5 Ways Predictive Analytics is Improving the Apparel Retail Industry Improved Product Recommendations. The apparel industry is involved in the designing and manufacturing clothing and accessories for women, men, and children in the categories of: casual wear, active wear, essentials, formal wear, and outer wear. Merchandising Analytics: A Case Study on How an Apparel Industry Client Optimized Markdowns and Projections The Business Challenge The client, a leading apparel industry manufacturer with business operations spread across the globe, wanted to differentiate its in-store offerings and cater to the changing customer preferences. We use cookies essential for this site to function well. tab. By grounding the data strategy in business use cases, apparel players can ensure that data investments are directly tied to business outcomes. At most apparel companies, the seasonal calendar is the dominant operating rhythm of the business. The best ones solve a particular business problem and achieve a measurable benefit by applying advanced analytics. Cumulative data compiled within The Fashion and Apparel Industry Report paints a bright portrait with worldwide revenue expected to rise from $481.2 billion in 2018 to $712.9 billion by 2022: Data via Statista and accessible in The Fashion and Apparel Industry Report One of the first and most frequent challenges that apparel players face when they begin an advanced analytics journey is discovering the limits of their data. The sports apparel market was valued at $167.7 billion in 2018 and is estimated to reach $248.1 billion by 2026, registering a CAGR of 5.1% from 2019 to 2026. In 2018, the men end user segment accounted for more than half of the share in the total sports apparel market, and is expected to grow at a CAGR of 4.6% throughout the forecast period. The Business Challenge The client, a leading apparel industry manufacturer with business operations spread across the globe, wanted to differentiate its in-store offerings and cater to the changing customer preferences. Companies should scan all areas of the business to identify the largest advanced analytics opportunities, as well as those that are most critical to the organization’s strategy (Exhibit 1). Translators become the cross-functional glue that helps infuse analytics throughout the organization, combining a deep understanding of the apparel industry with general technical fluency, product management skills, and an entrepreneurial mindset (Exhibit 4). Better Merchandising and Marketing Campaigns. Terms of Use Interestingly, the use cases of big data are not limited to these sectors alone. The industry emerges faster than many others with time. Using an agile operating model to pursue analytics use cases dramatically accelerates time to impact. Overall, 2017 is expected to be a better year for fashion industry. Companies in grocery, hospitality, consumer packaged goods, and financial services have shown that advanced analytics can accelerate their businesses, support smarter decision making, strengthen relationships with their consumers, and improve team management. Subscribed to {PRACTICE_NAME} email alerts. With the help of Quantzig’s merchandising analytics, the client also wanted to seek ways to gain predictive insights on the sales, returns, and pricing effectiveness and efficiently bridge the demand-supply gap with their customers. If organizational acceptance or approval is a major concern, automating manual processes (such as consolidating performance reports) as a first step can win buy-in. These opportunities should be focused directly on business outcomes versus simply developing insights. Contact our offices, Case Studies Get up to speed on any industry with comprehensive intelligence that is easy to read. HR Analytics One of the most important features of an agile approach is emphasizing output versus process: teams should feel autonomous enough to shift direction if something is not working. The client also wanted to understand how customer behavior is impacted by product replacements and further wanted to optimize their merchandising tactics to improve shopper loyalty. Clothing, one of the segments analyzed in the report, is projected to record a 3.8% CAGR and reach US$4.6 Billion by the end of the analysis period. Companies with a competitive advantage are those that can successfully cater to consumer tastes while managing costs and securing beneficial contracts with clothing marketers. Hello welcome back to Week 1, Session 4 of Descriptive Analytics. Think about your most used, and likely most valuable, possession. In this environment, data has become one of the core competitive advantages. Transportation and Logistics Political factors: The political factors can be the biggest source of uncertainty for the fashion industry. While apparel is an inherently creative industry, it has historically required some level of analytics to run the business. But apparel players should place additional emphasis on finding and training analytics translators within their organization. Competitive Rivalry. While agile pods are not applicable in all circumstances, apparel organizations should look to incorporate sprints in their analytics road map to create rapid test-and-learn capabilities. There are two primary trends which are driving the outdoor apparel industry right now: athletic leisure clothing and online sales. At any given time, the organization is simultaneously selling one season, producing another, and designing for yet another. Still others hang back under the belief that transformations entail a three- to five-year tech overhaul and Amazon-level resources or operational capabilities. 