You can download the report in PDF format to read offline. <a href="https://drive.google.com/file/d/12qw4jB-1-U38cRQ5_sA_CtoMH_tRyFyj/view?usp=sharing"> Download the Report </a> <img width="400" height="342" src="https://insidefashionlive.net/wp-content/uploads/2023/07/Brand-Outlook-23-report-download-image.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2023/07/Brand-Outlook-23-report-download-image.jpg 400w, https://insidefashionlive.net/wp-content/uploads/2023/07/Brand-Outlook-23-report-download-image-300x257.jpg 300w" sizes="(max-width: 400px) 100vw, 400px" /> <h3><b>Humbling Times for Brands Could a Hidden Blessing for Supply Chains</b></h3> Many saw the surge in consumer shopping during the pandemic as proof that people still were still buying for the sake of buying, shifting to e-commerce and prioritizing price. They were considering more and purchasing less. Thus even with higher prices, consumers have managed to purchase products they really wanted, by cutting out spending on those products that were a ‘maybe’. This is one reason why some brands continue to outperform the market. They are simply more desirable and consumers make some sacrifices to buy these sought after items. <h3><b>Supply Chains are Feeling the Winds of Change</b></h3> When things change at the consumer level they impact retail and ultimately upstream suppliers also feel the headwinds. With supply chains - from brands to factories - feeling energized by years of pandemic shopping, most were blindsided when suddenly the music stopped this year. A clear shift in consumer demand has been made even more painful by inflation and rising interest rates. The result is that there’s a lot more capacity than orders - and that does not look likely to change any time soon. Still, within any changing market there are opportunities along with the challenges. Each of these assumptions is proving wrong. That’s benefitted some brands and retailers and has been a rude turn of events for many. As the pandemic faded into the past, consumers were headed back to physical retail. For some, it was the novelty of returning to a place that had been off limits for about two years. But for others physical retail offered that overlooked opportunity to ‘try before you buy.’ Turns out that shopping in stores had benefits for consumers, who wanted to experience the products before purchasing. And to retailers who found that e-commerce margins were thin - and that’s if they had any margins at all. <h4><b>Pandemic Shopping Was Just a Bump … Not A Trend</b></h4> Post pandemic, there was more for consumers to do than simply shop online - and so we saw a move back towards a longer term trend of people buying ‘fewer but better’ or at least a lot fewer. Even as inflation hit, it was met with consumers purchasing fewer discretionary items in order to buy those that offered better value, rather than seeking cheaper prices. Consumers continued to slowly become more discerning, driving a longer term shift away from buying every new bright shiny object that hit the market. <img width="650" height="463" src="https://insidefashionlive.net/wp-content/uploads/2023/07/Quality-mid-year.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2023/07/Quality-mid-year.jpg 650w, https://insidefashionlive.net/wp-content/uploads/2023/07/Quality-mid-year-300x214.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2023/07/Quality-mid-year-120x86.jpg 120w, https://insidefashionlive.net/wp-content/uploads/2023/07/Quality-mid-year-350x250.jpg 350w" sizes="(max-width: 650px) 100vw, 650px" /> <i>Most consumers are trading up … as best they can. </i> <h3><b>Consumers See Things Differently Now</b></h3> Since consumers drive the market, we need to start with what they want, what they value and their point of view. <strong><i>Most consumers are trading up … as best they can. </i> </strong> This doesn’t mean that everyone is buying luxury goods. However within each product sector, consumers are looking to ‘buy better.’ They are upgrading from what they always buy to buying a bit less so that they can afford a bit better. <strong>What this means for brands and retailers:</strong> <ul> <li aria-level="1">Quality needs to be a top priority (for real).</li> <li aria-level="1">It is critical to understand how your customer defines ‘quality’.</li> <li aria-level="1">Trading up often means leaving the brand they are currently buying.</li> <li aria-level="1">Service is becoming increasingly important - to consumers of all ages.</li> </ul> The move towards ‘fewer but better’ has been a long time coming. It has manifested itself in a range of consumer trends from downsizing to minimalism. Social media influencers promoting ‘No Buy’ months (or even years). Gurus like Gary Vaynerchuk relentlessly telling Millennial (and now Gen Z) fans to save rather than spend - a big departure from early generations’ propensity to live beyond their means even if that meant piling up debt. <strong><i>Dress to Impress is being replaced by Quiet Luxury.</i></strong> A huge wardrobe of flashy apparel is giving way to a pared down collection of timeless clothing that are defined by quality. That includes premium materials, excellent workmanship, attention to details - and a less obvious aspect - service. <strong><i>Logos are giving way to Brands that have attributes associated with quality.