Management of Fashion Companies

What is Fashion?

Fashion is a Form of Expression

Trends — Sources of Fashion

1. Trickle-Down: Fashion starts among the upper class and moves down

2. Trickle-Up: Fashion starts among the lower class and moves up

3. Trickle-Across: Fashion moves horizontally through similar groups 

“Dream Factor”

1. Aspirational quality or idealized appeal of a garment or style

   1. To the create the dream, designers are into image-makers

   2. Importance of visuals, artistic directors, captivation

What is Luxury?

Outstanding quality, timelessness, heritage, experience, bespoke service

Fashion vs Luxury

Fashion reflects current trends and is accessible to a broader audience

Luxury emphasizes exclusivity, craftsmanship, heritage and timeless value

Business Models and Industry Segmentation

1. Luxury: Product is King, Conglomerates, multi-brand house

2. Fashion Designer: Seasonal creative vision and branding; heterogeneous 

3. Premium: 

4. Retailer: Fashionability at price; reactive manufacturing 

5. Direct-to-Consumer (DTC): Leverage e-commerce strategies 

Wholesale vs Retail

Wholesale: Sell-in intermediary stores

Retail: Sell-out directly to consumer through own store

Industry Analysis

1. Strategic group analysis

2. KSFs

3. Growth prospects

Fashion Price Pyramid

1. Haute Couture: Exclusive, made-to-measure, custom

2. Ready-to-Wear: Mass-produced, luxury everyday wear

3. Diffusion: Secondary lines offered to wider audience

4. Bridge: Premium and Fast Premium 

5. Mass: Fast Fashion and Retailers

Competitive Advantage Strategies

1. Differentiation or Cost Leadership

   1. Brands can choose strategies for individual product segments

Importance of Trademark

1. Distinguishes companies via graphics

   1. Increases identification and affinity, adding to brand equity

   2. Characteristics: Distinctiveness, Novelty, Legality

Importance of Branding

1. Method of creating uniqueness and relevance

   1. Tangible Associations: Functional

   2. Emotional Associations: Experiential / Meaning

Importance of Brand Signature

1. Internally consistent, Externally relevant, and Easily recognizable

   1. Stylistic Identity: Permanent set of stylistic codes (fabric, pattern)

   2. Communication Identity: Permanent set of message / tone of voice

   3. Retail Identity: Permanent set of store design and services

Importance of Heritage

Brand tradition, mythology, and store telling

Line vs Brand Extension

Line Extension: Expanding to separate business model (ready-to-wear, menswear)

Brand Extension: Expanding to separate product category (jewelry, footwear)