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Free Resources The government has the ability to encourage companies to buy fabrics locally, especially if the taxation on imports from other countries increases. It’s all about data: Extracting privileged insights. Geek meets chic: Four actions to jump-start advanced analytics in apparel 1. Marketing Analytics These factors include: Many such factors are compelling firms in the apparel industry space to leverage the use of merchandising analytics. The rise in disposable income, fluctuations in consumer behavior, the substantial shift toward branded apparels, and promising demographic factors have fueled the growth of the global apparel industry. Banking, Financial Services, and Insurance. Gain data-driven insights to deliver profitable results by leveraging Quantzig’s analytics solutions. Privacy Notice The retail landscape is going through an undeniably titanic shift. Additionally, technological advances in sports and fitness wear are also driving the sports apparel market, as market participants are strivin… This model is a huge departure from the calendar-driven world in which most apparel Pressrelease and Media mentions We also often see apparel players develop translators within their planning and merchant functions, as these areas typically employ basic analytics in their day-to-day activities. When developing internal skills, many organizations have established translator curriculums to train their teams. Clothing… Instead, teams should consider two things: first, how they want to optimize the By better understanding its shoppers’ key pain points, the retailer was able to identify a set of high-priority opportunities, such as trend analytics and demand forecasting. The next big technology wave in analytics platforms that are taking the retail industry by storm is mobile. Please email us at: McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. For long, the applications of big data analytics in various industries such as healthcare, finance, marketing, and telecom have been the talk of the town. Nicolaus Henke, Jordan Levine, and Paul McInerney, “You don’t have to be a data scientist to fill this must-have analytics role,”, Who’s shopping where? Blog Under many supply agreements, customers can cancel orders or return unwanted inventory. This PESTLE analysis of the fashion industry takes a thorough look into the many factors that influence fashion as we know it today. A cross-functional road map should be developed to make the tough decisions on where analytics matter most. The fashion industry is an interesting one when it comes to analyzing through the intensity of competitive rivalry. As a result, advanced analytics capabilities rarely reach the scale or level of insight required to create a competitive advantage. In this setting, we'll use the same forecasting tools to build a descriptive distribution based on data from several products. Banking, Financial Services, and Insurance To be successful, use cases must be well-defined and specific. cookies, McKinsey_Website_Accessibility@mckinsey.com, Visit our Big Data & Advanced Analytics page. Data can be enhanced within a single use case over time (Exhibit 2). All Rights Reserved. Analyzing this data reveals the current runway trends; for example, whether skirts or trousers are dominant in a particular season or the dominant style of trousers [4] . What Trends Are in Store for Analytics in 2018? Initial pilots can start with whatever data is available—such as recent shopping behavior—and expand over time to include email engagement, online browsing behavior, coupon usage, and demographics. collaboration with select social media and trusted analytics partners Please use UP and DOWN arrow keys to review autocomplete results. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. Instead, analytics can totally transform apparel players’ ways of working. players operate, where all steps in the process are carefully planned months—if not years—in advance. Advanced analytics can further help apparel companies tackle these challenges, turning even the most complex use cases into opportunities for growth. For example, initial data might simply identify customers who are highly likely to shop; over time, however, these models can be enhanced to determine what those customers will shop for, when they will shop, and how much they will buy. Yoga apparel is now a staple at traditional sportswear retailers such as Nike, adidas, Under Armor and New Balance who continue to grow their investment in this category over time. This is a pestle analysis evaluating how the various political, economic, social technological, environmental and legal factors affect the fashion industry. One of … Global Driving Apparel Industry (2020 to 2027) - Market Trajectory & Analytics. To date, however, these analytics have been highly siloed within different functions—such as planning, finance, and marketing—with little coordination or information sharing across functions. The global fashion industry is dependent on ever-changing trends that keep consumers, driven by the need to wear the latest. On the basis of forward 12-month Price-to-earnings (P/E) ratio, which is commonly used for valuing Consumer Discretionary stocks, the industry … These 4 factors can get the best analysis for your apparel and fashion business. Ideal analytics road maps balance quick, impactful wins with longer-term, more complex investments. Take Apparel and fashion, for example, the industry that relied on guesswork and gut … How a business markets … These more specific problems could then be crafted into individual use cases. Traditionally, Apparel companies are wholesalers, selling large quantities of goods to retailers, which mark up items and sell them to consumers for a profit. Industrial and Manufacturing Moreover, apparel cultural shift in the workplace at a global level is projected to increase the use of athleisure over the forecast period. While apparel is an inherently creative industry, it has historically... 