Digital innovation that we really need

Digitization is a trend that we have faced for the past few years. Everywhere we look, we are confronted with digitalization and, in a way, rightfully so. The world wants digitalization in extreme forms, so why not give the people what they want?  For some industries, this trend is easily applicable to all aspects of the industry. In the case of the fashion industry, this seems a bit trickier. If you google digital innovation, you get bombarded with articles about brands getting ready to enter the metaverse. You might then argue, "there you have your digital innovation, right!" But first, let's go back a few steps and look at the pain points of the current industry and find an appropriate, digital solution for them. Because let's face it, putting sweet sneakers on an avatar in a virtual world will not solve any real-world industry issues.   

The current situation  

To know where innovation is needed, it is first essential to paint a clear picture of the current situation. Apart from the widely known social trends such as plant-based eating, trans-cycling, and sustainability in our buying behavior and logistics, there is also a fundamental and noticeable shift in consumers and their position of power. "The customer is king," a statement we all know, and I bet we've all abused at one point or another. I know I have when I order a pizza, and it doesn't arrive in 30 minutes but 32 minutes. I mean, come on, free pizza! In the fashion industry, this is no different. You can read more about this in the following blog about how the classic wholesale strategy is dying.

Back to the pizza statement, look at the swift delivery times the food industry has. As Arjan van der Heijden, Operations Manager at JustBrands, also states in the most recently given Webinar on the Future of Replenishment for Retailers, "If my pizza can be there in 30 minutes, then why not my jacket and jeans?" Of course, industry experts understand that this requires an entirely new wholesale structure that we as an industry are not yet ready for, but the consumer may not understand this. 

In addition to the power shift of the consumer, retail, in general, has also changed a lot. In the past, there were only offline shopping possibilities. Nowadays, also online and through third parties, also known as multi-channeling. Each channel has its type of consumer, and, as we can read in the blog mentioned above, the consumer determines the chain back to the manufacturer. So, is digital innovation in a virtual world what we need? I believe we need to find it closer to the real world.   

Sounds from the market  

During the webinar on the future of replenishment for retailers, there were several questions for viewers to vote on. One of the questions asked was: "What change in the market has created the biggest impact for organizations?" With 75% of the votes, the answer to this was multi-channeling. Customer desires and questions come from different angles, and all have a specific way of processing.

"The relationship between pre-order and re-order has shifted that on the one hand more power lies with the supplier because they have the stocks, but on the other hand the power also lies with the retailer because if they don't sell the stocks then you as a supplier will have a problem. Ultimately I think the power has shifted much more to the consumer." Thus Arjan. 

What is interesting about this statement is that it becomes clear that retailers and suppliers need each other. There should be no shift but a balance between the two. "Trust is key."  

When asked what the biggest challenge is in a collaboration with retailers or brands, two answers came out of the poll: IT capacity and wanting to hold on to old ways of working. Arjan van der Heijden joined the table discussion on behalf of JustBrands. JustBrands is known for its progressive vision and delivery of chain cooperation, which can also be largely attributed to the rise of IT within the industry. "You have to give things a chance, keep communicating and understand that there is a joint responsibility." As soon as this can be substantiated numerically with the help of IT, of course, it only gets easier.  

To base a working method on trust is thrilling. It is not tangible, so you must let go of some control. You often see that when there is a VMI model (Vendor Managed Inventory), the feeling arises that you have been handed over to "the mighty and powerful supplier." But what is evident from the successes of JustBrands is that that is certainly not the case. The bottom line is that you have a common goal as a retailer and supplier. You want to make your square meters successful! 

Being able to substantiate successes numerically  

A prominent shortcoming within fashion is that each brand has its unique way of dealing with its data. Emotional choices often drive it. A retailer can label a particular product as a best seller purely based on emotion. With the advance of IT, suppliers can support these emotional choices with facts and figures. Either way, both outcomes are beneficial. Because every brand has its unique workflow and there is no standard within the industry to work towards, it takes time to invest in optimizing the value chain. And time is money! With this in mind, we often see that brands do not dare to start projects that require IT because, assumingly it will take a lot of time.

Chainbalance has been working with JustBrands for some time now and has taken this piece of IT off their hands. As specialists in data processing, Chainbalance ensures that replenishment choices are no longer made solely on emotional grounds. But, based on sales and on-hand data, figures can be provided to substantiate why certain stores are or are not replenished for particular items. What I wonder is, why would you use your own, expensive IT capacity to do this when there are innovative, advanced software solutions that can do this for you?  

No need to reinvent the wheel.  

Brands don't need to reinvent the wheel. If something can be done better or is not within the capabilities of a brand to improve, they need not disregard a solution immediately. God forbid, if my dishwasher breaks, I have enough self-knowledge to know that I won't get it fixed by tinkering with it myself. At that point, I have two options. Either I'll wash everything by hand or call someone who specializes in dishwasher repair. And especially when it comes to applying a piece of specialization in your workflow, which makes for an honest, more sustainable, transparent chain collaboration. Then the minimal time investment suddenly doesn't seem like a big hurdle anymore.   

We should always revisit the common goal instead of retailers feeling ridiculed when suppliers face retailers with the numbers—making your square meters successful! As a retailer, items that fly across the counter make you happy. Therefore, it is relevant to know which items are successful and which are not in certain stores so you can fill your store with the good stuff. And for a supplier, it is also essential to know this so that items are not blindly replenished and then taken back to the DC because they are not sold. Sales opportunities exist for both parties, but for this, you need each other and watertight data, clear communication, and trust.  

In short, suppliers and retailers need to be in balance. This requires substantiation of both emotional and numerical nature. This numerical substantiation is much closer to home than some brands think. Specialized parties remove the fear of pressure on IT capacity and give you back a tremendous amount of valuable data that impacts the overall value chain. 

Make your square meters successful—fewer logistics costs, higher sales, and nourishing the entire chain. With a straightforward solution and trust, you will find that you equalize the chain cooperation to make it transparent and more successful. That seems like an innovation that everyone wants to get on board with.