Disruption, innovation and transformation
What you need to know if you didn’t attend the AAFA Executive Summit
INSIGHT ARTICLE |
Disruption, innovation and transformation were the major themes of the 2016 American Apparel & Fashion Association (AAFA) Executive Summit in March, with significant sessions that truly resonated. Here are three areas of discussion from the summit that struck me as insightful to the fashion industry.
At this year’s AAFA summit the keynote featured the founders of Shoes of Prey, a global, multi-channel retail brand that enables women to design their own shoes online. This innovative business gives the consumer exactly what she wants, custom to her wishes in an attractive, easy-to-use online experience. They are leading the way in how women shop for shoes; customers can shop when they want, day or night, and can develop a unique product that’s reflective of their personal style, all in a fun and creative shopping experience. Why is this important? As fashion businesses compete in the marketplace, they need to look for ways to differentiate their brands and be that disruptor, that standout company that offers something fresh and innovative. Groundbreaking companies like Shoes of Prey offer that extra appeal to consumers by providing a unique experience backed up by a quality product. This is especially appealing to millennials, currently one of fashion’s most important targets, with their distinct buying preferences and need for an engaging relationship with the companies they buy from.
Another interesting session at the summit was “Money matters” where presenters took the concept of the popular TV show “Shark Tank” and reversed it. Rather than entrepreneurs pitching their business concepts to potential partners, private equities and strategic acquirers instead made their cases to a fictitious entrepreneur as to why they should be selected to invest in the business. What potential seller wouldn’t love this opportunity to pick the brains of bidding buyers, right? My takeaway from this session was that there are a variety of scenarios businesses must consider when contemplating the deal. Going the public-company buyer route means a fashion business might be able to leverage industry expertise, back-office infrastructure and the availability of the public equity market to finance growth to the next level. A private-company investor can enable the company to expand its business while remaining entrepreneurial. With a private-equity deal, companies get their desired funding while retaining autonomy and continued control over business operations and future strategy. Given the current seller’s market, companies should consider robust sell-side due diligence to help facilitate enduring and successful transactions and prevent broken deals.
And the last key point? Transformation is essential to growing fashion businesses. Full disclosure: This insight actually came from a session I facilitated, “The store, the Web players, the upstarts,” featuring a panel including luxury apparel online retailer, Moda Operandi, and ethical apparel brand, Zady. The panel reflected on their transformative business journeys.
Moda Operandi allows customers to preorder the latest ready-to-wear fashion months before the items are available anywhere else. The business brings the runway directly to the consumer, providing access to the latest fashions, along with personal stylists and shoppers, in an attractive and dynamic online environment. The experience brings designers and consumers together in a virtual showroom previously accessed only by select fashion buyers. Now, anyone anywhere can access cutting-edge fashion with a personal touch, something consumers are clamoring for. Gone are the days of consumers having to go to a high-end department store for the latest fashion trends and personalized service.
As for Zady, the founder talked about building a business model that shows the world there is a better way. Their mission is dedicated to ethically sourced and sustainable materials. To Zady, process and quality matter and this dedication is not a trend but a new standard. This commitment is especially appealing to millennials who make buying decisions based on their own eco-ethics and community mindfulness.
My takeaway from this session was learning how these companies make their innovative business models and specified missions work. They’re dedicated to providing cutting-edge fashion or ethically sourced clothes, but they also have robust financial strategies in place to ground their operations in solid business models. They have found that balance of purpose and profits, and they’re succeeding at both.
What have we learned?
This summit drove home for me the idea that the consumer is evolving, quickly. For businesses in the fashion industry to keep pace they must challenge their own conventions, look for new paths and disruption in the marketplace, push for innovation in their products and their distribution channels, be attentive to the volatile dealmaking environment and, finally, be agents of change and transformation, to benefit the all-important consumer, as well as their own businesses.
For additional insights on issues affecting the fashion industry, watch and read 8 trends in the fashion and home furnishings sector in 2016. Questions? Contact us.