A MODEL FOR

CHANGE

Part 1:

The need for

transformation
An analysis of the fashion and apparel industrys evolutions

LECTRA.COM/AMODELFORCHANGE
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a model for change

The pace of fashion has never been faster and neither has the pace of change.
Fast fashion, social media and mobile technologies have given consumers
the power of instantaneous sharing and, some would say, unreasonable
expectations: they can buy whatever they want without restrictions of time,
place, and in many cases, price. The consumer is unrelenting in her demands
and increasingly sophisticated; high quality, low prices and constant newness
are what interest her today. The market is increasingly saturated and
consumers increasingly sophisticated, which makes tried and true fashion
strategies such as geographic expansion and internationalization more
complex than in the past. The fashion industry our industry and the way
we work has been forever changed.
No job role or process has been spared. Design, development and sourcing
teams especially have been impacted and are often under pressure to do
more with less. There is however a limit as to how much a company can cut
costs and push for more speed. Fashion and apparel companies have been
forced to look inward and reevaluate how they bring products to market.
Updating technologies is a common place to start, but the real gains to be
had lay in something more elusive: process change across the organization.
This paper is based on interviews with leading industry professionals.
It highlights the major shifts that have led fashion to its current state and
how companies are responding to the new fashion landscape, suggesting
a model for change.

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Who is in the drivers seat? The consumer!

Today, the consumer has much more control than in

Social and economic changes, like internet access and

the past. This means the industry can no longer define

growing prosperity, spurred the growth of new fashion

what to make and sell without consumer input, but

markets in emerging countries that had typically been

rather must listen to the consumer and cater to her.

only supplier regions3, creating new opportunities to

Some companies are going so far as to completely

target new consumers and expand business. Supply

alter their business models to be entirely demand-

chains also underwent enormous transformation

driven. We allow order production to be completely

as tariffs and quotas disappeared and ways to

dictated by [consumer] wishes, and the vendors and

communicate faster and in more detail were developed.

factories simply integrate their resources to meet

This has had a major impact on how fashion is

the customized needs of all consumers, says Zhang

designed, developed, produced and distributed,

Daili, General Director of Red Collar, a high end

with repercussions from sourcing to the consumer

tailored suits manufacturer based in Qingdao, China .

experience. In an era when information is so easy to

This represents a dramatic shift in the value chain,

get, people naturally demand more; such change is

transferring power from brands at the top to their

inevitable, says Daili4. And these changes will only

consumers at the bottom.

amplify in the future.

Until recently, fashion was essentially defined by major

brands in the West and then adopted by the rest of
the world, who looked to places like Paris and New
York for inspiration. Collections appeared twice a year
and product development followed an almost purely
linear process: designs were created based on trends
scouted in major fashion capitals, then passed on to
product developers for industrialization, transferred
to production and eventually distributed in a shop or
department store. After World War II, choices began
to multiply as economic prosperity boomed and
innovations in supply chain and distribution systems
made it easier to get products into consumers hands.
Fashion evolved from something for a privileged few
to prt--porter for the masses2.

We allow order production

to be completely dictated by
[consumer] wishes, and the
vendors and factories simply
integrate their resources to
meet the customized needs
of all consumers
Zhang Daili
General Director, Red Collar

(Daili, 2014) 2 (Lewis 2010) 3 (Gereffi 2002) 4 (Daili, 2014)

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Globalization
Historically, local brands dominate local markets,
but this is beginning to change, as foreign brands
start to appear in the list of top grossing sales in
an increasing number of local markets. This is
in large part due to the strategies of geographic
expansion and international growth that brands

The increasingly global nature

of fashion forces retailers to
bring a localized response to
individual markets

and retailers, especially North American and

Romain Millet

European companies, have relied on for years.

General Director, Cache Cache

Romain Millet, General Director of French
company Cache Cache, notes that the increasingly
global nature of fashion forces retailers to bring
a localized response to individual markets5. He
points out the crucial element of the size and fit of
clothing, which is a constant challenge for fashion
brands. While local populations tend to have similar
morphologies, increased internationalization means
that populations are more heterogeneous than in
the past. More people are traveling these days as
well, and shopping when they travel, another way
that new morphologies are being introduced into
local markets.
Ensuring consistency and quality is crucial at a
time when customers do not hesitate to voice their
opinions on the Internet. Before, when a product
was returned, no one else knew about it. Now a lot
more people can see it through Twitter, Facebook
and other sites, points out Roger Lee, CEO of TAL
Apparel Limited, a Hong Kong apparel company that
manufactures shirts and trousers for dozens
of companies6.

