Follow the Fashion Conversation All the Way to the Bank

Before the age of social media and customer demands, fashion houses and their design teams were primarily responsible for creating and launching fashion trends. Remember miniskirts, leggings and graphic tees? Yep, all started by fashion houses and pushed to the masses.

But today, consumers pick up fashion ideas from media and movies, social sharing and friends, street styles and many other places. They often talk about these ideas online and before you know it, the ideas can grow into full-blown trends.

So what if fashion brands could tap into these conversations and help drive purchases by understanding consumer desires and creating merchandise that consumers already want? Turns out, we can.

How fast is your fashion?
There are two ways that fashion brands can access the data they need to more accurately forecast what consumers want and how they behave when they get it. One is by mining social commentary to see what's trending.

For example, a recent analysis of more than 175,000 social media mentions (gathered by SAP) uncovered what consumers are gushing about for summer fabrics, footwear, prints and colors. And while the trends may vary in regions of the world, the way retailers can use this information is universal.

The key is being able to quickly translate consumer demand into merchandise on the shelves. Fast fashion retailers live by this, through a process of quick-turn design and production, inventory optimization that supports fast turnover and integrated marketing, merchandising and pricing strategies that move product out the door.

But even fast fashion brands have flops and sometimes trends fizzle out before inventory can hit the shelves.

So to refine the strategy further, companies can employ a second strategy and look to their own data. By correlating social sentiment data with historical demand data from POS and syndicated data, companies can better determine whether or not significant changes in consumer sentiment – either positive or negative – will contribute to corresponding swings in actual demand.

And comparing changes in consumer sentiment with historical consumer demand can help the company develop better risk and cost profiles associated with maintaining fast-turn inventory.

Use history as your guide
Like most trend tracking, running the data and gleaning the richest insights benefits comes from having a baseline and an opportunity against which you'll measure. Without this, new product launches can be like a shot in the dark.

For example, Target recently teamed up with Lilly Pulitzer to debut a limited-edition clothing line. Social media lit up with conversations prior to the launch. And customers lined up outside stores counting down the minutes until the doors opened. Nearly as quickly as shoppers swarmed the stores, the merchandise sold out online too. While the sell-out was a huge success for both Target and Lilly Pulitzer, consumers who arrived a little too late took their frustrations to social channels.

Target brand managers may have underestimated the purchasing power of #LillyforTarget shoppers. But they can knock the next promo out of the park by simply doing a little more set up. By using this campaign as baseline, managers can tap into both social sentiment and actual sales data to forecast demand and possible outcomes for the next big brand tie-in.

Using a baseline and real-time data can help any retailer fine tune (down to the regions or stores) marketing or inventory availability to match demand and achieve a positive impact on the brand.

Manage inventory across locations
When using analytic tools to understand consumer behavior and create optimized strategies, don't forget that consumers in different cities, regions or countries have varying tastes.

In the recent analysis of social media commentary, black and white, blues, reds, and metallic came up hot this summer – but not equally around the globe. North American consumers prefer black and white, while those in the Greater China region are embracing reds.

By segmenting consumer social media conversations by location, fashion brands can adjust the supply chain to support these regional trends, align stock to distribution centers across specific geographies and create an optimal mix of products ready to launch in a short period of time.

With fashion, one size does not fit all, but fashion brands can use these insights to better direct investments and logistics efforts by stocking the right merchandise already starting to trend in just the right locations.

Lori Mitchell-Keller is senior vice president and head of Global Retail for SAP.
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