Speed = Profitability
Luxury brands aren't the only companies struggling to keep up with big-name retailers such as Gap and J.Crew. With the rise of fast fashion, Gap's revenue is stagnating at $16 billion, while Zara has earned twice as much since 2006. It has become apparent, in this consumer-driven world, that speed is no longer just a plus, but the main factor that distinguishes the winners from the rest. Waiting for one more week might lead to missed trend opportunities. In short, speed is value. Speed is profitability. Studies have shown that the slightest improvement in speed can translate into bigger profit margins. According to a 2018 study on the top 20 performers carried out by McKinsey & Company and Women’s Wear Daily, these fashion companies have made speed to market a main focus, delivering items to market in less than six-eight weeks.
Speed = Agility
Most fashion companies have mainly focused on cutting down the time spent on design and product development processes, but this has killed creativity and quality as a result, to which Raf Simons and Alber Elbaz have alluded. The 2017 State of Fashion report by Business of Fashion and McKinsey & Company states that due to the pressure of speed, fashion has become one big revolving door, with creative directors going in and out, for big brands such as Balenciaga, Saint Laurent and Brioni. Alleged plagiarism has been on a rise since then. What most companies tend to overlook, however, is that it’s not just about shortening the design-to-production process, it’s about using the latest innovations to gain supply-chain flexibility and respond to changes quickly. Agility gives you speed. Hence, flexibility is value.
Different business model, Different production speed
The digital age and new consumer behavior have prompted the development of new business models, and conventional categories such as brands and retailers just aren’t enough anymore. With the emergence of fast fashion, brands can now be divided into two subcategories: vertically integrated, direct-to-consumer players such as Zara and hybrid players such as Polo Ralph Lauren that are both wholesale and direct to consumer. As for retailers, they can be also split into two subcategories, multi-brand retailers that operate both online and offline such as Macy’s, and multi-brand pure e-commerce retailers such as ASOS.