The fashion industry has gone through dramatic changes in the last 20-30 years. Indeed it finds itself in the present at a crossroad: Resource scarcity is triggering shifts in business models and supply chains; waste is the new resource; customers are the sales channel of the future; and legislation is becoming ever more stringent.
Yet few businesses venture to think about how their industry may look in five, 15, or 30 years’ time. Radical changes are bound to happen in our world, and its consumer and sourcing markets, over the course of the next few decades, and we will encounter serious challenges of running businesses if we continue as we have in the last few.
The value of scenario work
Scenario work — the preparation for future industry realities — has proven to be among the most effective tools for sustained business development across all operations. The changes that affect the fashion industry, amongst others, are triggering radical market shifts. Only businesses that can and are willing to anticipate them will survive, remain competitive and thrive in the long run.
Many consider any scenario beyond a five-year horizon to be out of touch with reality. The fact though is: If looking back at predictions of 1950 or 1960, the reality we live in compares best to the predictions that were considered 'totally crazy' in their time. To name but a few: home and Internet shopping — specifically for fashion; abundant use of electronic payment means via cards, tele-banking; space technology; mobile phones and wireless technology … It was all there, akin to how we know it today.
In order to develop successful and meaningful long-term scenarios for the business context, there are three fundamental key points to be considered during elaboration:
- Developments of the past are not simply to be prolonged to the future as a logical and successive process. Technologies and societal shifts — embryonic at the time of research — are to be analysed, evaluated and then 'built into' the scenario as the new 'mainstream.' At this stage, a business' own agenda and vision are not admitted for consideration (yet).
- Accounts of extreme events of the present are taken as indicators for common events in a couple of decades. There is no limitation in terms of factors and impacts that are taken into consideration — the range of which may reach from resource scarcity to high-tech application in home appliances.
- Application of design thinking techniques is essential to assess consumer response and 'the practical use' of the different scenario components. New ways, ultimately, must be useful and desirable — to consumers as much as businesses — in order to become popular and represent a potential 'new status quo.'
At texSture, we researched during Q2 2013, trends, influences and impacts that will impact and shape the fashion and textiles industry in the next 5, 10 and 30 years’ time. From this research we were able to distil three distinct scenario 'story lines':
Scenario 1: “Market inversion”: What if Asia became today's Europe?
Asian brands are becoming aspirational for Western consumers and hence compete directly with Western brands. But: Asian brands, just as Western, target primarily Asian consumers. As cost of labour increases in Asia, particularly China, factories relocate to cheaper, more rural areas.
Asian manufacturers are traders to African manufacturers and producers, but ethical standards remain low. Workers from Western markets migrate East and are the new “cheap labour.” While Asia has become the main market for European brands, Asian and African culture is shaping the global mainstream.
Practical implications for brands:
- Operations: New sourcing channels will have to be built in order to cater to African markets — using specifically local materials. African non-oil countries will become the new sourcing hot spots for cheap labour.
- Technology: Control-of-origin systems will be standardised in order to follow orders though production. Increasingly, they will be integrated with tight (international) legal and reporting standards, and industry best-practise requirements.
- Business models: Asian manufacturers and brands will compete head-on with Western manufacturers and brands, specifically in the high-end market segment. Mass-customisation is key.
Scenario 2: “Local, high-tech economies:” What if everyone was a maker?
“Made in [your country]” is experiencing a revival across all Western markets. Virtual reality — from sampling to dressing rooms — is entering the retail landscape. Raw material prices keep rising. And at a time when 3D printing has finally matured sufficiently to become mainstream, physical and virtual maker markets such as Etsy are popular.
The situation is paradox: On the one hand localism reigns, but on the other the world has never been more global. “Made in [your area]” products are sought after, but rather than being a luxury they are the typical way of life. Fragmentation is the key word both for manufacturing and retail: Independent boutiques are proliferating and communities are geographically semi-isolated yet technologically hyper-connected.
Practical implications for brands:
- Operations: Shipping of physical goods is progressively only worth it for very high-value items. As a consequence, most production is taken care of by local craftsman, artisan and micro units.
- Technology: Distributed working technologies will increasingly be used, and serious results are achieved in their development to better account for and integrate 'inter-human bonds,' specifically for teams.
- Business models: Intellectual property (e.g. of designs and patterns) will become a brand's principle 'product.'
Scenario 3: “Collaborative-competitive markets:” What if we didn't buy to own?
Swishing is a new lifestyle, and eBay and Amazon are where people peddle their unused goods. Repair services are part of the offering of certain fashion brands. Car sharing, tool sharing and skill sharing are being rolled out on a large scale. The sharing economy is valued at $460 billion and is expected to grow at least 15% in the next 15 years.
Cotton, polyester and most other 'traditional' fibres are difficult to obtain. New-generation fibres cannot cope with the demand. World population has grown to an extent that agricultural activities are geared towards food. Few products are discarded; broken and ripped products are valued as raw material sources. Buy-to-own is not the predominant lifestyle any more, but is considered a luxury. Communities offer rental services for more expensive and rare items, including clothing.
Practical implications for brands:
- Operations: Need for diversification of raw materials used in design, and hence products. Search and development of alternative materials for which scaling does not pose any, or at least fewer, long-term problems.
- Technology: Refinement of recovery and recycling technologies, specifically in efficiency and complexity terms. 'Closing the loop' acquires proprietary traits (again), so that recycled materials may remain reliably within a specific company's raw materials stream.
- Business models: Lease-and-take-back schemes will become popular — even for fabrics. These go hand in hand with recovery and recycling schemes.
The benefits of scenario work
If integrated into corporate strategy development and investment strategies, scenario work helps to illustrate the vulnerabilities of a business, such as lack of agility to react to emerging business models (e.g. shift of B2C to C2C, the impact of 3D printing on consumer demand or the proliferation of forgeries) or input-material sourcing challenges.
Scenario work further encourages and facilitates the collaboration of executives from different departments as it enables development of a common vocabulary around key issues that will become dominant in the mid to long run. Sharing the same vocabulary is of paramount importance to enable shared vision and gain buy-in and support across multiple departments. This is particularly the case for managing change in reaction to short- and mid-term pressures around environmental and labour rights issues.
And last but not least, scenarios are a point of departure that can serve as inspiration on how to turn risks into opportunities. After all, sustainability ultimately is the key ingredient to maintain long-term competitiveness.