NPD’s Marshal Cohen and Mukti Khaire, an associate professor at Harvard Business School.

NPD’s Marshal Cohen and Mukti Khaire, an associate professor at Harvard Business School.

TECHNOLOGY

Taking the Creative Approach to Growing Fashion and Retail

If Marshal Cohen had his way, retailers and fashion-industry leaders would have started breaking the rules a long time ago.

“The fashion industry needs a big wake-up call to recognize how different the consumer has become,” said the retail analyst. He believes it is about time the fashion industry and retailers played catch-up with the technology industry.

Cohen, who is one of the country’s most quoted retail analysts in his job with The NPD Group in New York, was headlining a one-day conference in Los Angeles called Fi3, which stands for Fashion x (Innovation x Insight x Influence).

The newly minted symposium, held in an art gallery near downtown Los Angeles, was organized by Bernard Campbell and André Warren, both professionals who used to work at MAGIC, the large biannual apparel and accessories trade show organized in Las Vegas by Advanstar Communications. Campbell and Warren’s idea is for the fashion industry and other creative ventures to come together for a day-long dialogue and an exchange of ideas to move business forward in a creative way.

Cohen was busy introducing new ideas and smashing old ones. For example, he said, many retailers are used to stocking winter coats in August and bathing suits in December. But consumers aren’t ready to buy coats when it’s hot outside and bathing suits when it is chilly. “Traditionally, we are steeped in tradition, and retail is all about a set of rules,” he observed. “Back to School traditionally is a holiday that starts in June and ends in August. But 43 percent of the consumers I interviewed [this year] are buying in October.”

Another misconception is that the millennial generation, those people between the ages of 18 and 34, are a hot consumer market. That may be true, but they are not quite as affluent as the baby boomers, who are between the ages of 48 and 67. “We keep hearing that the millennial customer is the biggest opportunity out there,” Cohen said. “They are a big market, but what we should be concerned about is that they are $1.1 trillion in debt. The average millennial has $45,000 of individual debt from school loans and auto loans. How much discretionary income would you have if you had that debt? Fifty-four percent of them said that debt is their No. 1 concern.”

But millennials are four times more likely to comment about a brand through social media and 10 times more likely to do research about a brand. The No. 1 thing that influences millennials is technology.

That leaves brands and retailers with a host of ways to communicate with a younger customer. And with 36 percent of millennials still living with their parents, it is essential to realize that this millennial generation is influencing the shopping habits of older and younger generations in their homes.

What do millennials care about when shopping online? Seamless integration with a brand. “They want the same information on a smartphone as on a tablet as on their computer,” Cohen said. “If your marketing team isn’t creating a message in a seamless, integrated way, you are not reaching that millennial properly.”

But the boomers are still the biggest spending group in U.S. society and will be for a while. “We need to recognize you can’t lose sight of them as a huge opportunity at retail,” Cohen said. “By 2015, they will be 27 percent of the population, and they are going to peak by 2026.”

When it comes to social responsibility, 74 percent of consumers said they wanted the brands they purchase to contribute to a cause or philanthropy. “The consumer does care,” he said.

And when it comes to trends, Cohen said we are entering a new era of more of everything. “It is about more color and more technology and understanding the new era of not being obsolete. Apple is saying we are not making obsolete our product anymore. We may have a new style, but we are not getting rid of the old one. So you can buy an iPhone5, but you can also buy an iPhone4,” he said. “Consumers want to buy the things they like again. They don’t want to discover a whole new fit from the same brand of blue jeans.”

The role of creative industries

Also speaking at the conference was Mukti Khaire, an associate professor of business administration at Harvard Business School. She has spent much of her time studying creative industries and how they influence society. One of her case studies has been on Chanel, the Parisian powerhouse label.

“Coco Chanel designed a whole new style of clothes. The prevailing style that was around at the time is something I call the hobble skirt. Chanel’s style was more practical, unfussy, simple, straight and elegant in a different way than what was considered as appropriate at the time,” she said. “With the arrival of simple, practical and elegant clothes, then women had a different image of themselves.”

She noted that clothes are not just clothes but a physical manifestation of political, social and cultural morays about what is right.