(Millet 2014) 6 (Lee 2014)

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China
If one region in the world has the power and mass

Urbanization in the Chinese rural interior is

to force change upon the industry, it is China. And

driving the growth of middle and upper classes,

China has already done so in more ways than one.

forcing brands and retailers to shift their focus

from traditional Tier 1 and 2 cities to inland

China is by far both the number one producer and

agglomerations. From 2010 to 2015, per capita

consumer of fashion, accounting for about 50% of

consumption in apparel will increase by 75% in

the worlds apparel production in units and 38%

China, which is expected to spend around $200 /

of global apparel exports, according to the World

capita on garments in 2015, compared with around

Trade Organization, although 75% of this is for

$700 for the US and Europe8.

domestic consumption. Even so, Chinas production

for export is still among the highest in the world,
vying with India for global leader. Lectra research
shows that small producers in China still outsize

From 2010 to 2015, per capita

consumption in apparel will
increase by 75% in China

those found in other producer regions such as

Brazil.
With wages rising, the population urbanizing,
Millennials saving less than their parents and a
consumer mindset that continues to mature, Chinas
fashion market is ripe for the picking, although

For Chairman of Sinoer Mens Wears Yujian

competition will be fierce. The future of the world

Chen, The main changes in Chinas garment

will be profoundly shaped by Chinas rush toward

industry are a clear trend toward personalization,

consumerism, Karl Gerth, an expert on Chinese

especially in the past three years, and changes in

consumption at the University of California, San

distribution channels. The traditional single shop is

Diego, told The Economist .

being replaced by a multi-channel sales model.9

Although Chinese consumers hold foreign brands

in high esteem, they do not yet have much sense
of brand loyalty or sophistication and will switch
from one to another on a whim10. With many brands
crowding the marketplace in an effort to satisfy
the desire for personalized fashion, bringing new
brands to China is no easy feat. In addition, the
new middle class is directly digital and at ease
shopping online11, as the rise to success of Alibaba,
Chinas largest online marketplace, illustrates12.

(The Economist 2014) 8 (TechnoPak) 9 (Chen, 2014)

10

(The Economist 2014)

11

(The Economist 2014)

12

(Gelles 2014)

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China (cont)
Chinas long history as a supplier to Western brands
means that its manufacturers have acquired a great
deal of infrastructure and knowledge by working
closely with some of the worlds foremost companies.
In other words, they have learned from the best who
led the initial change. Armed with all that know-how,
a growing number of Chinese manufacturers are
now turning their efforts toward developing an offer
for the domestic market and some are even setting
their sights abroad. Lectra research shows that of
the hundreds of Original equipment manufacturers
(OEMs) it works with in China, roughly 60% have
launched their own brands.
The next step will be the development and maturation
of a fashion aesthetic unique to China, rather than
simply copied from Europe: Once they have a
bit of money to play with, well see more Chinese
companies investing in research and development,
as we see in the West, they will eventually come
to see true innovation as an important part of
their business, Jason Spenser, Millward Brown
Shanghais managing director, told Womens Wear
Daily13. The fact that some companies have started
hiring talent, such as designers with experience at
European fashion houses, from Europe is evidence
that this is already happening14.

13

(Hall 2014)

14

(Source : Lectra)

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Impact on fashion and apparel players

Changing consumer preferences have spurred changes, but the implications on the industry vary.

Brands and Retailers:

What does this mean anymore?
Brands, which have traditionally gone through
retailers who sell on their behalf, have developed
retail operations for two reasons: to capture
a higher percentage of the final sale price and
achieve complete control over the presentation,
distribution and final price of their goods. A brands
ability to control its reputation and exclusivity are
key, especially in the case of luxury. Many retailers
seeking to capture higher margins and offer
exclusive products that draw customers launched
their own private brands long ago. Today, some of
these brands Joe Fresh is a great example are
starting to be businesses in their own right.
As consumers seek fashion that they feel reflects
their individuality, theres a growing market
for smaller brands that eschew traditional
mass-marketing. Mega-brands are going to be
challenged, but also designer brands and for the
same reasons. For the younger generation, a
designer brand does not mean anything and it will
mean less and less in the future, explains
Robin Lewis, CEO and Editorial Director of
The Robin Report.15
As competition in the brand/retail market

