Authored by Áslaug Magnúsdóttir and can also be found here: http://is.gd/BC6CPD
This is the fifth in a series of articles on the Business of Fashion basics, and is taken from the business of fashion website. Originally published in 2007, this series is used to educate those interested in going into the business of the fashion industry. NosaFashions claims no copyright to this material and is used strictly for educational purposes.
Today, BoF resumes its longstanding ‘Basics’ series on how to set up a fashion business from scratch, collaborating with Ari Bloom, a NYC based strategic advisor to growth brands. In this instalment, we examine how an informed design and development process can further your chances of commercial success.
LONDON, United Kingdom -- It’s no secret that the fashion industry is driven by design. Creating beautiful, unique products is not just an important component of fashion, it’s the very lifeblood of the sector.
But when we think of design, we often focus on the creative side alone. This is no doubt important. But it’s also critical to consider market feedback that may influence how you present your product. Everything you create produces a reaction, positive or negative. And the most successful business people tirelessly look for these signals, embrace their genuine meaning, and then react. Structured cost analysis, collection planning and smart presentation are also essential.
Here are six things you can do to make your design process more effective — and profitable..
1. Pore over your sales results each season
If you are already selling product, you should have excellent access to very valuable sales data. Use it. Read the reports generated by your store or website and ask your stockists for sales summaries. The information is generally available, you just have to ask for it.
Important metrics to focus on are: unit sales, total volume, sell through percent, net gross margin, net average retail price and returns. A quick note on the all-important sell-through, however. Sell-through is only a function of the success a product achieves related to how you or your buyers purchased it. So, while this is an important measure, it can exclude some important contextual information that should always be considered, as well. A good buy from the same collection can significantly lift sell-throughs.
You should also spend time with your buyers and retail partners to add qualitative colour to the quantitative data you get from the reports. Ask them about specific styles. Why did they or didn’t they work? What might they do differently? What did you miss in your offering?
2. Talk to floor associates and check out the competition
Fashion is not a desk job. Get out there and see the state of the world for yourself. While buyers and company executives will give you good intelligence, the sales associates who work on the front lines can also be valuable in painting a vivid picture of how your product performs on the shop floor.
Initiate these relationships as often as possible and encourage the associates to speak candidly about what is and isn’t working, and what’s missing. As an added bonus, you may be pleasantly surprised by the attention your product gets on the floor once an associate is better acquainted with you.
You should also spend some time observing your peers (also known as competitors). Most customers have a finite amount of money to spend on fashion and it’s important to understand what other brands competing for that same share of wallet are doing and, in particular, which types of products seem to be performing the best.
3. Gather first-hand customer feedback
There is nothing quite as valuable as a direct interaction with your customer. Reports may tell you what consumers bought, but spending quality time with them or at least watching them shop will help you to understand how and why they make purchase decisions.
You’ll also get a better handle on what they chose not to buy. This is a particularly good way to identify styling issues, in addition to fit and quality problems. The most tragic failures occur when a designer creates a beautiful product that’s poorly executed in terms of fit or quality. Without these elements, your hard work will be for naught.
So, if you are lucky enough to be selling product out of your own store, spend as much time as possible on the floor interacting with your customers. And if possible, when visiting your accounts, observe (or work!) the sales floor. Trunk shows are another great way to meet customers directly.
If you have a mailing list, you can consider reaching out directly to you customers for feedback. Posting a feedback link on your website or via social media is another quick and easy way to get more structured thoughts from your customers. You may be surprised how happy your fans will be to help you out. Sending a personal thank you note or offering a discount on the next purchase are both nice touches and good incentives for your customers to make future purchases.
4. Consider costs carefully
Make sure that you are designing and developing a product that can reasonably be produced. While that may sound like an obvious point, many talented designers create beautiful concepts that prove to be too expensive or complicated to produce at scale.
Be sure that every detail of the product is truly creating value for a customer. With a retail markup, on average, of 6 times production cost, every dollar you are adding to the cost of producing a garment will add around $6 to the final retail price.
Your products should have clear cost targets, derived from working backward from final retail pricing. Make sure to build in a realistic margin for yourself that considers not only the pure costs of production, but also other monies that you will have to spend in order to get the product into a selling environment. This includes things like duties, freight, fees, commissions, warehousing, sampling and development costs.
Keep in mind that samples are often one of the single biggest line items in the design process and can swing a seemingly profitable collection into the red.
5. Develop a collection plan
As you think about the overall size and breadth of your collection, you should identify the number of items required to fulfil your vision, but cross reference that with a reasonable assessment of what can fit in a store, on a website or into a retail account’s buy.
There are three fundamental elements to planning a balanced collection and it’s essential to keep these in mind, over the long-term development of your product assortment, as well as in each and every collection you produce. We often think about these as a collection pyramid.
The Base: Every successful fashion company rests upon the success of one or two items which form the foundation of the overall product assortment and a more predictable stream of revenue around which a real business can be built. These products don’t change dramatically from season to season and they become the staples of your product offering. Tory Burch has her Reva ballerina flats, Louis Vuitton has its leather goods and Acne has its denim. Without this kind of solid foundation, it’s difficult to build a successful business.
The Middle: In the middle are the products that you adapt and refresh each season with new colours, fabrics or prints, but the basic silhouettes remain the same. Over time, you may choose to slowly adapt these products and perfect them, but in general you are using tried and tested shapes which have already been proven in the market.
The Top: At the top of your collection are the purely seasonal elements which are more about driving interest and bringing new energy to your product mix. This may be the pieces you show on the runway and which are featured in editorial. From time to time, you may have a huge commercial hit at the top part of your collection, but as it’s generally hard to predict exactly what will strike a chord (or which product your favourite A-list celebrity decides to wear), it can sometimes be hard for a small fashion business to capitalise on the short-term buzz generated by these types of products.
6. Use a stylist – smartly!
Many designers choose to employ the services of a stylist. These can be hired professionals, in-house team members or even a friend or colleague with a good eye. The most important outcome here is that you receive a second opinion on how the collection sits together best and how to present it to buyers or customers. Don’t underestimate the importance of this step, as it can greatly impact your eventual sales.
Ari Bloom has worked with numerous fashion brands as a consultant and as a mentor to the CFDA fashion incubator program. He collaborated with Imran Amed to continue The Business of Fashion Basics series.
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