Business for Fashion published the ten trends that will shape 2017. We will share one trend every week, read the complete article here
Growth in organic materials
2017 is expected to be a year of organic growth. Gone are the days of growth driven by store expansion; next year, we should see brands focusing on like-for-like sales, increasing domestic demand, and growing through value rather than volume. Indeed, the “race for space” is long over. The traditional means of fast growth — geographic, channel, and/or store network expansion — have been exhausted, as those few companies still stuck in the old paradigm are discovering to their cost. Further, a decline in retail space productivity and price increases offset by the use of promotions have also been threatening growth. As a result, we believe that in the next year successful companies will be those that focus more tightly than ever on organic growth, particularly through branding and developing their local clienteles.
There are several steps involved in this journey. To start, fashion players will redouble their focus on branding in order to escape the increasing commoditisation trap. To create value, brands need to be different and maintain clear, strong brand values. At the luxury end, this brand strengthening in 2017 will likely entail a reinvestment in creativity: creating unique products that encapsulate their USP. At the more affordable end of fashion, companies can be expected to emphasise their points of distinction by engaging more closely with the customer. Strong brands are also best placed to fight the promotion spiral that leads to a race to the bottom given the perceived negative correlation between the strength of the brand and its share of discounted sales.
Deepening relationships with local clienteles also offer an effective way to deal with regional headwinds and — especially for luxury brands — to reduce dependency on tourism, which is susceptible to economic and geopolitical volatility. Cultivating a local clientele can help global fashion players deal with volatility, as they can intensify their focus on one geography during a prosperous time, and shift to another when the first hits a low.
Technology plays a key role in activating brands and clientele. By exploiting developments in upstream technology, particularly predictive analytics, fashion companies can gather and analyse more data to tailor their branding strategy. More practically, this enables them to focus on creating products for their local clienteles, including limited-edition and specialised products, with reduced risk of overstock and markdowns.