2. PRESS RELEASE PR Newswire . Shifting to a more rapid operating model may be the hardest change to manage in this journey, but it will substantially accelerate the analytics road map. our use of cookies, and Trying to pursue each of the advanced analytics use cases simultaneously is the fastest way to fail. The fashion industry is playing a huge role in the clothing wastage because every new season brings up new clothes and new fashion. It’s probably fair to say that you have your phone with you at … However, a few factors are expected to influence in the apparel industry. Retail and CPG Industry Analysis. People create and sustain change. Channels are proliferating, new direct-to-consumer and online pure-play companies are rapidly capturing market share, and consumers are expecting far more from their retailers in personalized marketing and products. Digital upends old models. Please click "Accept" to help us improve its usefulness with additional cookies. Although some industries have started recycling the worn-out clothes; but this effort is operating at a very low level. The industry – and thus the reports in this grouping - involves such topics as: workwear, lingerie, baby products, and jewelry. Political factors: Fashion icons in the White House. Once use cases are identified, they need to be prioritized. Merchandising analytics help companies track new product performance, optimize markdowns and promotions, and improve overall profit margins. Big Data Analytics In recent years, advanced analytics has become a core component across a wide range of consumer-facing industries to address increasing complexity. Consumers are more demanding in their need for an end-to-end, personalized offering; complexity has never been higher across assortments and channels; and competition continues to increase from nimble and new digital-native brands. A retailer’s data can be a treasure trove of insights if used appropriately, but many of the unique aspects of apparel—including an ever-changing assortment, rapidly changing trends and product attribute needs, and nonstandardized SKU-naming processes across wholesale customers—often result in relatively poor data collection and quality on product attributes, customer behavior, and supply chain history. Careers For example, assortment optimization is far too broad a use case to be effective. Investing in analytics and technical skill sets—for example, data scientists and architects, as well as coders and developers—will certainly be an important aspect of an advanced analytics transformation. Additionally, companies can rely on merchandising analytics to enhance their merchandising effectiveness and store performance. Product categories include everything from basics to luxury items. Most transformations fail. This, in turn, helps better inform their IT priorities, including how much data history is needed at what level of detail or aggregation, as well as how often it’s updated. Women's Apparel Market Research Reports & Industry Analysis The Women’s Apparel Global Industry was $621 Billion in 2014 which was a 12% increase over the last 5 year period. Request Free Proposal The apparel industry is one of the most in-demand businesses due to the emergence of new trends and production of fashionable clothes. The power of geospatial analytics in omnichannel retail. To wrap up, I'm gonna talk about a specific setting based on the apparel industry. Shoes and Retail Apparel Industry's Valuation. The client also wanted to understand how customer behavior is impacted by product replacements and further wanted to optimize their merchandising tactics to improve shopper [...]. Press enter to select and open the results on a new page. These long lead times too often expand beyond product development—innovation can become pegged to these seasons as well, and timelines for projects can extend over long periods due to the need to navigate calendar-driven capacity constraints. We regularly witness specific analytics applications increase top-line sales or improve the bottom line by 2 to 10 percent, with larger transformations achieving a more than tenfold return on investment. Outdoor Apparel Industry Trends and Analysis. Once these high-priority opportunities have been identified, functional teams can build individual use cases. In addition to internal skill-building, companies should put in place a robust external recruiting plan (such as skill sets, job descriptions, target sources) tailored to their specific needs to fill in additional gaps. Major companies include BIOWORLD, Bollman Hat Company, New Era Cap, and Randa Accessories (all based in the US), as well as Hermes (France), Mainland Headwear (Hong Kong), and Mulberry Group (the UK). For example, many apparel retailers have looked to replace the painstakingly manual store allocation process with analytics models that assign inventory while maximizing margins and reducing opportunity cost. Every industry and every country should take this step into cleaning up the environment. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Banks, consultants, sales & marketing teams, accountants and students all find value in IBISWorld. Moreover, the. Digital companies—with Amazon leading the pack—are at the forefront, constantly finding new and innovative ways to apply analytics throughout the value chain, from merchandising to marketing to operations to human resources. To help you win in this competitive and rapidly changing market, we provide the broadest and deepest global view of the apparel industry based on best-in-class point-of-sale (POS) and consumer data. No matter the starting point, data availability and quality are not valid excuses to delay the development of advanced analytics capabilities. Oil and Gas Request a free proposal! Ecommerce Fashion Industry: Statistics 1. Merchandising Analytics For example, a specialty apparel player recently used an agile approach to launch its e-commerce business, building cross-functional “pods” of 10 to 12 people from development, analytics, merchandising, and marketing to rapidly test new user experiences and pursue growth (Exhibit 3). 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