If sustainability and digitality are key
areas of focus for the luxury fashion industry in the new year, as Dedagroup
Stealth is covering in detail via a series of content pieces looking back at
2018 and forward to 2019, then supply chain agility is the rhyming term that
glues it all together.
We’re confident that based on events in
2018 – such as the growing consumer focus on the environment and some big-name
retailers and brands in the luxury sector like Chanel and Prada making their
early moves online – these trends will gain pace.
But success in both fields and in general
business development over the coming 12 months will be dependent on having a
supply chain set-up that is flexible enough to cater for changes, and
technology to run these back-end operations that is sophisticated enough to
draw instant benefits.
In some instances, luxury fashion brands
are buying their supply chain – or, more accurately, parts of it – to gain more
control.
They are taking control of their suppliers
by acquiring them. French conglomerate Kering has bought several suppliers,
including a majority stake in French tannery France Coco and a python farm in
Thailand.
Chanel, meanwhile, has been prolific in
this regard. In 2016, the French luxury house created a silk production unit,
by acquiring four of its key suppliers which was said to be part of a
commitment to “long-term sustainability of a high-quality segment and to
ensuring the longevity of the silk weaving industry in France”, while also
taking over feather providers, milliners and boot-makers over the last decade.
Burberry agreed a deal with Italian leather goods supplier CF&P earlier this year to buy the business, and this trend suggests one way of knowing what’s going on in the supply chain is for companies to own it. There will surely be more of this in 2019, won’t there?
In fact, there are multiple reasons for
adopting the above strategy in luxury fashion – if the supplier is ‘in house’,
there’s clearly cost savings to be made, and exclusivity and point of
differentiation is more easily maintained.
But as the personalisation craze in the
premium markets gathers pace, as it is expected to continue to do in 2019, this
strategy will also come into its own.
Luxury items inscribed with a customer’s
initials, or products that have been bought using a unique combination of
handpicked materials, colours and styles dictate that brands have a solid view
and tight control over their supply chains.
It’s no longer a case of just designing items and pushing them out to market. Increasingly, the customer is having a voice in how the item looks, feels and is comprised, meaning businesses have to work even closer with their manufacturers and factories – and on more specific projects. In July, for example, Louis Vuitton launched a website for its European customer base, and a central part of the online platform revolves around the personalisation services available to customers. Make it Yours, Hot Stamping,
My LV World Tour, and Mon Monogram and Mon Damier Graphite services allow shoppers to customise products – it is big business for brand, as it is for many others in the sector.
As brands in the luxury space add new channels of distribution or evolve how and where their goods are made and sold in line with growing direct to consumer activity and less reliance on mid-market wholesale partners, it brings with it changes in supply chain management. While ‘buy the supply chain’ is an option, there are other ways of getting on top of supply chain processes.
With technology that gives a view of where their products are – from manufacturer, to warehouse, to wholesale business partner, to retail store, and everywhere in between – luxury brands and retailers can cope with the wide-scale changes their industry is going through and is set to experience more in 2019.
The push for sustainability and digitality are fashioning an ever greater need for supply chain agility in the luxury space, and more and more brands will realise as much in the new year ahead.
