Speed-to-market: How luxury brands are picking up the pace of production cycles

Labels like Gucci, Ralph Lauren, Coach, Helmut Lang, Burberry and Rag & Bone — all brands that could once call the shots around trends and fashion cycles — are adopting new strategies focused on increased flexibility and faster-paced production windows, in order to adapt to increasing competition and an in-control customer.

“Speed is everything right now,” said Karin Tracy, the head of fashion, luxury and beauty industries at Facebook. “For luxury brands, whoever is the fastest right now will have competitive advantage, full stop. They need to step out of the comfort zone of perfection, think about how to move fast and build things to let them do so.”

Fast-fashion brands like Zara — which releases new items four to five times faster than a traditional retail brand, according to the apparel consultancy firm Alvanon — and online-only retailers like Boohoo that can update their sites with hundreds of new styles daily, are guiding the quickening pace of trends, as well as customers’ need for newness. Within the luxury industry, brands have taken different degrees of action to deal, with some disregarding the traditional fashion calendar to bend to a see-now-buy-now approach and others adding more collection drops throughout the year.

“In order to really perform like Zara does, or go with an immediate fashion calendar, these brands will have to consider an overhaul,” said Caitlin Aylward, director of research at L2. “There are other steps that can be taken to improve speed-to-market.”

Updating production processes
In October, Kering announced that it will be launching the Gucci Art Lab this year, a 35,000-square-foot space in Italy that will specialize in manufacturing leather goods and shoes, and source its own sustainable materials to bring the Gucci supply chain closer to home. The goal is, in part, to speed up the rate at which new capsule collections can be released.

“This is a step toward internalization of production, especially leather goods,” said Kering CFO Jean-Marc Duplaix, during a call with investors at the time of the announcement. “Over time, there will be better control over product development, sampling and material development.”

Having more control over the production process means brands can better control the timing and frequency of new product launches. That’s how labels like Burberry and Tommy Hilfiger were able to seemingly switch their production schedules to an in-season model in a matter of weeks: Vertically integrated supply chains grant brands a level of autonomy that other brands, beholden to outside manufacturers and factories, don’t have, particularly on the smaller scale.

To help speed up the production process, brands must continue to invest in technology that will use tools like 3D design, automation and robotics to eliminate inefficiencies and reduce turnaround time in the supply chain, which will help keep new collections in line with customer trends. PVH Corporation and Xcel Brands, which owns labels like Isaac Mizrahi, are among the few using 3D software to cut months out of the production window.

“Luxury brands could all do a better job of adapting technology to aid the production process,” said Ed Gribbins, the president of Alvanon. “There are brands that are just now starting to test 3D product development softwares, and that’s going to change the way all retailers go to market, eventually.”

Breaking down internal silos
Traditional internal organization at brands has typically meant that there’s little communication between departments. With the need for speed a top priority, breaking down those walls is more important than ever before, as designer, merchandising, manufacturing and data teams need to speak to each other to make faster decisions.

“The group that I’m running is working to identify new technologies that can impact all areas of the business,” said Kate Twist, the chief digital officer of Xcel Brands. “It will be a very cross-functional business. Marketing, design, merchandising, planning and retail partners will work together and be touching a lot of different things at one time. Speed to market is crucial, and we need to work as quickly as possible.”

In response to both the changing fashion calendar and the emphasis on staying in step with customers’ interest, brands like Helmut Lang and Theory are releasing more collections throughout the year. To do that, both brands have restructured internally to establish organizations that can design, produce and launch collections outside of the traditional fashion calendar. Gribbins cited working with one brand, which he declined to name, that divided its design team into two groups. Each team worked on the brand’s next two upcoming collections, to be released in tandem.

“Internal decisiveness is probably the single biggest challenge in terms of speed to market,” said Gribbins. “Luxury has been more nimble at making decisions than, say, department stores or specialty retailers, which have been on an 18-month cycle. That doesn’t work anymore. Who knows what we’re going to want in spring of 2019?”

Leading with data
Processing customer data and using that feedback to aid in faster decision making is a remaining obstacle for luxury brands. Since many still make the majority of their sales through wholesale channels like boutiques and department stores, there’s a degree of separation between customer feedback and the brand.

This distance poses a greater threat when the end customer’s behavior is changing. Millennials, of course, have become known for less brand loyalty and an unwillingness to pay luxury prices.

“Data is the hardest because brands don’t own the customer, in many cases, and if they don’t connect as directly to the end user, they struggle to get that data,” said Gribbins. “On top of that, millennials, as a group, don’t seem to value brands in the same respect that their parents might have. That’s a threat.”

Both Gucci and Xcel Brands have worked a better connection to the end customer into their speed-to-market strategies. Gucci’s Art Lab is designed to digest customer data faster and emphasize direct retail channels, like boutiques and e-commerce. Xcel Brands, which depends on retail partners, is building a better data loop between its in-house team and its wholesale partners. Across the board, luxury brands are looking to get closer to customers through their owned channels, not only to stay relevant, but to make faster decisions.

“Luxury retail needs to get a much closer and tighter understanding of the customer, including the ones buying, what’s being bought and how they want to interact with you,” said Antony Karabus, CEO of HRC Retail Advisory. “Then they can react.”