Convergence of tech and real estate in fashion
In these unprecedented times, fashion retailers will be challenged to adopt improved strategies and tactics for serving existing clientele, as well as developing new customers.
In the luxury sector, this becomes even more crucial, as the top 30 percent of your brand’s customers may be producing up to 70 percent of total sales and the highest average gross margins.
For many retailers, the challenges of developing and implementing a bricks-versus-clicks strategy started to accelerate in 2011-12. I regularly met with field managers, regional managers and senior corporate staff for numerous fashion brands across a broad pricing spectrum, including their CEOs, directors of stores, and directors of real estate during this timeframe.
I started to hear a pattern emerge in my conversations with many of these retailers, including those in the luxury sector, about their challenges with ecommerce, product distribution, inventory timing and availability, as well as margin compression from increasing costs.
At the time, I was the top field executive leading one of the largest retail real estate properties in the United States, with a “destination” portion of the property devoted to luxury retail, and comprising more than 500 operating retailers, restaurants and entertainment venues.
In early 2013, I enrolled in an MBA level certification program in supply chain management to learn more about the underlying issues from these retailer conversations and to better understand how this would alter the retail landscape in the future.
As part of my coursework, I pulled annual reports, MarketLine SWOT analysis reports, and other information regarding strategic priorities being pursued by retailers.
Many of these reports cited “Lack of presence in ecommerce platform” as a primary weakness and developing “Better inventory management to improve gross margin expansion” as an opportunity, both of which rely heavily on technology.
Threats listed in many of the reports included “Intense competition in the retail environment, slow speed to market with fashion merchandise relative to competitors” and “inefficient supply chains.”