3 questions for Céline Choain and Xavier Romatet
The results of the “Nouveaux Modèles Economiques de la Mode” study have just been released. The report, which focuses on the strategies fashion businesses use to succeed, was a group project led by fashion federations and financed by DEFI. At their request, experts from the Kea & Partners business management firm and the Institut Français de la Mode (IFM, the French Fashion Institute) questioned 40 French and international businesses and analysed over 300 brands. The goal was to highlight their strategies and core operational and financial systems. Céline Choain, Senior Partner at Kea & Partners, and Xavier Romatet, IFM General Manager, share some takeaways from this extensive project.
What were the study’s objectives, and in what context was it conducted?
– Xavier Romatet: In the last few years the fashion industry has witnessed the birth of new business models in France and around the world. Technologies and digital use have changed the way retail is structured in particular. We’ve also seen a wave of new players arrive. So we needed to look into the reasons behind their emergence and the characteristics of these new business models.
– Céline Choain: This study is an investigative analysis conducted on behalf of all the federations, so for the fashion industry. It’s meant to benefit everyone, which is relatively unique. The project began in January 2020 with the mission of covering all types of models targeting all market sectors. Interviews with business managers and the analyses had started before the quarantine. Our objective had been to finish the study mid-April. Beginning mid-March, it was logical that we included questions related to Covd-19 with a special focus on resilience.
In this environment, which is more uncertain than ever, what are the indispensable parameters to take into account for doing business in fashion?
– Céline Choain: The word “uncertain” is key. We know that the world is complex and puzzling. And the Covid-19 crisis has amplified this situation and put certain basic practices – like cash flow, operational excellence, a company’s agility, and managing variable costs – back at the centre of fashion managers’ reflections. The study also highlights imperatives that apply to everyone: adopting a truly unique value proposition, developing brand content involving more than the product, being genuinely committed to CSR, expanding internationally as quickly as possible, and accelerating the digitalisation of sales models as well as operations.
– Xavier Romatet: I believe this study brings three major elements to light. The businesses who best survive the crises are those who have well-balanced business models. Performing quickly is also critical, and that demands agility. So it’s important to streamline organisational systems, be closer to clients and suppliers, tighten up procurement schedules, etc. This flexibility means businesses can better anticipate and react. And finally, hybridization is inevitable: between physical points of sale and digital strategy, long and short channels, and brands’ usual products and new ones …
The study calls attention to three essential topics in particular: CSR, digital technology, and data. What are the stakes in these domains?
– Céline Choain: All businesses, no matter their size, maturity, or business model, identified CSR as a priority. For some brands, it’s their reason for being; for others it’s a factor that has become key in their strategy. All respondents reported having already launched new projects, especially concerning the environment: ecodesign, transparency, the evolution of processes, manufacturing conditions, upcycling, etc. Post-crisis, the new action plans, with their newly defined social components, seem valid for the long term.
– Xavier Romatet: CSR is, in fact, at the heart of the changes in every one of the businesses we interviewed. And 82% of them believe that they have made progress in that area over the past few years. So it’s not just a trending topic or communication strategy but a structural orientation integrated in the business model. It’s important to emphasize this, since it shows real awareness, even though we still see problems with implementation.
Concerning digitalisation, it shouldn’t be applied only to e-commerce. Digital technology is at the centre of every process: design, manufacturing, retail, communication, etc. Of course, we see different levels of maturity for digitalisation, especially due to the type of business. It’s clear the crisis has been a catalyst for developing digitalisation. With brick and mortar stores closed, e-commerce became the only way to stay in touch with consumers, whether they were already experts on buying online or, on the contrary, new recruits. The positive aspect of this forced digitalisation is that it helped many brands win new customers. Now the challenge is not to lose what has been won! Which is why we need to think comprehensively about this. The study shows that digitalisation goes hand in hand with community. And communities have to be built so they’re involved and interact and include not just fans but also customers. Some businesses have the right ingredients to reach these goals – for example the designer’s personality – and others don’t. In general, you have to know how to tell stories and move away from a strategy that’s based entirely on the product. Storytelling lets you take the consumer into an imaginary world and nudge them into buying. The process is long and complicated to set up, but it’s essential.
– Céline Choain: The crisis really accelerated the choice to use digital technology, especially for the more traditional structures. Eventually, those businesses realised that everything was possible. For example, ship-from-store or curbside pickup services which, until recently, had seemed complicated to set up, were run as pilots with simplified technical solutions and teams who were ready to work with a “test and learn” attitude.
From now on, maintaining the status quo is impossible. And that also applies to data; it’s urgent to make it accessible and to target! The sector has always had endogenous and exogenous data; it’s not starting from zero. The real challenge is analysing data to make better decisions. One of the areas where data can be applied is overseeing customer value. The managers we spoke with know this, since 100% of them said it was a strategic topic. Unfortunately, only 12% of them said they were truly committed to the process of treating and optimising data.
– Xavier Romatet: Céline is right. The problem with data isn’t technological. The question to ask is “what do I do with it?” Brands and businesses must know their clients – both the regular and occasional ones. It’s not enough to push products on websites and in stores. Today consumers have choice and power, so it’s important to maintain a direct relationship with them in order to understand them and meet their expectations. And data is there for that. Businesses need to remove technical obstacles. Numbers, in fact, have no value if you don’t make them talk. Data needs to be considered, not from a technological angle, but rather from the perspective of good marketing sense!