Next Generation Operating Models
How to shift from surviving to thrivingTuesday 30 May 2023
Brands continue to find themselves under pressure from all directions. Cost inflation, staff shortages, and ever-changing customer needs are all contributing to margin compression, which is quickly rising to unsustainable levels.
While increasing consumption has offered some relief to the sector, as ESG increasingly influences consumer decisions volumes are expected to slow or stagnate.
With an expected real decline of c.0-1%pt per annum from 2022-27 for UK apparel markets, combined with the need to reduce stock by 50% to meet UN emissions targets, it’s vital brands re-think operating models and introduce new and innovative ways to drive revenue.
There are several key themes that will be critical for future success. From using technology to drive efficiency, to utilising partnerships to fill capability gaps, all the while maintaining a strong brand with clear values, it’s important to define your strategic options and prioritise.
Brands must decide where they sit on the scale of fast adopter to follower, identify pain points and understand cost to serve, ROI and their areas of greatest need, rather than simply rushing to overhaul operating models.
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Doing more with less
Overproduction is a long-lasting, deep-rooted problem for brands. 15-45 billion items of clothing produced every year are wasted, mostly ending up in landfill or incinerated. This is both a huge sustainability problem and a costly commercial one. Yet improving buying processes to better align with future demand can enable brands to reduce wastage, improve operating efficiency, and ultimately drive value.