Changing The Channel

Since our last blog on the mid-market, The Changing Landscape, there has been plenty of newness, but this time reflecting influences of an e-commerce boom, omni-channel retailing, and the idea of a “moving target” or mobile shopper. With so many companies shifting into omni-channel retailing, today, we’d like to discuss what they are doing to stand out in a crowded marketplace.

Timing is everything, especially for the likes of Gap Inc, American Eagle Outfitters, and Macy’s. Not only are they placing smaller orders in factories but postponing color and fabric decisions to the very last minute as well as reducing the overall time products spend in warehouses. So what’s causing this change of pace? Well, as demands from millennial shoppers strengthen, it’s all about selection, speed, and uniqueness. This has forced many retailers to trim their concept-to-store times from twelve months to about nine to six. Not to mention the rise in such brands as H&M, Zara, and Forever 21 has challenged the ability of traditional retailers to keep up in the world of fast fashion. So what are these fashion labels doing to not only satisfy the demands of Generation Y-ers but keep up with the competition?

photo via ADWEEK

We spoke about Generation Y, a few months ago, examining who they are and what they really believe in. As online shopping becomes more mainstream, from these Millenials to the Baby Boomers, more and more companies are upping their e-commerce presence. Research shows that many consumers use the internet as a way to check product availability, explore brands, and read reviews before actually stepping foot into the store itself. Not to mention, with today's technology, consumers can virtually try on clothing without ever entering into a dressing room. This growing comfort in shopping online and rise in price savvy consumers also puts more pressure on retailers to deliver a knowledgeable staff, a generous in-stock selection, and a pleasant in-store experience.

video via Wall Street Journal

A major battle retailers are having with the universal access that the internet offers as well as increased comfort by consumers using it is the growing presence of "showrooming." Shoppers are getting smarter and extremely price conscious. With showrooming, shoppers scope out products in stores (with no obligation to buy) and then go online and compare prices to buy merchandise for less at sites like Amazon, which ultimately damages brick and mortar operations. The electronic industry is feeling the largest hit from this issue and is fighting back. For example, Walmart now ships to its stores so customers can avoid shipping fees and Best Buy price matches competitors web prices. However, how to actually combat this issue is going to be difficult as online only companies continue to grow and expand product assortments.

photo via MBF Trend Consulting

While social media may only have a small influence on actual purchases, Pinterest has definitely been challenging retailers on how to capitalize on the ever-so-popular digital pin boards. Pinterest is the largest growing social platform ever and it is taking over the way we shop by "socially sharing" products. We discussed Pinterest previously and the question of how retailers were actually going to make money using the site. And, by the looks of it, a few companies have started to figure out how to get visual and use the platform for not only promotional purposes, but for potential profits. Sephora recently updated its website by incorporating the "Pin It" button on all of its 14,000 products and the site actually crashed. Both Ebay and Amazon have also added these "Pin It" buttons to their product pages. We'll be watching to see how visual profits get as more and more companies start to "pin" their individual product assortments.

photo via pocketlint.com

Spotify, a music streaming site and another platform extremely popular with Millenials, is teaming up with Coca-Cola in hopes to go well, everywhere. The music sharing platform is not only looking to attract more paying subscribers, but reach a global presence. Together the two brands hope to create new experiences for users by collaborating on music related projects and promotions and combining there branding.

photo via styld.by

Gap's got style as its partners with bloggers from FabSugar, Refinery29, and Lookbook.nu to create the site styld.by. Bloggers take Gap's spring 2012 merchandise and create looks to inspire shoppers, allow them to share with friends or purchase online. This strategy not only creates a "cool" factor, but puts Gap out there in the digital arena as more than just a contemporary retailer.

photo via NY Times

So how else are retailers standing out in the endless virtual world of products? Well, by combining forces because companies are stronger in numbers (literally)! Nordstrom's and Bonobos, Walgreens and Drugstore.com and Walmart and Kosmix are just a few examples. Let's be honest, brick and mortar stores are losing their ground so instead, retailers are going after the digital marketplace. Looking at Nordstrom as an example again, last February they also acquired HauteLook, started introducing apps, and offering same-day shipping to compete with other retailers and set themselves apart. 

photo via H&M

Looking at H&M, who recently released their third annual sustainable collection as well as published their Conscious Actions Sustainability Report this month, transparency has become a major focal point for the company. This time around, despite the super low price points, H&M seems much more conscious of how they are marketing the collection by merchandising conventional pieces with eco-friendly ones. A summary of the report highlights how H&M has established themselves as the biggest user of organic cotton in the world. As H&M reaches new improvements and accomplishments in the sustainability sector, we predict they will eventually establish themselves as the first known sustainable leader in the apparel mid-market.

