Toolio’s second prediction about the retail landscape post Covid-19 looks at the evolution of product assortments, which will prioritize more focused collections, targeted product launches and fewer markdowns. You can see the rest of our post-Covid predictions here.
Just as retailers were recovering from their post-financial crisis markdown woes, the current pandemic is posing a risk of another wave of inventory write-offs. Reduced customer demand and discretionary income, store closures and last minute order cancellations have left many brands sitting on excessive stale inventory, which they have to aggressively markdown, liquidate through off-price channels or risk pushing out to future seasons. As grim as the current situation feels, it's an opportunity for fashion brands to reset and refocus on how to effectively manage product assortments moving forward.
Post Covid-19, the winning brands and retailers will break out of the vicious markdown cycle with a larger base of timeless products complemented with data-driven, carefully planned and timely introduced collections.
Increased Adoption of Timeless Products
While the fashion-forward seasonal products are typically the traffic drivers, brands make most of their profits from seasonless products in their permanent collections. Post Covid-19, brands will leverage core items to a greater extent. They will release them in seasonal colors and materials, and promote them to remind customers of the brand's iconic shapes and silhouettes. Most importantly they will analyze, evaluate and grow the core collection’s percentage penetration to total products. While trends and newness will always have a place, brands will be focused on creating seasonal products that could potentially be moved to core collections to increase gross margins and the bottom line.
Delivery Calendar Aligned with Customers’ Expectations
Building on a strong foundation of key items, brands will layer on seasonal collections that are delivered in a timely fashion and introduced through frequent product launches. For far too long, the fashion industry has been on a delivery calendar that is out of sync with actual seasons. “Sweaters ship to stores in June, when it's warm, and bathing suits ship to stores in January, when it's cold,” noted a Business of Fashion article on the evolving fashion calendar. As the influence of department stores weakens, brands will have more autonomy and flexibility to decide when to introduce new products and will better align product launches with their customers’ expectations.
Focused and More Frequent Product Collections
Big seasonal collection launches will be replaced by frequent and smaller product group introductions. Brands will take a page from the playbooks of streetwear companies like Supreme and Fear of God, and will create product launches that will resemble the drop model. However, the goal for brands will not be a sense of urgency and scarcity. Instead, brands will use these focused product launches to serve three critical purposes: staying relevant to the customer through curated and timely product storytelling, reducing inventory risks for new ideas and quickly identifying winning products that could move into core collections.
This shift from traditional collections to a product assortment with a foundation of seasonless products complemented by frequent product introductions will create new operational complexities that brands will have to overcome. Brands will need a systematic way to monitor and replenish their seasonless products. It will be critical to periodically study the items nearing their end of life, and replace them with the winners from the seasonal products. In addition, frequent product launches will require a flexible assortment planning software that centralizes assortment plans within the organization and facilitates cross department collaboration.
Lastly, it will be critical to have a system that quickly and automatically analyzes past performance, identifies the success factors and informs the future product launches. To get these right, retailers will require close coordination between their different teams and modern technologies to make it possible.
Our next prediction talks about how retailers will optimize their supply chains. You can see all of our post-Covid retail predictions here.
Looking for more?
Toolio is building the technology and know-how to manage this transformation. If you want to learn more about how technology can help you navigate increasing planning complexities, request a demo of Toolio.