interaction and collaboration with other business actors without any

brokers or agents, i.e. reducing total transaction cost. ‐ Improved flexibility and easier adjustment to changes in consumer demand.

When asked about the role of IT in these achievements, Bas Possen is clear in stating:

“Huge impact of IT.”

“It gave the opportunity for new business models (just imagine configuring your shirt or jacket in 3D on your iPad and then being able to fit it in 3D on your digital twin, then sending it directly into production, making a down‐payment on a digital paying device and being able to always retrieve and reuse your old orders and customer record).”

Still in the same context and while discussing the return on investment: “Did the IT investment return the expected value from the very beginning?”

“Of course not from the very beginning, because being an innovator we make constant mistakes and lose money in R&D, with wrongful launches and implementations. However, we learn quickly from our mistakes and try to get to a healthy return on investment as soon as possible after each innovation.”

Conclusion Despite the “Textiles & Textile Products” classification in the Top 5 enterprise death rate, POSSEN.COM has managed to keep a competitive advantage by leveraging the resources in the supply chain. This was achieved by integrating the POSSEN.COM information system with both supplier and manufacturing information systems. Moreover, POSSEN.COM made this integration perceivable to the consumer who recognises the exclusivity of the supplier, of the manufacturer and of the whole process. Despite POSSEN’s success there were many difficulties and Bas Possen referred to some of them:

“The textile and fashion industry is very scattered (many different companies) and highly competitive (many companies fighting not to go bankrupt). It was very difficult to find partners on the supply side that not only understood the need to invest in innovative business frameworks (i.e. focus on mass customization, use of technology), but also had the resources to make the necessary investments.”(September2010)


In 2009/2010 POSSEN celebrates its 40th‐year anniversary as a fashion house rich in history. Since 1999/2000 POSSEN.COM has strived for the implementation of an innovative business model, and has made a clear investment in technology as a way to produce real value for all stakeholders: customers, suppliers, manufacturers and also for the enterprise itself.


Exhibit 1 Internet Users 2000‐2010

Exhibit 2 Enterprise birth rates and death rates

Enterprise birth rates (left) and death rates (right), business economy, 2005 (%)3

3 Eurostat Statistics in Focus 44/2008; Industry, trade and services; “Enterprise births, survivals and deaths – employment effects”. Author: Hartmut SCHRÖR


Exhibit 3 MyFashion.eu Project

Keywords: Supply Network, Workflow Backbone, Fashion Industry

Abstract:

MyFashion.eu engages in the establishment of an innovative business model, a supply network concept and information and communication systems for customer‐configured apparel products made and delivered through a dynamically configured single‐piece‐flow supply network of manufacturers and service providers. The aim is to provide the consumer with extended and integrated fashion products through the use of a workflow management information backbone and a point‐of‐sale system that completely integrate the order and logistics processes. The traditional cascading apparel supply chain with its long lead times and its inflexible batch production will be bypassed, thus giving regional, high quality EU textile and apparel manufacturers additional business opportunities.

Objectives:

1) Development of a system for the co‐ordination of dynamic supply networks based on a workflow management information backbone. 2) Development of a point‐of‐sale software with integrated modules for order and logistics management as well as customer relationship management.

Project Conclusion: MyFashion.eu ended in April 2004

Exhibit 4 The Catch

Newsweek published on February 22, 2010 a most interesting article entitled “Designed by a Digital Hand”. The author’s adventure in ordering an on‐line suit after a 3D digital body scan in New York is described in detail and portrays a contrasting experience compared to those of POSSEN.COM customers. Among other amusing episodes, the author talks about the second fitting session:

“When I had the temerity to suggest perhaps the blazer shouldn’t be cutting the circulation of my brachial artery, Jenkins looked at me and said ‘I know how a jacket is supposed to fit, Jonathan.’”

While commenting this quotation when asked about the reason for POSSEN’s success, Bas Possen replied:

“The main reason for our success is not to rely on the Internet and technology as the new religion, but to search for a delicate balance between old and new economy respecting the ‘see, feel, try experience’ needed by customers, but embracing the best technologies for improving sales (3D


configurators, 3D try‐on, social media) and logistics (end‐to‐end web‐based supply chain integration). A multi‐channel approach (showrooms, travelling tailors and e‐stores). And of course there is the ‘secret’ POSSEN sauce on how to treat the customer in such a way that he or she becomes a happy and loyal customer.”

Exhibit 5 ICT Enabling Architecture

The picture illustrates the enabling infrastructure deployed in the MyFashion.eu Demonstrator.

The Point of Sale (POS) software is featured in two ways, either as a local POS or as a Web POS (POS Services). Both are integrated to ensure information consistency across the network. The Supply Chain Coordination (SC Coord.) ensures access to order tracking along the supply chain. This module, also accessible on‐line by the customer, is closely integrated with the Distributed Workflow Management System (DWFMS) which is responsible for ensuring the business process orchestration. All involved parties are linked in real‐time through messaging.

Access to a given supplier’s inventory is achieved through an Internet link to a webpage provided by the supplier’s Web Server.


Exhibit 6 On‐line Shopping of Men Suites (checked Oct/2010)

Image Source: POSSEN Webpage November 2010

Suits/Tuxedos (2 piece suit) Size selection Price [Range] (€)

POSSEN Exclusive

POSSEN Elite

POSSEN Black

POSSEN Sartoriale

Made-to-Fit

590

690

790

890 (POSSEN Sartoriale allows the selection of high-end fabric from suppliers such as Ermenegildo Zegna, Loro Piana, Holland & Sherr, Ariston di Napoli, Dormeuil, Cerruti, Vitale Barberis Canonico)

Price changes with the fabric.

POSSEN Corporate http://www.possen.com/

289 – 389

BOSS

http://store-nl.hugoboss.com/

Based on a measurement table available on-line.

499 – 899

Versace

http://www.neimanmarcus.com/

Based on a measurement table available on-line.

995 – 1200

Harris Tweed

http://www.harristweedshop.com

Specific measurements asked upon order submission.

558 (57 or 92 € supplement oversize in chest and/or waist)

Collected from the WEB, November 2010

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