photo via WWD

For our March MBF Picks, we discussed how Macy's import promotion, "Brasil: A Magical Journey," captured the hot topic of Brazil and stood out in the marketplace by focusing on an international concept. With J.C. Penney's new vendor and merchandising strategies causing a stir, Macy's has as a result begun a $400 million renovation of its Herald Square flagship, the largest in history. The 154-year old department store will incorporate fast changing technology while still preserving its historic essence through interactive store directories, mobile apps, digital product information, enhanced signage, and live video feeds to capture the buying power of the younger market. More details of the renovation include the creation of the world's largest women's shoe department, bringing in more luxury brands, and expanding their e-commerce potential. Macy's is particularly interested in this younger market and is not only looking to build better relationships in the store, but think locally in terms of products as well by offering experienced staff, locally targeted marketing messages, and more exclusive items.

photo via WWD

While Macy's bold transformation of more is more is underway, J.C. Penney looks to simplify as the major changes announced in the press are already in effect. From merchandise to fixtures, J.C. Penney is looking hip and refreshed. The retailer has already made efforts to revamp their product assortment by accepting applications from vendors seeking to sell product starting next spring. The entire store is going to be reformatted to give it a boutique-like feel and creating "the street" and "the square" to direct shoppers to brand presentations and demos. Not only are they moving towards the idea of "everyday low prices," but completely restructuring their pricing and tag system. In addition to this, the retailer features a color of the month with special sales on items with that tag color (April's color is teal incase you were wondering)! For us, this color system sounds familiar and reminds us a bit of how Apple introduced the nano-chromatic iPods years ago as well as their other color themed products and campaigns. With Ron Johnson at the head, how will J.C. Penney incorporate Apple's strategies next?

As the mid-market continues to experiment with innovative concepts and use technology as leverage to reach Millennial shoppers, attitudes and expectations will challenge retailers to change the channel. In general, brick and mortar operations will probably never completely fade out. However, the presence of the digital world is making a huge impact on the way we are shopping as more and more companies transition to omni-channel retailing. The idea of the department store is changing overall, especially as both J.C. Penney and Target introduce new boutique-inspired concepts and Macy's explores with technology. Whether it's taking full advantage of the internet and technology, repositioning oneself in the market, renovating, re-merchandising, or even moving towards a more sustainable product assortment, it will be interesting to see what will become of the mid-market in general as the entire industry is under major peer pressure to change. 

Made For Us

As both economic and unemployment uncertainties remain apparent and our predictions are confirmed, a shift away from globalization has begun to arise as a result. In the postwar years of the 1950’s, we supported our country and bought products made here in the U.S. like cars from GM and household appliances from GE, for instance. We were given a fresh start to rebuild our economy honoring our morals, values and general patriotism. As 1950’s influences begin to resurface today, maybe this is exactly where we are headed.

photo via ABC News

A “Made In America” mindset not only brings manufacturing back to the U.S., but also creates jobs in the process. A growing appreciation, support and general patriotism takes precedence over buying elsewhere. It’s not only a phenomenon we see here in the U.S., but in northern Europe as well. Everything goes back to the ideas of tradition, quality, authenticity and handcrafted skills.

People are happy and proud to work for this country and for companies that support work in the US as well as the evolution of skill sets, which we have lost after shifting to offshore manufacturing. In our blog, This Week’s Forecast: Seasonless, we keep emphasizing how we need to change things, specifically the supply chain and start nearshoring. However, before that can happen, we need to have the skills and the knowledge here in the U.S. to enforce and ensure this shift and change.

photo via ecouterre.com

According to PBS, in the 60's, 95 percent of clothing sold in America was made here, which today dwindles to just about 5 percent. Which companies do you know that make products here? We bet you weren't aware that the likes of fashion labels such as Nanette Lepore, The Row, Rag & Bone, Oscar de la Renta, Nicole Miller, Lela Rose, J Brand and Jason Wu all do. Not to mention, the Obama administration has specifically used the fashion industry to promote a Made in America campaign to bring manufacturing jobs back to the U.S. and double exports by 2014. U.S. apparel and textile exports have grown 13.7 percent in 2011 and Deputy U.S. Trade Representative, Demetrios Marantis predicts that "export opportunities are just boundless."