</i></strong> Legacy brands that are associated with quality - and attributes associated with quality - are getting renewed respect. The old fashioned brands that were ‘a name you could trust’ are finding a growing fan base amongst younger consumers who want greater assurance about the products they buy. This is especially important when shopping online where they can’t actually touch the product. <b>OUTLOOK for BRANDS & RETAILERS: </b> This is the beginning of an opportunity to sell fewer units but at full price and thus have better margins. In other words, mainstream brands can start being more like luxury brands rather than competing with mass market brands or discounters. The move will be gradual, but brands that offer solid value and the will to resist relying on promotions, will be able to shift into this more favorable business model. <img width="1024" height="474" src="https://insidefashionlive.net/wp-content/uploads/2023/07/Connected-mid-year-1024x474.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2023/07/Connected-mid-year-1024x474.jpg 1024w, https://insidefashionlive.net/wp-content/uploads/2023/07/Connected-mid-year-300x139.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2023/07/Connected-mid-year-768x356.jpg 768w, https://insidefashionlive.net/wp-content/uploads/2023/07/Connected-mid-year-750x347.jpg 750w, https://insidefashionlive.net/wp-content/uploads/2023/07/Connected-mid-year.jpg 1140w" sizes="(max-width: 1024px) 100vw, 1024px" /> <h3><b>Behind All Winning Brands</b></h3> It’s not easy to be a brand these days. Retailers also face steep challenges. Yet some are winning. So the question is: <i>“Facing the same market conditions, what are those who are succeeding doing right?”</i> <em><b>Top Brands are Able to Stand on Their Own </b></em> Brands that win at retail are those that have defined what they do or who they serve so that the consumer sees them as the ‘best choice’. Nike has clearly aligned itself with basketball (even though they make products for many different sports). They win the market by being seen as the best shoes for basketball. Lululemon has done the same with yoga. The company was able to compete in the activewear sector by creating its own category - yoga - becoming famous for high end yoga gear. Canada Goose wins on the technology they put into their down parkas. They are famous for their cold rooms in stores that let consumers test the coat in actual winter temperatures before buying. For the last few decades this didn’t matter as much. Just about any name or logo could pass for a ‘brand’. However, capturing the hearts and wallets of a more discerning consumer, with almost limitless choice, requires a lot more strategy than selling to consumers who simply want to buy for the sake of buying. <h4><b>The Danger Zone for Brands & Retailers</b></h4> Brand collaborations have been a great way to combine the power of two strong brands to create something new and innovative. It also enabled brands to develop capsule collections that can generate a lot of media buzz and add newness to the selling floor. <b>Relying too heavily on collaborations</b>, and neglecting to build or maintain the core value of their own brand has taken a heavy toll on the value of some formerly strong brands. A growing number are finding that their own brand has lost its identity or meaning. They have simply become a carrier or distribution point for other people’s brands. Their intellectual property is suddenly worth very little. The capsule collection for the brand partnership is driving sales - in some cases most of the sales. <b>Celebrity collaborations can be risky business</b> as several brands have discovered. Celebrities are used to being controversial or provocative in order to gain media attention. It is nearly impossible for a brand to control the behavior of a celebrity. When a celebrity collaboration goes bad, it typically goes <i>very bad</i> - for the brand! Most recently Adidas and Gap paid dearly for brand deals with Kanye West’s Yeezy brand. Similarly, brands are finding that consumers are not looking for them to be activists. They simply want good products. <b>Outlook for Brands and Retailers: </b> A return to building your own brand value (intellectual property) is the only way your brand will actually be worth anything. Further, the risks of collaborations gone wrong are becoming greater than the reward. Leave activism to the activists. They don’t sell apparel. Their mission is to stir up controversy. <img width="1024" height="568" src="https://insidefashionlive.net/wp-content/uploads/2023/07/Supply-Chain-mid-year-1024x568.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2023/07/Supply-Chain-mid-year-1024x568.jpg 1024w, https://insidefashionlive.net/wp-content/uploads/2023/07/Supply-Chain-mid-year-300x166.