“There's no such thing as bad weather, just the wrong clothing, so get yourself a sexy raincoat and live a little.” [Billy Connolly]
Every year the arrival and departure of summer becomes more unpredictable, yet you can set your watch by the sale of spring / summer and autumn /winter collections.
With weather patterns out of sync with retail buying cycles, increasingly the market fails to deliver on customer demand. The expectation from the consumer for greater choice and range is heightened and often not satisfied. Equally the impact on trading figures becomes more apparent as the high street empties during periods of extreme weather conditions.
Traditional retailers feel the pain more than online where flexing stock and product merchandising can be achieved much more rapidly. Famously in early 2013 Marks & Spencer attributed a 5% drop in spring sales to an unexpected cold snap in March. During the same period a Visa UK survey suggested that the clothing and footwear sector saw a 2.6% year on year fall in March. While the high street suffered, footfall fell 5.2% during spring 2013 on the high street, the internet captured more trade as good or bad weather encourages people to shop from home, mobile or desktop. The website Brand Alley, which sells designer labels, reported increased profits as a result of snapping-up last season’s winter stock and selling it in the summer. The challenge is the pace at which you can influence your stock cycle.
Given the change in customer shopping behaviour – radicalised by mobile – the desire to browse and buy product fast is clearly an opportunity to relax and lengthen the transition period from one season to the next. The fashion industry will always be influenced and lead by the designer shows, which are traditionally seasonal, but the way in which the retail business then transitions stock to store should be changed to provide more adaptable collections that are less seasonally defined.
PWC chief retail and consumer advisor, Christine Cross, says “retailers are doing a lot of work to make the transition period longer and integrating more interesting product – some are also considering holding stock overseas as this can help with capital management as duty is payable once stock enters the UK borders.”
The implications are far-reaching impacting not just supply but also sourcing and the structure of functions within retail businesses. Deloitte suggests that a rethink is required by management to enable retailers to be more agile across channels. Rather than organising by category or channel it could be necessary to have a head of retail across all channels and markets – a significant implication for talent attraction.
There is already evidence that making these changes works in the fast-fashion market. Vertical integration of supply chain delivers results; this has been a key part of Zara’s success as it allowed the Spanish retailer to produce more of its best-selling product within 48 hours. These changes are expensive, but can be offset by moving sourcing and production closer to home. A change of direction from the trend to out-source to China, Vietnam, Thailand et al. The economic situation in Europe means there are opportunities to produce closer to home but at lower cost.
The impact of the weather on 2014 results has yet to be seen, but a brief heat wave in July followed by a changeable, wet August will impact fashion sales. The consumer may be the only beneficiary if retailers have to dump stock via spot sales and reductions. If we are bound by the weather then the traditional approach to fashion retail needs to change. The starting point is a relaxing of seasonal boundaries, perhaps think more quarter by quarter, or month on month. How we structure and adapt the buying and supply chain will be down to a new generation of retail talent.
Tamsin Terry-Lush is a Principal Consultant in the Retail Practice at Berwick Partners