retail and design, at home. Other companies those

that had outsourced creative elements crucial to
brand definition and product identity such as style
development are bringing these back as part of
a strategy to offer unique, well fitting products.
Their European peers never outsourced design or
development, as they recognized that keeping these
elements in-house gives them powerful control
over added-value activities that allow them to focus
on developing product as a lever for growth.
The outsourcing of pattern development,
sampling, industrialization and production by
brands and retailers has been an opportunity for
manufacturers, but not one without its challenges.
The new challenge for manufacturers is staying
close to their customers but keeping their costs
competitive. They have to develop greater job
flexibility and occupy niches with greater added
value that, because the skills are scarce, enable
them to maintain a competitive edge, says Stefano
Antonioni, Operation Director for AEFFE.16
This also means that production skills and
infrastructure have become rare in retail-centric
markets like the US, and that bringing back
manufacturing is not possible: rather, it must
be rebuilt.

intensifies, some companies, especially in the US,

have decided to outsource as many activities as
possible, keeping only those linked to consumer
understanding and engagement, such as marketing,

15

(Lewis, 2014)

16

(Antonioni, 2014)

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Manufacturers

Supplier Partnerships

Manufacturers are looking for ways to cut costs and

CSR coupled with time and cost pressures have forced

increase efficiency. Many savvy Chinese manufacturers,

Western companies to re-evaluate how and where

who for years have been the production workhorse

they source. Most agree that the lowest price is no

of American and European fashion companies, have

longer necessarily the best deal; many companies favor

begun to develop relationships with regions like Vietnam

working with fewer suppliers that they can depend on

and Bangladesh, outsourcing the most basic activities

to deliver the right quality, on time and consistently.

in order to take advantage of lower wages and less

A growing number of US and European companies

demanding workers, so they can focus on value-added,

are adding near-shore suppliers to their portfolios for

higher margin work.

quicker response items and those that require a higher

17

Manufacturers across the world have also realized

that selling directly to the end consumer is the most
powerful way to protect revenue, leading them to evolve
their business models and create their own physical and

level of quality control. In Europe, for example, working

with a Tunisian or Portuguese supplier allows a quicker
turnaround time and the capacity to ride trends faster,
as they develop.

online stores. While OEMs and ODMs (Original design

manufacturers) are B-to-B companies, original brand
manufacturers (OBMs) sell directly to consumers.
This is a riskier business model with potentially higher
returns that demands more resources be allocated to
brand development and upstream lifecycle processes.
Developing the creative and brand side of business
is more demanding and requires a strong expertise-

Building in quality is essential

to delivering the new value that
consumers are seeking

centric platform, as well as mature design and

development process knowledge. Sinoer Mens Wears
Chen sums it up when he says, To enhance operational
efficiency and provide the response capacity needed

Given that most brands and retailers have chosen

to respond quickly to customers requires a well-

not to manufacture their own products, the quality

structured organization. This change is a must.

of the supplier relationship is now as important as

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speed and price, as manufacturers transition to

becoming full-fledged strategic partners. Alan Wragg,
Category Technical Director at Tesco says, Trust and
partnerships are becoming very important. It used to be
very transactional, people used to buy for one season
and change suppliers for the following one. Those days
are gone, as we all know just how long it takes to get a
supplier on board.19 Building in quality is essential to
delivering the new value that consumers are seeking.
Romain Millet of Cache Cache echoes his sentiment,
pointing to the importance of long term relationships
that can guarantee quality and response time.20

17

(Source: Lectra)

18

(Chen, 2014)

19

(Wragg 2014)

20

(Millet 2014)

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Fashion for everyone right now

Fast fashion has been a buzzword since Zara turned
the apparel industry on its head with its time-tomarket-slashing vertically integrated retail model,
which allowed them to drastically increase the number

grading, marker making, garment cutting and simple

industrialization tasks. Automating manual processes
certainly confers an advantage, but to really compete
today, basic technology is just not enough. Change and
agility need to accompany new technology.

of deliveries and challenged the idea of seasons and

For brands and retailers, managing complexity

collections. To achieve all this, they adopted a new way

implies reducing the product development cycle and

of working that draws heavily on lean methodology

introducing collaboration across the global process.

honed in the automotive industry. A combination of

Lean development that draws on iterative methods

automation and increased cross-functional

like digital prototyping gives companies the agility they

collaboration allowed these companies to create a

need to adapt to changes in the market and test new

consumer demand for novelty and value, while

products before they start to incur real production

responding to quality needs.

