How to act players fashion market in conditions crisis and what measures were taken by Western colleagues, says Ekaterina Petukhova, a specialist at Fashion Consulting Group.
Change organizational structure
The crisis will reveal excessive organizational structures with overlapping functions and an unreasonably large number of staff.
Obviously, the salaries of permanent employees will be a heavy burden on the budget of vertically integrated companies. There will inevitably be a reduction in staff and a reduction in remuneration for those remaining in the state. Such processes will occur in global giants like Inditex, but you need to remember that such companies have a greater margin of safety than other market participants, and you should not focus on them in this situation.
Recently, due to the rapid development of networks, franchising and / or sales departments have grown to incredible sizes in some companies. And the first wave of layoffs affected mainly the marketing and PR staff, and sometimes the staff working directly with the product. For example, Ketroy, a manufacturer and retailer of men's business wear, cut its design department by 75%.
In contrast to Russian companies, Westerners dismiss primarily employees of the HR, IT, logistics, and finance departments. They believe that any dismissal that relates directly to the product or work with the client will not affect the business for the better. If there is a serious reduction in the staff of retail stores, then this may affect the level of service provided to customers. After the crisis, it will be very difficult to convince customers that the measures were temporary and that the store is worthy of their attention.
Implement information system
For the effective operation of any system, a constant relationship between its individual elements is required. In this case, we are talking about stores, manufacturing plants and the head office of the company. Such a relationship can be ensured only by a good information system - those who once invested in its implementation will today be able to fully appreciate their efforts.
Software products based on indicators of the FMCG retail and quite applicable to the fashion industry have already proven their effectiveness in the work of market leaders, whose chains include more than 100 stores. Today, it is precisely such companies that will be able to detect and evaluate fluctuations in customer demand and respond to them, changing the purchase both quantitatively and qualitatively.
Get rid from unprofitable assets
Both in the US and Europe, and in Russia, retailers have already begun to close the least successful and unprofitable stores and move out of shopping centers with low traffic rates. For example, in the USA, GAP (85), Ann Taylor (117), Disney (98) are closing their stores, O'stin started doing this here. Oggi, Women's Secret, Colors & Beauty stopped working on Nevsky Prospekt in St. Petersburg. These stores, which served as flagship stores, were not profitable due to high rents, and as soon as costs began to decline, they decided to close them. This trend will continue throughout 2009. Major players such as Macy's and Eddie Bauer have already announced the closure of a number of stores after January 2009.
Another opportunity to increase profitability is to get rid of the least profitable or unprofitable brand in the portfolio to concentrate on promoting the most successful. For example, Baon announced the elimination of the Desam brand - in the near future all Desam stores will operate under the guise of Baon.
There is a danger for companies operating in franchising. Cases are already known when in the regions operators refused a whole package of seemingly quite successful brands. So, in one of the regions, the franchisees SoFrench, E20 and Mango almost simultaneously closed them. Available in Moscow for a wide target audience, similar brands in the rest of Russia are perceived as more expensive, and this may jeopardize the stability of the regional retail network.
However, the most problematic assets are in the hands of manufacturers. Factories and factories as objects of long-term payback in a crisis are likely to replace the investor.
Assess new outsourcing opportunities
With the onset of the crisis, more processes will need to be outsourced. Today, many companies, in addition to the traditional placement of production abroad, are ready to abandon their own design team and entrust the development of collections to external specialists.
Revise approach to buy
Obviously, the assortment will be dominated by groups with the lowest risk - basic silhouettes in basic or fashionable colors. For manufacturers, the use of already proven, hit styles will reduce the cost of developing collections, and for stores, get rid of models that could potentially turn into illiquid remnants. One more new tendency has been outlined in the organization of the buying process itself. For the convenience of buyers, common dates for the largest US trade show were set - now they will be held at the same time. The organizers offer visitors low-cost hotel accommodation and discounts on airline tickets. They declare that their exhibitions should give visitors some additional benefit compared to others. Therefore, it was decided to focus not only on the favorable prices that buyers can receive when ordering during the exhibition, but also on educational programs during the exhibitions. This trend in the United States shows how the fashion industry should act in any region of the world: do not try to make money on each other, but unite to fight the crisis.
To focus at the complex in-store marketing communications
The organization of communications inside the store requires investments, but they will pay off many times over. A store is an advertisement that is "always with you". Therefore, retailers today must focus on in-store communications - visual merchandising, sales techniques and sales incentives. Correct display of goods and effective organization of the retail space attract buyers and increase sales. A creative showcase, faster than glossy advertising, will force a customer to enter a store, where another equally important component of the complex comes into force - the sales technique.
And finally, the system of sales promotion campaigns, inevitable in a crisis, will help get rid of illiquid balances, increase sales and maintain audience loyalty. It should be noted that this year Western chains announced the start of sales earlier than usual in order to at least approach the planned sales level. And some companies started looking for more radical ways. So, for example, suffering serious losses Marks & Spencer, for example, announced a one-day discount of 20% on clothing and accessories even before the start of official sales. The last time the UK's largest department store chain went so far was 2004.
Focus effort on non-standard decisions
In a crisis, it is necessary to critically approach the distribution of the marketing budget through communication channels and leave only the most effective of them, allowing you to quickly and cost-effectively deliver messages to your target audience. Therefore, it is worth paying special attention to the Internet, which allows you to implement the most innovative solutions and draw attention to the brand.
For example, Costume National launched a campaign on one of the most popular social networks MySpace to promote the second line of C'N'C. Instead of attracting professional models to shoot the Spring - Summer 2008 season advertising campaign, C'N'C offered to participate in the casting of shooting ordinary young people - users of the MySpace service. To participate in the casting, you just had to add the C'N'C page to the group of your “friends”. Attendance of the brand profile in the early days reached incredible rates.
Today, fashion companies are showing great interest in e-commerce. In the USA and Europe, for example, online sales grew by an average of 10% in the pre-Christmas season, while real retail was somehow kept afloat thanks to incredible discounts of up to 75-80%. This state of affairs did not go unnoticed - Tibi and Pucci recently launched their online stores. It is possible to identify groups of consumers with whom it is most effective to work through the Internet. First, there are young people for whom the Internet has already become a familiar habitat. Secondly, men are the most loyal customers. They are difficult to attract, but if you really offer them what they need, they will stay true to you for a long time. Shopping for men is torture. Therefore, for the male audience, the online store of the brand that they are used to will be a real salvation.
There is another group of consumers who will be interested in online purchases. These are women and youth who have some means to buy accessories or clothes of the upper price segment, but who, purely psychologically, cannot go to a luxury store, because they feel uncomfortable there. For them, an online store is an opportunity to make a purchase or find a product that will become the object of their desired purchase in the future without any hesitation.
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