The report that Kea co-signs  with the Institut Français de la Mode [New Economic Models of Fashion] provides answers.  

This report – resulting from a collective initiative of all the fashion federations, under the impetus of the DEFI La Mode de France – invites us to go beyond  the shock caused by the Covid crisis and to deal with the profound change in the sector.

For the second time since the beginning of the millennium, the world economy is facing a crisis of unprecedented gravity compared to that of 2008-2009. The impact of Covid-19, still difficult to circumscribe at this stage, is already stunning in its magnitude. It may seem futile to look for historical references in previous economic or health crises: the nature of the shock is different in that it combines to an acute degree hitherto separate issues whose harmful effects mutually reinforce each other.

The fashion sector is, perhaps more than others, capable of taking its reinvention head on and driving changes that are now inevitable. Fashion, constantly called upon to renew its ways of doing things, cannot do without a profound change. She is prepared for it because the quest for meaning, which led an increasing number of observers to call for an overhaul of the fashion system, is already well anchored in people's minds, particularly among the younger generations.

The lessons for this industry which in France weighs more than 154 billion in turnover from upstream to downstream:

PREREQUISITES FOR ALL:

• Uniqueness of the value proposition

• Clarity of the customer target

• Brand content, beyond the product

• Activation of a CSR strategy

• Ability to open up internationally

• Operational excellence and monitoring KPIs

• Animation of the customer relationship

FIVE THEMES TO EXPLORE:

• Culture and dynamics of transformation

• Redesign of the merchandise model

• Customer value approach

• CSR at the heart of the business model

• Innovation and technologies in the value chain

CROSS-CUTTING CHARACTERISTICS OF WINNING MODELS:

• Frugality of marketing spend

• Ability to exploit data (customers, products)

• Hybrid business models

• Understanding of new international dynamics (glocal vs mega cities)

• Reason to be carried by the teams and clear for the customers

• Culture of innovation (products, customer experience, communications)

RESILIENCE FACTORS FOR POST-COVID SUCCESS:

• Consistency of the operating model with the value proposition

• Cash management vs EBITDA management

• Ability to vary costs

• Access to funding sources

• Capital structure with a long-term horizon

• Digital maturity and e-commerce

• Personality of the manager