Luxury vs Masstige

1. Luxury

   1. No compromises on quality

   2. Timeless / Heritage

   3. Customer Experience

2. Masstige

   1. Standardized Quality

   2. Disposable

   3. No Customer Experience

Luxury Segmentation Evolution

1. Trading Down: Segmenting Luxury through Scarcity

   1. Absolute Luxury — Unique, custom, handcrafted 

   2. Lifestyle Luxury — Quality, heritage, brand identity

   3. Attainable Luxury — Accessible, media focused

2. Trading Up:

   1. Luxury → Couture; Mass → Masstige

Masstige

1. Retail category that encompasses brands with prestigious characteristics, but accessible to mass consumer audience

   1. Collaborations, artificially limited products, high-traffic locations

      1. Example: Victoria’s Secret

   2. Cannot fully replicate luxury experience on all fronts

French Model

1. Birth and Meaning of Haute Couture —  A Dream

   1. Branding as Art, Couture, and Traditional

   2. Charles Fredrick founded first Haute Couture house in France in 1858

2. Examples

   1. Chanel — Family Business

      1. Goal of keeping as exclusive as possible

      2. Focused on specific iconic women’s products

         1. Chanel No. 5 — Best selling perfume of all time

   2. Dior & LVMH — Luxury Conglomerate

      1. High level of manufacturing control

      2. Cultural branding and strong heritage

      3. Conglomerate strategy

3. Growth Strategy

   1. Couture as an Image Builder — Not revenue

   2. No Line Extension

   3. Growth through Brand Extension

   4. Vertical Integration

Italian Model

1. Origin of Success

   1. Designer - Entrepreneur

   2. Fashion Pipeline

   3. National culture

2. Examples

   1. Dolce & Gabbana

      1. Strong Heritage — Sicillianity 

      2. Fashion House → Vertical Integration

   2. Zegna

      1. Textile Mill → Luxury Menswear

      2. Acquisitions and IPO

      3. Sustainability

3. Growth Strategy

   1. Clothing as core business

   2. Direct control of manufacturing — Ingredient Branding

   3. Luxury Leisurewear

Fast Fashion KSFs

1. Rapid supply chain response → High Volume / Turnover

2. Low Prices and High Fashionability 

3. Standardized Stores

4. High Profitability

Made-to-Order vs Made-to-Stock

1. Made-to-Order — Traditional High Fashion Model

   1. Build seasonal sample collection

   2. Present Collection and acquire orders

   3. Launch production and deliver products

2. Made-to-Stock — Mass Market Model

   1. Sale forecasts

   2. Production planning

   3. Launch production and deliver products

Mass Market Models (H&M vs Zara)

1. Retailers — Engage in commercializing good directly from manufacturer

   1. H&M: Limited editions and mass-market prestige

      1. Cost Leadership Model

2. Speciality Chains — Sell their own branded products in store

   1. Zara: Fast, vertical retailer, complete in-house Europe production

      1. Focus on scale and technologically integrated stores

Ultrafast Fashion

Even faster production, daily distribution, social-media data-drive

Fashion Pipeline Process

1. Begins 2 Years before Presentation

   1. Design

   2. Production of Raw Textiles

   3. Manufacturing into Clothing

   4. Distribution to Consumers

Life Cycle Assessment (LCA)

Systematic approach used to evaluate the environmental impacts of a product, process, or activity throughout its entire life cycle

Role of Textiles

Trends: Man-made fibers increase in usage every year

Certain fibers can be marked-up and branded around quality / procurement

Problem of Intermediate Manufacturing

Intermediary manufacturers are not visible to end consumer → out-competed by cheaper manufactures (Europe → China)

Ingredient Branding

1. Co-branding driven by the manufacturer of the finished products

   1. Push Effect: Focuses marketing on intermediary level of value chain (B2B2C)

      1. Example: Gore Tex x North Face

   2. Pull Effect: Focuses marketing on end consumer (B2C)

      1. Example: Gucci x North Face

What is Sustainability

Development that meets the needs of the present without compromising the ability of future generations to meet their own need

1. Focus in Fashion: Reduction of Overconsumption

2. 3P Model — People, Planet, Profit

3. 5P Model — People, Planet, Prosperity, Partnership, Peace

4. ESG — Environmental Social Governance

Circular Economy and ESG Practices

1. Reusing and recycling products into new goods

2. Using organic renewable fibers and non-toxic chemicals

3. Increasing transparency and traceability of production 

4. Fair wages and increased working conditions

5. Longevity of clothing and materials

Green Washing

Promote false solutions that distract and delay concrete action

Role of Management vs Creativity

1. Role of Management: 

   1. Short Term: Collection Architecture

   2. Long Term: Brand identity and positioning

2. Role of Creativity: 

   1. Short Term: Collection stylistic themes and concepts

   2. Long Term: Stylistic Identity

Dressing Styles

Classic, Modern, Characterized, and Avant-Garde

Fashion Collection Characteristics

Size, Structure, Innovation, Role

1. Image: Brand defining, highest price, seasonal

2. Core: Carry-over seasons, large range

3. Basic: Never sold out, entry level, high volume

Phases of Fashion Collection Development

1. External / Internal research on fashion trends

2. Defining the collection guidelines

3. Defining the merchandising plan

4. Collection development

   1. Style and Model Design

5. Presenting the collection

Merchandising Manager Roles

1. Product Merchandiser: Manage product development, market fit and profitability

2. Retail Merchandiser: Manage customer experience and sales

3. Visual Merchandiser: Manage brand image through store presentation

Fashion → Retail Reasons

1. Increase profitability

2. Transmit coherent identity of brand through store

3. Better connect with end consumers

Client Advisor

1. Advise on trends/merchandise,

2. Cross & up-sell,

3. Brand ambassador

Store of the Future

1. Hyper-localized

2. Digital

3. Custom-clienteling

ROPO

Research online, purchase offline

Omnichannel

Seamless Customer Centric experience across all channels (Online/IRL)

