Dhaka, Tuesday, 24 May 2022

Brands self-disrupt to meet consumer needs

Brands self-disrupt to meet consumer needs

Apparel Desk: In order to stay relevant among young consumers, traditional brands are disrupting their own offerings, and business models. The latest Business of Fashion–McKinsey State of Fashion Survey highlights, self-disruption as one of the top 10 trends for the fashion industry to watch out for in 2019.

Two key forces drive this self-disruption: preference of younger consumers’ for novelty and advancements in digital technology and social media. According to a McKinsey survey, younger consumers are willing to set themselves apart through brands and follow with upcoming brands. Social media allows these challenger brands to disrupt the marketplace.

The disruption by challenger brands is characterised by rapid growth, social-media fluency, and e-commerce-focused distribution. Clothing brand Reformation, for example, has 1.1 million Instagram followers and makes almost 80 per cent of sales online. It pushes its green credentials and has a roster of celebrity endorsers, including Selena Gomez, Emily Ratajkowski, and Rihanna. The disruptor brand I.AM.GIA has a similar profile, with more than 600,000 Instagram followers and a strong celebrity following. Both are growing sales at high-double-digit rates.

Brands adopt levers to self-disrupt

Established brands acknowledge that challenger brands are often more nimble and effective at reaching young audiences. Inresponse, the former are now turning to a series of levers to “self-disrupt”. One of these primary levers is brand makeovers which includes overhauling their approach to create an impression of having their finger on the pulse by refreshing their image. Burberry, for example, developed a new logo and monogram under Riccardo Tisci.

Heritage brands are turning to streetwear to create a cool image. In 2018, Louis Vuitton appointed Virgil Abloh, known for his disruptive streetwear brand Off-White, as its artistic director. This tendency to collaborate and flex a brand’s identity has now reached critical mass, and is expected to persist in future also.

Revamping business models

Numerous established brands are revamping their business models to reflect these evolutions. For instance, some are imitating the “drop” approach commonly used by streetwear labels to release smaller and more frequent collections that create rarity value and elevate anticipation.

Established luxury brands are also increasingly embracing digital channels as a primary—at times, exclusive—route to market. Following early disruptors Warby Parker and Everlane, Comme des Garçons launched its first direct-to-consumer-only brand in 2018 to expand its customer base. We expect more established brands to follow suit.

Launching accelerators and incubators

Established brands are also embracing disruption by launching accelerators and incubators to test new approaches in a more controlled environment. These are more flexible and less risky than M&A, enabling experimentation and offering the opportunity to accelerate business-model innovation when necessary. These initiatives help major players support innovators and absorb or adapt some of their most pioneering practices and ideas. Others are creating dedicated internal units to streamline the innovation process.

Brands will continue to innovate, leveraging their scale to fast-track capability building through M&A, accelerators, and innovation labs.

The latter will help companies remain at the forefront of business-model innovation and respond to new fashion trends more quickly. It will be increasingly important to adopt agile ways of working and depart from the traditional operating model. Players will also work to streamline supply chains, enabling faster time to market.

In an increasingly fickle fashion environment, market leaders will need to take more risks to stay ahead. Fashion brands must learn to embrace a more flexible approach of business in areas from commercial models to the supply chain and distribution.