Part 7: Fashion Business in Today’s World Chapter 25 The Latest Fashion Business Trends

Objectives Discuss the changing consumer market Explain niche specialization marketing Describe trends in retail formats Discuss the popularity and types of nonstore retailing Explain the current survival business strategies Summarize how technology is leading to customized goods

Satisfying a Changing Consumer Market Almost all consumers are: Price-conscious Value-driven Today’s consumer is wiser; much more savvy at recognizing value With less time to browse, consumers want convenient, quick, one- stop shopping

Cross-shopping Combining purchases from both ends of the price scale Studies have determined that quality can be similar in less-expensive and expensive items Customers expressing a more individual style Sale of sportswear is increasing

The Importance of Demographics Highest spending power today is the mature market (over 50) and children influencing parents to spend Mature and ethnic customers are fastest growing markets in the U.S.

What the Mature Consumer Wants Simple, lasting style Functional fashion Easy-to-wear, in-stock High-quality, fair prices Guarantees, returns Extra services Clear signage Pleasant, safe shopping Real-life ads and models

Niche Marketing Micro-segmentation: dividing total market into many narrow target markets; can be good for profits Easier to personalize customer relations and products Companies can operate with less stock and more inventory turnover

Niche Manufacturing Requirements: Clear vision of plan to pursue Knowledge of production and marketing capabilities Untapped resources Willingness to take risks Employee creativity Must collect information through database marketing Trends are analyzed using data mining

Trends in Retail Formats Industry is saturated with more merchandise supply than demand Trends that will continue Small niche retailing National discount mass merchandisers offering value retailing Lifestyle centers Nonstore formats

Discount Retailing Very competitive Low margins Broad assortments Size leads to buying clout Buyers get rebates, promotions, and additional discounts Category management helps by dividing product groups into business units within a larger enterprise

Nonstore Retailing Consumer-direct sales: Direct mail catalogs TV retail sales Online commerce Advantage: Lowers inventory requirements for stores Disadvantage: Consumers can’t see, touch, and try on merchandise; more returns

Reasons for Growth in Home Shopping Convenience and comfort Anonymity Time saving Improved sales presentation Easy payment, ordering, and delivery Niche marketing Older, affluent base I use my time for things other than shopping

Direct Mail Covers a large market with low overhead Niche catalogs can focus on certain sizes, lifestyles, fashion levels, or age groups Must be very customer responsive to succeed

TV Home Shopping Consumers watch for live entertainment, information, and educational value Gives instant feedback, builds brand names, increases customer base Can also be interactive TV

Online and Multi-Channel Retailing Selling merchandise to consumers using personal computers Also called electronic retailing Offers immediate choices through databases Reduces paper and postage of mailed catalogs Internet shoppers can browse, read product reviews, and “try on” clothes using virtual model features. Multi-channel: retailer uses several selling channels (store, catalog, Web)

Survival Business Strategies Restructuring: Involves examining a business to see what changes can make it better, reallocating resources and employees, and re-charting its course. Strategies may include making the company bigger, smaller, more efficient, specialized, global, national, etc.

Horizontal Restructuring Consolidation Consolidation within industries or companies Consolidation through Acquisitions Takeovers Merging two companies Downsizing Liquidation Reasons to MERGE Market share Prestige Research Eliminate competition Open markets Customer base Technology Obtain assets Gain expertise Expand line

Vertical Restructuring Also considered consolidation Retailer/supplier lines are blurred Middle layer of supply chain eliminated Examples include: Factory outlets Retail private labels

Supply Chain Collaboration Retailers and vendors use EDI systems to share data about POS, forecasts, inventory, and logistics Advantages of supply chain collaboration Speeds up the product cycle Retailers can respond more quickly to consumer demand Increases ROI Builds stronger businesses

Employee Recruitment and Training Better training of personnel essential to provide required service that increases profits Employees must be taught to Deal with change Deal with customers Grasp financial matters Communicate effectively Provide better service

Customization Through Technology Supply chain collaboration partnerships Web-based electronic data interchange (EDI) systems Wireless transmission of POS information Visualized data displays 3-D body scanning Interactive design stations Direct shipment

Do You Know... What do you see as possible future changes in the consumer market? What are some of the advantages and disadvantages of the various forms of nonstore retailing?