Customer Service vs Clienteling

Customer Service: Focused on immediate needs and issues of customers

Clienteling: Focus on personalized service and long-term relationships

Customer Relationship Management (CRM)

Strategy and technology for managing company’s customer interactions

Communication Strategy Characteristics

1. Concept: Originates from Heritage / Storytelling

2. Tone of Voice: Casual for Mass Market / Formal for Luxury

3. Colors: Iconic shades

4. People: Influencers

5. Atmosphere & Location

6. Media: Images / Videos

Amplified Event

Events are bolstered through social media networks

Return on Empathy (ROE)

New version of ROI focused on brand thoughtfulness and customer connections

Innovation Process

1. Object

   1. Product — Developing Industries

   2. Process — Mature Industries

2. Driver

   1. Technology Push — New technology drives innovation

   2.  Market Pull — Consumers demand innovation in market

3. Approach

   1. Closed Innovation: Internal R&D

   2. Open Innovation: Exchange of ideas between firms

Innovation Mover Advantages

First Mover Advantage — Experience, scale, reputation, buyer switching

Second Mover Advantage — Free-riding / learn from mistakes

Obstacles to Innovation / Change

1. Distorted market perception

2. Lack of motivation

3. Difficulty in defining method of change

4. Failure to implement change

Creativity vs Innovation

Creativity — Involves generating original and unique ideas

Innovation — Implementing creative ideas to create value

Disruptive Innovation

Strategy to make communication more impactful through

1. Overcoming the noise dominated by rivals

2. Balance innovation with long-term brand preservation and vision

Ray-Ban Case

1. Ray-Ban Competitive Advantage: Heritage / Design Excellence / Function

2. Failure: Unable to capture changing fashion trends, low standards

3. Luxottica KSFs

   1. Retail Expertise

   2. Vertical Integration

   3. Premium Pricing

   4. Authenticity and Messaging

4. Ray-Ban Case

   1. First Turnaround — “Never Hide”

      1. Marketing strategy focused on hyper-individualism

   2. Second Turnaround — “Proud to Belong”

      1. Focused on community building and self-confidence

Radical Fashion

1. Characteristic of Radical Fashion — High Visual Impact

   1. Examples:

      1. Japanese Avant-Garde — Exotic textiles and new technology

      2. Chinese Aesthetics — Chinese Designers

   2. Difficulties of Radical Fashion

      1. Fashion most often focused on tradition and heritage

         1. Most consumer are not interested in changing norms

Digital Marketplaces

Challenges: Brands lack control, no customer experience, identity dilution

Second Hand: Sustainability trends, struggles with authenticity

Bain- Altagamma Luxury Good Worldwide

1. Luxury Market Growth Trends:

   1. 2024 marks first year of significant uncertainty regarding future performance

   2. Growth driven by high-end clients, tourism recovery in Europe/Japan, and increased Asian consumption.

2. Polarization in Brand Performance:

   1. Disparities between regions: Europe and Japan flourishing; China facing middle-class consumer confidence issues

   2. Uber-luxury items outperform, while entry-level luxury regains relevance as an access point to luxury.

   3. Experience-based sectors (gourmet food, hospitality) are strongest performers

3. Geopolitical and Macroeconomic Pressures:

   1. U.S. consumer confidence fluctuates with election cycles.

   2. Inflation and geopolitical conflicts dampen middle-class spending globally.

4. Generational Insights:

   1. Gen Z sees constrained spending, revamped targeting towards senior generations

Khooa

1. Personal Shopping Revolution:

   1. Focuses on face, body, and color analysis to personalize clothing choices.

   2. Originally a luxury for celebrities, now democratized via digital tools like Khooa.

2. Body and Face Shape Analysis:

   1. Shapes are independent of size or gender, focusing on proportions.

3. Color Analysis:

   1. Determines suitable palettes based on seasonal archetypes (Spring, Summer, Autumn, Winter).

4. Digital Transformation:

   1. App-based services for wardrobe matching, calendar planning, and makeup guidance.

Rocca

1. Customer experience is paramount: entering a Rolex store means entering the brand's world. The objective is to deliver a seamless, coherent experience that reflects the brand's identity