photo via New York Times

Over the past two years, factories nationwide have created over 400,000 manufacturing jobs with companies like Otis, GE and Master Lock paving the path to job recovery. In addition, due to increasing prices of raw materials and logistics, over 50 percent of U.S. based importers have moved portions of their manufacturing out of China into Vietnam, Pakistan, Bangladesh or even back here to the U.S. This growth in U.S. manufactured products is affecting every industry from apparel and textiles to cars, appliances, electronics, and the list goes on.

video via vimeo

With this in mind, a potential reality TV series called Made Right Here is in the works highlighting brands that are still made right here in the U.S. From baseball gloves to belts and buckles, the show seeks to tell the stories of true American culture by introducing craftspeople and masters of the trade to the world. American manufacturing is still very much alive and the series is dedicated to promoting buying locally made merchandise, supporting U.S. skilled artisans and most importantly giving a voice to the future of traditional American industries.

photo via Williamsburg Garment Company

Locally here in New York City is the Williamsburg Garment Company which sells garments to the trade at a fraction of industry standard mark-up, with hopes that the retailer will pass on the savings to the consumer. Using a cash and carry business model, the company avoids costly expenses like unpaid invoices and returns that usually drive up prices at the wholesale level. This small one-man operation is like nothing we've seen before with its unique, transparent and high quality affordable merchandise.

photo via Plastics Today

Looking towards the South, the Houston-based professional hairdressing company, Farouk Systems does 80 percent of its production in the U.S. with costs only slightly higher than China because of improved efficiency. Mr. Shami, the chairman and main owner of the company believes, "If you can say your products come from a U.S. factory, that conveys a good image and I believe this has helped us expand." Looking beyond cost effectiveness there is a much deeper worth, pride in the products one makes. As more companies begin to value their image and this country, a trend towards re-shoring addresses the direct creation of U.S. jobs and nationwide dignity.

With rising costs in China, increasing productivity of U.S. workers, supply chain risks and weather unpredictability, the U.S. is becoming progressively valuable in the world of manufacturing. From small start ups to large corporations, more and more companies are cutting ties with China and re-shoring manufacturing back to the U.S., as a promise for better job security, changing consumer attitudes and nationwide pride ensues. Looking at an array of companies already based in the U.S., the skills and knowledge are here and making a major comeback. As we continually realize the value of these skill sets, we will become more equipped to take on the shifting supply chain and protect American culture and industry.

From all of us here at MBF, have a happy and healthy Earth Day!

The New Normal

Since April is Earth Month, we wanted to kick it off by sharing with you a chat we had with Anne Gillespie, a specialist in sustainable textiles. Together, we discussed a subject matter close to our hearts: how can we bring sustainability to the mid market where it can really make an impact? We are very much  in sync with Anne and believe that change will be driven by larger companies. Once one large company creates a sustainable, transparent and profitable format, the rest will follow in suit. It’s all about stimulating peer pressure just like how fast fashion companies Zara and H&M provoked snappier delivery cycles.

photo via Anne Gillespie

With a background working for both MEC and Textile Exchange as well as a co-founder of the Continuum Tradeshow we discussed in our previous post, Trading Spaces, Anne has extensive expertise regarding the supply chain from developing organic fibers to consulting. We had the opportunity to ask Anne her thoughts on a few matters pertaining to what is actually happening in the industry:

MBF: How are larger companies responding to the subject of sustainability?

Anne Gillespie: Big companies are genuinely committed to making things happen. Business has the opportunity to drive change. We are starting to build a strong business sense about sustainability because resources are going to be gone and we need to start looking for new energy sources. Change will be driven by large companies because once it is amplified it will move very quickly. While larger companies may move slower (large ships are harder to turn), there will be lots of depth.

MBF: What do you think are the biggest drivers?

AG: The drivers are coming within the industry itself for example scarcity of resources, oil and cost control. Being called out prevents companies from marketing themselves as sustainable. You have to be transparent.

In our opinion, the apparel industry is in need of new norms to drive an appetite for sustainability and buying sustainable goods. More and more consumers are starting to look at slow and mindful consumption, especially the next generations, Y and Z who are already challenging traditional retail models. Here are some examples of companies that have been implementing these new norms: Patagonia, Icebreaker, Anvil, Nike, C&A, Marks & Spencer, Trigema, A.P.C., Walmart, H&M and Eileen Fischer. While some may be doing more or less than others, we feel it is important that something is being done as these leaders in the industry re-establish today's standards.