Fashion as well as art and music can introduce ideas that challenge our current way of thinking. For example, hip-hop music transformed America’s racial vocabulary, Khaire said. “It changed the cultural landscape by making urban society more vital and desirable rather than poor, marginal and untouchable.”

Introducing a new fashion or concept requires companies to sell consumers on the value of something different. “If you are introducing ‘Made in LA’ as a value or ‘Made in USA,’ what you want is for people to consume it because they see the value in it,” she noted. “How that belief is going to come about is not only with advertising and marketing material but also from a general public discourse,”

That discourse could be about the disadvantages of manufacturing in Bangladesh after more than 1,100 workers have been killed in clothing-factory fires and building collapses this year.

Finding inspiration

Jade Howe, founder and creative director of menswear line Howe Clothing, discussed his place within Southern California’s $230 billion creative economy, citing statistics from the most recent report released by Otis College of Art + Design on the region’s creative economy.

Howe talked about his moment of inspiration before launching his collection, when he realized that menswear was stuck in a rut.

“Dad, teenage brother and kid looked the same, wearing oversized track suits. Guys were swimming in their clothing,” he said. “I’m not saying those styles don’t have their place. That’s just all there was [in 1999].”

The designer met pro skater Tony Hawk, who was looking to start an apparel line. Together the two launched the label in 2001 under Blitz Distribution. (Howe is currently a division of Seattle Pacific Industries.) Howe took inspiration from surfing and music and created his first solo collection, which he dubbed “Cowboy Punk Meets English Country Gentleman.”

“I predicted a revolution in fit,” he said. The line—based on tailored pieces, slim fits and subtle details—was a hit with buyers, Howe said. “You know the moment when your phone blows up?” he said. “Men are the rudder of the economy. When they find something they like, they go back again.”

Shifting model

The Fi3 conference also looked at the changing business landscape for apparel from the shift from traditional models to new ones—and, in some cases, the shift back.

Heath Wells, the co-founder of NuOrder, a West Hollywood, Calif.–based tech company, said it is going to be hard to change the way the fashion industry does business.

“The challenge is that people are often committed to pen and paper. There’s a generation that’s reluctant to change,” Wells said.

But his business-to-business digital wholesale ordering system has grown quickly since taking a bow in August 2011. Currently, 50 people work in NuOrder’s offices in West Hollywood and New York. The system has handled $50 million in orders in September alone, Wells said, and it is forecast to handle $600 million in orders for 2013.

With clients such as Helmut Lang, BCBGMaxAzria, Ted Baker, Paul Smith and Alternative Apparel, he believes that the entire industry will forget about fulfilling orders through pen and paper in favor of digital means such as iPads. Time savings alone could be valuable. Wells contends that it takes 28 minutes to fill out a paper order form with a pen but only three minutes to place an order digitally through a system such as NuOrder.

Content evolution

For many in the apparel and retail industry, social media has revolutionized the way brands talk to their customers. But the competition for eyeballs online and in social media is fierce. The panel “Content Is King … So What! With Chelsea Matthews” sought to give advice on what attracts fashion people to brands’ e-commerce and social media sites. Chelsea Matthews, chief executive officer and founder of Matte Black, a Los Angeles–based company self-described as a culture-marketing firm, led the panel. Panelists were Alisa Gould-Simon, co-founder of fashion platform Pose.com, and Adam Derry, founder of the consulting firm ADBD.

Gould-Simon said fashion people are looking for Web content that is timely and offers a unique point of view. For example, even if a content maker reposts a story from another website, it is crucial that the repost is wrapped up with the content maker’s point-of-view.

“It has to be relevant and serendipitous,” she said.

ADBD’s Derry said it’s important for brands to know who they are trying to communicate with. “Know your consumer. Know your content, and, most importantly, know your brand,” he said.

Matthews said that a relatively old fashioned means of communication—email— is becoming a medium of choice for Web professionals. The strategy is that a message sitting in an email box has a very good chance to attract a potential consumer to a brand website. Consumers also are looking for something even more old fashioned, Matthews said. Meeting face-to-face, not online. “Socializing is next. I see a hunger for socializing,” she said.

With additional reporting by Andrew Asch and Alison A. Nieder

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