2. Building loyalty through connection: establishing and maintaining a strong link between the customer and the brand is crucial. Regular engagement ensures lasting relationships

3. Understanding the customer:

   1. Rational level: knowledge of technical features, such as movements and craftsmanship, is essential

   2. Emotional level: trust-building is key to addressing the unique needs of each client

   3. Professional level: staff must undergo monthly training to uphold brand standards and enhance customer service

4. Salespeople as brand ambassadors: sales staff represent the brand and must embody it values in every interaction, acting as trusted advisors to the customer

5. Managing scarcity and demand: with an annual production of 1 million watches and demand three times higher, the challenge isn't selling more but deciding how to sell effectively. The vast second-hand market presents opportunities and challenges, necessitating strategies to address reseller dynamics

6. Balancing prestige and scale: despite being one of the top 5 most recognized brands globally, Rolex maintains an exclusive aura with a relatively modest revenue of €9 billion, reflecting its focus on quality over quantity

Miamo

1. The skincare sector, particularly the "doctor brands" segment, is the fastest-growing category in beauty

2. MIAMO, born within the pharma-cosmetics, has become a market leader in just a few years by focusing on:

   1. R&D and innovation: leveraging patented technologies and formulating products with high concentrations of active Ingredients 

   2. Skin protocol authority: establishing itself as a trusted authority through a comprehensive protocol that bundles different products together for maximum effectiveness

   3. Customer education: educating both pharmacies and direct consumers through its Academy, providing in-depth training to build trust and understanding of the protocol

3. The brand's strong scientific foundation was further reinforced by appointing its co-founder as a brand ambassador, leveraging her medical expertise and social media communication skills to enhance credibility and visibility.

4. However, while the innovative decision to sell exclusively through pharmacies in Italy legitimized its positioning, it could pose challenges for international expansion. Finding alternative distribution channels abroad may complicate the process of educating new partners and explaining the intricacies of the brand's protocol.

Stone Island

1. Stone Island’s competitive advantage: cutting-edge textile innovation and distinctive fashion aesthetic

2. Roles & Responsibilities:

   1. Analyze: collect, analyze, and translate internal and external data into market opportunities, connecting commercial needs with creative design processes

   2. Translate & Connect: manage pricing and margins, optimize opportunities, and map competitors to position products strategically and leverage brand strengths for profitability

   3. Monitor: oversee collection development, ensuring alignment with the briefing and consumer needs, from initial sketches to prototypes and samples

   4. Align: collaborate with key departments—design, production, marketing, distribution, merchandising, and finance—to achieve cohesive goals

   5. Goals: focus on business outcomes (margins and sales) and brand image (product desirability and DNA)

3. Interaction with other functions:

   1. HQ collaboration: engage with key departments like creative & design, product development, marketing, finance, visual merchandising, CRM, and training to implement the company strategy from a product perspective

   2. Channel integration: align with retail, e-commerce, and wholesale channels to ensure consistent strategy execution across all touchpoints

   3. Regional coordination: work closely with buyers and stores to adapt strategies to local market needs and ensure effective implementation on the ground

4. Four merchandising moments:

   1. Collection briefing: Define financial targets, analyze market trends, and customer profiles. Collaboration with channels, CRM, and product development

   2. Collection development: focus on product design, pricing, and feasibility with input from design, production, and finance teams

   3. Collection presentation: finalize assortment, master orders, and VM guidelines

   4. Collection launch: execute product training, clienteling, and store communication plans with support from CRM, marketing, and VM teams