costs. Collaboration between design and development

21

We only have to see how often customers browse

in-store for new items to see the change in consumer
behavior: the average Zara customer visits a store
17 times a year, versus 4 times for a traditional
store.22 As TAL Apparel Limiteds Lee points out, the

departments breaks the silo mentality that has

reigned for so long in the fashion and apparel industry,
eliminating bottle- necks that resulted from outdated
linear processes and increasing decision making power
earlier on in product development.

collections are smaller, but there are more of them,

For established fashion companies, especially retailers

so more products. This means more sizes, colors,

and brands, adopting change can be a daunting

and variations to manage. Multiply that by the many

prospect. As TAL Apparel Limiteds Lee, points out,

geographic regions where a company is present, and

many companies have been around for 30 or 40 years,

the complexity increases further, with the addition of

before advanced technology was even necessary.

more diverse morphologies and varying local style

Many have in-house systems patched together and see

preferences. This diversity represents an enormous

transformation as an expensive, complex challenge.

increase in complexity in the collection development

He laments the fact that many companies dont even

cycle for fashion and apparel companies, which

know how many units they have in stores down to

demands a bold change in tactics to be efficient and

color and size24. While this kind of situation would be

remain competitive.

unthinkable in the automotive or technology industries,

23

So whether a company intends to play in the fast

fashion field or not, these players have raised the bar

fashion is still relatively immature when it comes to

technology adoption.

for the entire industry, changing the price to value ratio

for good.

A new way of working is needed

To manage the complexity that increased seasons and
multi-channel distribution imply, fashion companies
have started looking for ways to improve their ways of
working. Manufacturers in countries like Brazil and
China have been some of the most ardent adopters of
basic technologies such as pattern making,

21

(de la Cruz Iglesias 2009)

22

Idem

23

(Lee 2014)

24

(Lee 2014)

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Conclusion
The fashion industry is expected to change as much

The connected consumer is driving fashion to a

in the next ten years as it has in its entire 150-year

point where many companies are struggling to keep

history. As AEFFEs Antonioni describes it,

up. They are unable to adapt to faster cycle of

Customers are ever more demanding and want

collections that some say is making the notion of

extremely rapid service. The market is turbulent

season a moot point. And the phenomenon is not

and volatile, underpinned by increasingly

restricted to the United States and Europe;

unpredictable demand. At the same time, the

developing countries, notably Brazil and China are

appearance of rapidly evolving technology in the

also undergoing major change.

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consumer sector has thrown the manual and

inefficient ways of working that still pervade the
fashion industry into sharp relief: design,
development and production have largely relied on
the same, often manual, methods despite all the

Today, those companies that realize the need to

reexamine their tools and reinvent inefficient ways
of working are those that will successfully navigate
the complexity of the new consumer landscape.

advances happening in the world outside of fashion

and apparel.

THE NEXT STEP:

ACCEPTING CHANGE
Given all this, fashion and apparel companies must
find ways to adapt their way of working in order
to keep up with an ever-changing consumer and
expanding markets.
Change is the buzzword and those companies that
manage to make it a part of their daily operations
have a better chance of succeeding. But change is
difficult and exhausting.
So how can companies know what changes to
make and how to implement them in a positive and
sustainable way?
What are the new best practices in fashion?
Find out in part 2 of the e-book, available soon.

25

(Ziv 2013)

26

(Antonioni, 2014)

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WHY LECTRA?
With 40 years experience in the fashion industry,

goals and applies technology as needed. We guide

Lectra is in a unique position to support fashion

clients through an analysis process to then choose

and apparel companies in the numerous challenges

and implement the right technology and training

they face. Our fashion-specific technology unites

program. With worldwide support coming from

solutions that take an end-to-end approach to

5 international call centers and real-time remote

apparel development, covering fashion and textile

assistance, we provide our customers knowledge

design to product development to collection

and tools to get up and running to achieve their

management to production. Lectras experience

goals such as time to market and cost reduction,

with a significant customer base composed of

improvements in quality and business development.

the worlds most respected fashion companies

has fueled our ambitious and rigorous R & D
development. Our solutions are driven by real
client needs.

Beyond supporting and impulsing change, Lectra

also helps ensure the change is sustainable
and that technology reaps long-term benefits.
Recognizing that the human element is the key,

But technology is inherently less effective without

Lectra experts help provide the smooth transition

the know-how to leverage it. Lectra experts come

needed to meet goals.

from all facets of the industry and cultures of the

world and therefore bring a novel perspective to

Please contact Lectra today to find out how we can

problem solving. Lectra helps identify business

support your change initiative.

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