Overstocks in Fashion

Compared to other industries, most fashion brands have been lagging behind in technology, resulting in overstocks and large discounts. Jan Wilmking, ex-Zalando and ex-McKinsey, sheds lights on the fashion industry, and how strategic investments in technology do improve the supply chain performance.

Jan has a background in management consulting, he worked for some years at McKinsey in consumer goods and retail. There, he discovered the fashion industry and was intrigued by its combination of rational and artistic processes. He was then more recently Senior Vice President of Private Brands for Zalando for over 6 years, where he was responsible for Zalando’s portfolio of 15 private label fashion brands. There, he helped to scale the business from under 200 million euros to over half a billion euros.

As one of the world’s biggest industries, the money is definitely available to invest in better technology, so why does there seem to be such reluctancy? We go into more detail about what a complex industry fashion is, often deeply rooted in tradition, and how it comes with a whole series of problematics (seasonalities, trends, substitutes, pricing, etc.) that most standard enterprise software simply can’t address.

In addition, we discuss the all important question of wastage within fashion, one of the “dirty secrets” of the business that is now coming more and more to light. Overstock is something that no fashion company ever wants to talk about for a vast number of reasons. We also touch on the social and environmental issues of consumerism that are intrinsically linked to this need to overproduce.

To conclude, we talk about company culture within the fashion industry and the impressive advancements that have been used for the “front-end” of fashion, i.e. marketing and audience targeting, and how this technology now needs to move to the “back-end”.

Timestamps

00:08 Introduction

00:31 Jan, perhaps you could start by telling us a little more about your background?

01:45 Joann├Ęs, what are your views on how the fashion industry is currently approaching technology?

02:45 At Zalando there is a core value of combining fashion and technology. Why is this rationale so important?

04:47 In a trillion-dollar industry, why is there such a hesitancy to invest in technology?

07:20 Why is overstock such an issue?

10:44 Previously we have discussed how the industry has relied heavily on sales to get rid of this stock. Does it really make sense for prices to shift as much as they do?

13:04 One of the solutions to solve this overstocking problem was to improve the approach to forecasts. How do you instill this more sophisticated approach?

15:40 Which are the other areas for improvement, those where we can use technology as a support?

19:17 With so many challenges to overcome, how do we prioritize which is the problem to attack first?

22:44 What are the innovations and transformations that you can see having an impact for the future?