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2023/07/Supply-Chain-mid-year-768x426.jpg 768w, https://insidefashionlive.net/wp-content/uploads/2023/07/Supply-Chain-mid-year-750x416.jpg 750w, https://insidefashionlive.net/wp-content/uploads/2023/07/Supply-Chain-mid-year.jpg 1140w" sizes="(max-width: 1024px) 100vw, 1024px" /> <h3><b>Strong Brands Build that All-Important Consumer Trust</b></h3> To win a brand doesn’t need a grand value proposition. But it should tie in directly to at least one attribute that consumers want or value. Brands now must appeal to a very well defined, targeted audience. Otherwise they will fall back to selling on price and price alone. <b>Brands who claim to be something they are not</b> will quickly lose consumer trust. Most consumers are looking for ‘value for dollar’. They are not expecting to pay budget prices and get luxury goods quality. However, if a brand claims that they offer a high quality product, they can’t cut corners and expect that the consumer won’t notice or care. If a consumer is disappointed with a product, they are much more likely to try a different brand next time. There is literally limitless choice between online and physical retail. This is giving the consumer a lot of power. <h4><strong><i>Be careful about overpromising and under delivering. </i></strong></h4> Consumers have learned lessons the hard way. A key attribute they want now are things they can trust. Being a brand or retailer they can trust will be a huge win! <b>OUTLOOK for BRANDS & RETAILERS:</b> Retail is overflowing with meaningless brands. Consumers look to brands as beacons that signal value. They want a brand they can trust to deliver on what it promises. Consumers want what is genuine, authentic and reliable. <img width="1024" height="501" src="https://insidefashionlive.net/wp-content/uploads/2023/07/Mfg-tech-mid-year-1024x501.jpg" alt="" loading="lazy" srcset="https://insidefashionlive.net/wp-content/uploads/2023/07/Mfg-tech-mid-year-1024x501.jpg 1024w, https://insidefashionlive.net/wp-content/uploads/2023/07/Mfg-tech-mid-year-300x147.jpg 300w, https://insidefashionlive.net/wp-content/uploads/2023/07/Mfg-tech-mid-year-768x376.jpg 768w, https://insidefashionlive.net/wp-content/uploads/2023/07/Mfg-tech-mid-year-750x367.jpg 750w, https://insidefashionlive.net/wp-content/uploads/2023/07/Mfg-tech-mid-year.jpg 1140w" sizes="(max-width: 1024px) 100vw, 1024px" /> <h3><b>Supply Chains Shift Gears</b></h3> The overstocking of retail inventories in 2022 - and the subsequent effort to clear this stock - has taken a sharp toll on manufacturers in every key sourcing nation. In the longer term, this could be a turning point for suppliers. Particularly for those who are craving the opportunity to move to higher value manufacturing but face brands who are pushing hard on price. <h3><strong>Smaller but Better</strong></h3> <b>What used to be small orders are now the new standard.</b> The shifts in consumer demand are likely to mean that smaller orders are the new normal. Suppliers will need to rethink their production lines to adapt to order sizes that they never before would have considered. As brands adjust to some of the changes in the market, they will choose to err on the side of caution. Especially since the old model of leaning into promotions to clear stock is less effective. <b>A growing focus on quality. </b>From workmanship and materials - to even packaging - the tide is turning and it’s heading upmarket. ‘Better’ will be the new buzzword. Even if that comes down to only a few percent better. Each season will need to be just a bit better than the last. <b>Quick response</b> models that support lower inventory levels are gaining renewed interest. But with the difference in that brands will start to reduce SKUs as they become more focused meeting the consumer demand for ‘fewer but better’. <b>Less waste</b> will be a residual benefit from keeping inventories tighter. The benefits of being able to better align buying with retail sell-through will play a foundational role in greater sustainability and higher margins. For many factories, this will be a slow shift towards moving up the value chain. However, they will need skills/technology to meet higher standards. The good news is that innovation in technology is going through a massive growth phase. The result is that many tech solutions are getting cheaper - and are easier to implement. The trend is towards solutions that can be layered on top of existing technology. This is making it easier for companies to upgrade - at lower costs and with fewer disruptions. There’s also more innovation around technology that helps employees be more efficient and productive. From AI that is eliminating repetitive and mindless tasks, to cobots that do more of the heavy lifting for people in warehouses and factories - technology will be vital to helping manufacturers meet shifts in demand. <b>OUTLOOK for SUPPLIERS: </b> Major shifts on the demand side of supply chains are driving equally big changes on the supply side. Factories who are forward looking and bold can capitalize on an evolving market to better position themselves as frontrunners is the growing demand for smaller but better orders. Competing on skills and agility - and to a greater extent creativity - will require more sophistication than competing on price alone. However manufacturers, as well as other supply chain stakeholders, will be able to leverage the rapid developments in new technology (software and hardware) that is becoming more accessible (lower prices, greater availability - even to smaller companies). This will give them additional bargaining power - beyond price - and help inch margins back to healthier levels.