Therefore, we would like to highlight five of the latest new business ideas and concepts embracing this change within the fashion industry. What really is being done and by who?

photo via youtube.com

1. H&M Glamour Collection Launching on April 12th
We've reported on both the "Garden Collection" from 2010 as well as the "Conscious Collection" from 2011 as H&M has consistently made an effort to produce sustainable collections annually during the month of April. This year's debut which releases today, the "Exclusive Glamour Collection," is inspired by celebrity red carpet fashion and is comprised of a range of dresses made from organic cotton, hemp and recycled polyester. Not only is it inspired by celebrity fashion but celebrity fashion is inspired by it as Michelle Williams, Amanda Seyfried, Kristin Davis and Viola Davis have all been spotted wearing the eco-conscious collection.

photo via ecouterre.com

2. C.L.A.S.S. and Green Carpet Challenge
Livia Firth, the creative director of eco-age.com is teaming up with Giusy Bettoni of the tradeshow C.L.A.S.S. to establish the first green carpet challenge library. Firth's Green Carpet Challenge featured high end designers dressing such A-listers as Meryl Streep in Lanvin, Viola Davis in Valentino, Michael Fassbender in Giorgio Armani and Kenneth Branagh in Ermenegildo Zegna all in sustainable fabrics. Overall, we have seen a growing interest in celebrities representing green fashion on the red carpet and we are excited to see who wears what next!

photo via inhabitat.com

3. NYU's Sloth Campus Thrift Store
NYU's on campus thrift store, Sloth, looks to challenge traditional retail models with the idea of mindful consumption by slowing down fashion and going beyond buying and selling resale clothing. Run by senior students, the shop embodies the idea of ethnical fashion and socially conscious spending habits that support fair wages, safe working conditions, environmental sustainability and economic transparency. It's about appreciating garments, textiles and excellent design that tell stories and hold memories from generations before, not to mention encourages conscientious spending on ethical, green and recycled products. Sloth not only seeks to enhance an already campus wide community experience but has the opportunity to interact globally with its exchange program and high quality, reasonably priced items. This global aspect distinguishes Sloth from any other thrift or pricey designer resale shop.

photo via ecouterre.com

4. Loomstate's Reversible, Rotatable "321" Garments
Think of clothing as a rubik's cube and you have Loomstate's new multi-functioning collection. With panels of color blocked fabric, an array of personalized color combinations can be reversed, rotated, you name it! According to Rogan Gregory the labels co-founder, this idea of multi-functional clothing is yet another approach to sustainable design. He also states, "We want to reinvent the way women think about their clothes." While the clothes are already made in the U.S.A. from 100% Tencel, this new design concept is the perfect approach to incorporating freedom, creativity and uniqueness into the way we dress.

video via joinless.org

5. JoinLess
The 60's had the peace sign and we have the less-than symbol (<). That's right, JoinLess is a new symbolic movement and the world's first open source brand that reminds us less really is more. Free of any unauthorized trademarking, this anti-brand is owned by no one and free to use by all. This branding technique or technically lack there of, promotes the benefits of living a sustainable lifestyle by slowing down, collaborating, connecting and doing more for others. While corporations have mastered the art of mass production, the (<) mark is anything but a business and instead believes in "grass production". Our society is so obsessed with the thrill of having and buying "stuff" but all that really is is a temporary fix of happiness. Owning, buying and spending has become such a culture obsessed addiction. We need to start focusing on bettering our future and experimenting with new forms of exchange and doing business. When it comes down to it money is just a symbol but it's the idea behind that money that makes it powerful. With a core belief system and a concrete message, as long as the (<) brand sticks to its roots, we suspect it will one day have the power as well to really make a significant impact.

From the red carpet to college campuses, high-end designers and the mid-market, the desire to create and maintain a responsible and sustainable lifestyle is here and its growing. As this awareness and accountability begins to filter through the industry, more and more companies will begin to feel pressured to revise their current strategies and business models. In the end, compulsive buying and spending habits will only get us so far because it's all just useless stuff isn't it? As we shift towards this new norm, we will soon see the power of (<) and how much of a difference it can make.

April MBF Picks

Spring is officially here and summer is on its way (hopefully!)! We are swamped here at MBF, as we’re sure most of you are as well!  Last week we talked about the weather and how it is affecting the industry from the runway to the retail level. This week for our April MBF Picks, we’d like to post some street style photos we’ve snapped from around the city revealing what people are actually wearing. From long and flowy to short and sweet, skirt lengths pair with short jackets in denim, leather or cargo! It’s all about keeping things layered as the sporadic weather reminds us we have to be ready for anything! 

photo via MBF Trend Consulting

                                                                                    

photo via MBF Trend Consulting

photo via MBF Trend Consulting

photo via MBF Trend Consulting

photo via MBF Trend Consulting

photo via MBF Trend Consulting

From all of us here at MBF Trend Consulting, have a Happy Easter and Passover!