Seasonless Fashion: How Will Merchandising Change?
A few years ago, a new retail concept called “buy now, wear now” was introduced to reduce the lag between fashion and real-world seasons. Customers no longer had to wait months to buy something they saw on a runway four to six months ago.
However, the concept failed to take off due to the limitations in the supply chain and wholesale distribution that required advance planning.
Legacy brands returned to their traditional fashion cycles while modern retailers like Zara and Uniqlo emerged as the consumers’ champion by leveraging on a ‘pull’ supply chain, where production is driven by demand.
Unfortunately, this situation led many brands onto a downward path of constant discounting due to the amount of unsold inventory that would pile up at the end of the season.
Sarah Johnson, founder of Flourish Retail and former Head of Merchandising at Asos, knew this all too well. During her session at Omnilytics’s Fashion’s New Rulebook summit, she explained why the current seasonal cycle is unprofitable and how seasonless merchandising could be the ultimate solution for some of the industry’s biggest financial problems.
Why Is There So Much Overstock?
The most glaring issue that exists in fashion retail is overproduction.
In merchandising, products are planned with distinct lifecycles – of when it should be launched, how long it would stay on shelves and when to begin markdowns. Johnson believes this rigid cycle is the main cause of overstock.
In the example she shared, she talked about the redundancy of planning cycles. She explained how coats would typically be launched in September, when the weather was still relatively warm, and entered markdown by December when the product became weather appropriate. This means customers would wait to buy their coats in December and wear them through the coldest winter months until February. In turn, they ignore the new Spring merchandiser that would be launched around the same period.
Because of this, merchandisers need to integrate markdown costs into the OTB planning to drive sell-throughs. As a result, more inventory is needed and profit is sacrificed to meet the sales targets.
The impact of overbuying goes beyond just sale profits. To keep unit costs low, brands and retailers will need to buy even more products to reduce MOQ or try to negotiate lower prices from suppliers – which ultimately puts more pressure onto the supply chain. Coupled with the extra cost in shipping and storage, even just a slight overbuy can cause detrimental effects on the bottom line.
How Does Seasonless Merchandising Fix Overstock?
Without the traditional seasons like Fall/Winter and Spring/Summer, seasonless merchandising allows brands to run product cycles according to market demands. If we revisit the same example as before, this means brands can now launch coats closer to when temperatures start to drop to increase the chances of a full-priced purchase.
This also plays into the global market. Johnson states, “With seasons no longer being a limiting factor, products will be relevant across more markets at the same time – improving the potential for sell-through while reducing the need for discounting”.
Moreover, as designer brands begin to abandon the archaic runway calendar, trends will evolve more organically at a slower pace. Fast fashion brands that feed off these trend cycles no longer need to play catch up and constantly churn out unnecessary products. This also reduces the risks associated with trend-led products because the demand can properly be assessed through data, allowing for more effective planning in future launches.
“With data, you can identify the key products and launch timings, sell-throughs, sizing and stock turns, so you buy the right quantity of product to sell out and move on to the next relevant product to launch”.
Because of this, seasonless merchandising provides brands more opportunity to trade and meet customer demand more effectively, increasing the full-priced sales mix without sacrificing profits.
“Sales are vanity and profit is sanity” – Sarah Johnson.
Now that brands have a more heightened awareness of inventory size and leaner assortments, the merchandising and buying processes for a post-Covid retail environment will undoubtedly change.
Johnson suggested for brands to break up the trading calendar and rework OTB calculations. By removing the seasons, brands will be able to reduce the need to markdown and lower their discount spend. She continues that brands should not worry about reducing sales targets as it will be countered by higher profits due to a lower unit cost.
She also emphasised how brands need to start re-educating customers and wean off constant discounting. “Customers are going to quickly realise if they want a product, they need to buy it now – they can’t wait until a discount appears”, she said.
Although this does pose a risk, Johnson pulled a similar move in Asos China where she opted to push Christmas discounts after Chinese New Year to capitalise on the increased spending. The risk eventually paid off, as she doubled Asos’ full-priced sales mix and increased YoY profits by 33%.
Three Action Steps for Seasonless Merchandising
To integrating seasonless merchandising for your brand, Johnson breaks it down to just three simple steps:
- Break the cycle – rework the trading calendar to see when you need to launch the product most relevant for your customer.
- Look at the profit and exit margin – see what differences you can make with fewer discounts, which will impact the business profit as a whole by not overbuying and bearing the incurring cost.
- Use fashion market insights – refine your buys so your products have the best possibility of selling through. Ensure timing, sizing and assortment are validated by data and market insights.
Most importantly, Johnson reminds brands and retailers to not fear selling out at full-price despite common misconceptions, it is far from a bad thing.
To watch a full recap of Sarah Johnson’s session and access additional materials on seasonal merchandising, click here.
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