Fashion & Apparel: Due for a Stylish Technology Makeover

Remember the mess a major Vancouver-based fashion retailer got into with its black stretchy yoga pants that revealed more than what customers expected? According to reports, the recall of the bottom-baring bottoms was expected to result in a $60-million loss for the trendy retailer. The retailer, which had achieved great success by re-defining women's wear, suddenly saw its stock tumble by 7 percent. The company, which could not respond to the voice of the customer fast enough, has been struggling these past two years to recover from the disaster.

A similar fate may lie in wait for other apparel and fashion houses because the world of fashion is acutely unforgiving. In addition, it is fast changing. Keeping pace with customer tastes, demands and buying preferences adds to the complexity. Traditional systems that kept the industry ticking have begun to fail. They are unable to cater to the digital and social behavior of Millennials. They also fall short when it comes to the need for an accurate and rapid response to changing market conditions.

That is why it is no surprise that SAP is planning to discontinue selling its Apparel and Footwear Solution (AFS) solutions — which the fashion industry, by and large, uses to battle business and operational odds — and replace it with a new Fashion Management Solution. (With hundreds of major brands and global customers, AFS will continue to be supported, like other ECC 6.0 solutions, with a roadmap of SAP support until 2025.)

For those prepared for the technological shift, this is good news. The industry needs technology that can deal with four major disrupters.
Enterprises that can influence the forces below in their favor, will fashion the future of the industry.

Globalization: Apparel manufacturers are developing global sourcing strategies to ensure they open new markets and meet customer demand at attractive price points while strengthening sustainability. This is increasing the complexity of their supply chains.

Customer experience: The Millennial buyer is extremely brand conscious and has information about competing brands, literally, at his/her fingertips. Brands must influence these buyers through continuous, intelligent, personalized and contextual engagement across a variety of touchpoints. 

Faster Fashion: Newer categories — such as active wear, comfort wear and athleisure — are cannibalizing existing product ranges that have been core to business for decades (such as jeans, which are on the decline). Tastes are changing rapidly and it is important for manufacturers to know what customers want as quickly as possible. The time to market is shrinking as well. There was a time when high-end runway styles took two to three years to find their way into markets. Today, a brand such as Zara gets them out into mass markets in eight to 10 weeks.

Vertically-integrated channels: Fashion retailers are developing their own brands and product lines to gain control over brand image and quality. Simultaneously, manufacturers and wholesalers are moving into retail to directly own the customer, improve margins and enhance brand image. Fundamentally, everyone in the industry is opting for new channels that were not part of their traditional business mix. The result is an increase in operational complexity and an urgent need for end-to-end visibility over inventory.

Now throw in social, mobile and artificial intelligence (AI) that are making their way into customer experience and you have an industry that is in the midst of turmoil and uncertainty — seeking ways to integrate everything into one clean and reliable piece of technology.

The industry is particularly worried because it has invested years, not to speak of millions of dollars, in tightly coupled systems that have given them a competitive edge. That was then. Now it is different. The very same systems, customized until practically paralyzed in the new environment, are unable to integrate with social, mobile, Big Data and analytical technologies. Every CEO in the industry secretly realizes this — and fears its implication. Have they stepped out too far already?

Take the example of global mass-market, big-brand sportswear manufacturers that invested billions in their ERP. Then, some years ago, they began to aggressively invest in retail technology for their branded stores. Now, they are sitting on two of everything. One system for wholesale and the other for retail, two sets of skills to manage both, two sets of licenses…you get the picture. It sure doesn't look pretty, especially from the desk of the CEO or the CFO.

Now is the time to bring the two systems together and integrate both with social media channels and enterprise data analytics.
Keeping in mind Millennial shopping characteristics of instant gratification, channel hopping, etc., it has been observed that CIOs are embarking on simplification and are:
  • Looking for best-in-class solutions for assortment planning and localization
  • Retaining their investments in existing B2B, B2C platforms
  • Consolidating all shopper activity signals in a single repository like CAR
The implementation of solutions tailored for the industry, using pre-configured templates, has been found to reduce the total cost of ownership by 30 percent. Further, reusable accelerators have been found to significantly reduce overall time and effort, enabling faster ROI.

Under the right direction, vision and leadership, the fashion industry has every reason to embrace the complexities of today's technology, as addressing and updating traditional models will guarantee a better informed, proactive and successful enterprise.

Shivaprakash Rao, Practice Partner-Apparel and Fashion, Consumer Business Unit, Wipro Ltd. Rao works with leading apparel, footwear and cosmetics clients to define strategy and execute enterprise transformations across the fashion lifecycle. With more than 18 years of consulting experience, Rao now concentrates on assisting clients in understanding both the ROI in SAP FMS implementations and direct to consumer omnichannel initiatives.

Shashikant Gangadhar Walimbe is SAP industry lead for consumer segment, Business Application Services, Wipro Ltd. Walimbe is responsible for strategy, industry-specific solutions, go-to-market and key client stakeholder management. Walimbe has more than 23 years of experience in the global IT services industry with noted expertise in practice development, pre-sales and delivery excellence.