As post-pandemic shoppers show inclination for in-store experiences, fashion suppliers are currently experiencing a regular and ongoing reduction in online sales.
Online retail sales decreased by 2.2 % in September 2023, compared to 0.9 % in August, according to the Office for National Statistics ( ONS ). However, its most recent October results showed a 0.8 % rise in online income.
Retailers in particular are suffering, and none more so than Asos, which reported in its most recent full year results for the year to 3 September a 11 % decline in group revenue to £3.54 billion.
A strategy decision to scale “test and react” to 10 % of Asos ‘ own brand was buried within the company’s full year results. Additionally, it stated that it had” significant functional improvement,” citing the “test and behave” pilot for its high-end products.
Examine and react: What are they?
In order to rearrange larger quantities, a merchant will check and react by purchasing small quantities and observing how customers respond to the product.
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Although Chinese e-tailer Shein, which refers to its model as a large-scale automated test and re-order ( LATR ), is currently the most well-known for it, the general idea has served as the cornerstone for many fashion retail strategies.
According to a previous supply chain and logistics producer, “test and react” has been used in many businesses [like Zara and River Island ] for years, and the majority of businesses began testing and learning about books on the shop floor.”
According to Peter Williams, former Boohoo chairman ( 2014–2019 ) and current chairman at circular fashion hub Advanced Clothing Solutions, Asos ‘ approach is still in its infancy and positive results are yet to be seen, but online juggernauts Cooheo also heavily rely on this model.
Williams remarked,” Buohoo pioneered this [model ] in the UK.” They could afford to take the chance and go courageous because they were well-established.
However, Boohoo reported losses in the six-month period leading up to August 31, falling 17 % to £729.1m from the same period last year. The UK has seen record sales for Shein, the newest industry in virtual style. In the 16 months leading up to December 31, 2022, selling reached £1.12 billion, and pre-tax earnings were just under £12.2 million.
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What is Shein’s secret?
According to Daniel Bobroff, co-founder of Intawear, a business that links fashion brands to game developers to design digital characters, one possible explanation for Shein’s accomplishment in the tumultuous online market is its entry and ability to gather data.
Shein is basically scraping the web when they look for clothing changes, according to Bobroff.
There is a ton of data that is processed and scraped regularly in order to determine what constitutes an item popping because they are using various technologies to detect trendsetters and movements in specific types of clothing.
He continued, describing Shein’s design as “on steroids,” adding that this is just a “digitally evolved” approach to check and respond where in the past it was more human.
When adopting evaluation and adapt, there are three factors to take into account.
Data
Any store with plans to follow, or scale-up, its check and react capability must first overcome data and the infrastructure necessary to accurately harness it.
The fashion industry has undoubtedly relied on simple data evaluation for years, if not centuries, according to Ken Price, CEO of the online menswear clothing company Blake Mill. The key point is that the market today has a lot more data at its disposal to aid in more efficient decision-making, and they should make the most of it.
He continued by saying that Inditex, the owner of Zara, has been a “pioneer” in the use of statistics in style. They can maximize productivity and sales at enormous scale thanks to their feedback circle from store to design, purchasing, merchandising, and fulfillment, according to Price.
There are “very few companies that have access to therefore much consumer data as commerce does,” Bobroff acknowledged, but he added that knowing which information to use and having the internal expertise to utilize it are two entirely different dogs.
According to Bobroff, “determining whether some of these [digital test and react strategies ] will work puts you very close to machine learning/AI]artificial intelligence], and for those to work, you do n’t necessarily know the kind of data you need up front.
” If you want to do it at Shein’s level, you need time, money, and the tech skillsets at your disposal; however, lower levels wo n’t be as impactful and effective.
Creating and growth
The check and react design, according to the original supply chain and logistics director, requires a “great design team and supply base” at the outset.
The ability to have both material and production applicable would then be desirable, and all of those components would need to be accessible to the customer, according to her.
” If you want to respond quickly, think about how close you need to be generation sensible to the customers you serve in order to have a long-term model.”
Type of fabric and goods
Certain materials are simple to create “quickly” and would be better suited to test and relate, the original supply chain and logistics chairman added.
If you think about woven dresses and knitwear, you tend to be able to replicate those immediately,” she said.” Bags and footwear have a high craft involved, while also as]a long lead production, and it’s difficult to reproduce that quickly.
However, you should n’t be deceived into thinking that customers want subpar, cheap goods. For a while, you could get away with it, but that is n’t the best long-term strategy.
She also noted that there are sustainability concerns with this fast fashion model, but she also added that it can cut waste by allowing businesses to concentrate on what their customers want because they would immediately just buy a small amount of the product and would only produce more if it sold.
This means that you can purchase the appropriate amount to avoid overconsumption and minimize waste into landfill because you have a more precise consumer demand forecast, she said.
Although it was initially carried out on the factory floor, test and react has since advanced beyond the realm of possibility in the modern era. While not all merchants are seeing success with this concept, those with the necessary equipment, data, and resources may soon overtake those who are unable to make improvement.
But, it is doubtful that anyone else will stand shoulder to shoulder with Shein. According to Richard Lim, CEO of Retail Economics, there is a basic trend in the sector for retailers to adopt an efficient and responsive operating model that is more adaptable, and part of that trend is the ability to shorten supply chains and immediately respond to consumer trends.