Steven Sinofsy looks at the collapsing world of retail and sees disruption’s fingerprints everywhere. It’s all true as far as it goes. But perhaps, the proximate cause is something more specific.
Macy’s, JC Penny, Nordstrom, and other retailers are vertically integrated operations. They have benefitted (and are now tied up by) supply chains that extend from factories in Asia (or wherever) to their stores in New York City (or wherever), including extremely complex logistics, transport, finance, partnerships, and production. They rely on economies of scale and a predictable market, and a timeframe of months to get ideas to market. However, in the new economy we have careened into — the postnormal — things work differently.
But — as Sinofsky’s graphs illustrate — the deepest impact of such an economic shift are not immediate, but cumulative. The problems inherent in their complexity make it difficult for them to compete with more agile competitors, such as the niche of ‘fast fashion’. When new fashion trends start to emerge, smaller, more focused and nimble fashion brands can get new products to market in weeks, not months (see Fast Fashion Has Completely Disrupted Apparel Retail).
This fast fashion trend is upsetting the industry so broadly that the seasonal fashion circuit is being knocked off its axis. For example, Tom Ford cancelled this year’s New York show and will adopt a ‘see-now-buy-now’ approach in September. Burberry’s moved to two ‘seasonless’ shows, and its collections will be immediately available.
As the fashion/retail world spins into a real-time mode, many of the established feedback loops fail, and the retailers miss opportunities or pull huge gaffes. The innovators have sidestepped building the broad and deep vertical integrations, and have worked to build lean, fast, and agile networks, so they can get ideas into stores at light speed. So, the fashions shown in the spring shows are knocked off and are in the stores of fast fashion upstarts in June, while the old and slow retailers don’t get them until September.
So this is specifically a disruption caused by the incumbents inability to get up to speed in a real-time economy.