The death of fast fashion business models – Why digital transformation isn’t enough

  • Business Model Innovation

The world of fashion today

The fashion industry is one that everyone can relate to as a user. We all wear clothes. The way we make decisions and choices about that clothing is what differs us as consumers. Human beings have the basic need to shield themselves from harsh natural elements, but what first began as a purely utilitarian need quickly blossomed into the fastest and easiest way for an individual to tell the story about who they are.

Today’s fashion business models don’t support the needs of their customers. “Fast fashion” was built upon the fact that people wanted access to the latest trends as quickly as possible (and inexpensively). And while this is still a huge desire from customers, given that approximately one garbage truck of clothes is burned or landfilled every second of every day, we’re moving on to a time where impact and sustainability are coming to the front of consumer’s buying patterns. Sustainability and upcycling have become some of the most prominent trends that we see today in fashion, from H&M’s Conscious Collective to Olivia Wilde’s partnership with ThredUp. Lyst, the global fashion search engine, has reported a 47% increase in shoppers looking for items that have ethical and style credentials with terms such as ‘vegan leather’ and ‘organic cotton’.  We’re moving towards a pivotal moment in time where we will see whether the need for sustainable shopping options will rival the classic need for new trends as quickly as possible.

What’s missing in this transition is a key element that is crucial to transformation: business models. Creating new sustainable offerings and exploring an ethical supply chain are steps towards change. But unless there is a coexisting movement to explore new business models for retail, we will get stuck in a death spiral of marketing campaigns and sustainability becoming just another trend rather than a pillar in a wasteful industry. Incorporating impact and sustainability at a business model level will support long- term value creation and incorporate a socially and environmental mindset at the very core of an organization.

Zara 2.0, ready for the future

Now you may ask, “but what do these fashion business models look like?” Is there really such a thing as a new business model for retail and fashion? As design thinkers, we knew that the way best way to find an answer was to bring together different stakeholders – from consumers to people who work in fashion – together to co- innovate and co- create new ideas for business models of the future.

We held an event in NYC with the intention of “killing” the business model of Zara and using business model innovation techniques to create a new model for the future of fashion. Through this process we saw a wide range of ideas, of which we generated four unique models. Ideas varied from moving away from brick and mortar completely to focusing on a way to digitally switch outfits on existing photos, so that your social media feed get the impression of you switching styles without having to actually try on new clothes. Operations shifted from human focus to purely tech and finding ways to close the loop for each of these business models drove participants to consider their input as much as their output. One team even gamified the retail process (see below) which made a major impact on the existing business model’s channels and customer relationships.

Zara fashion business model 2.0

Insights from crowdsourcing

The most prominent themes that came out of the conversation focused on sustainability and technology. Our findings confirmed the gap we are seeing in this industry: there must be more conversations around the business models that are going to support future consumer trends and a rising generation of environmentally and politically mindful consumers and workers. Yes, digital transformation is important. But it is just a piece of the puzzle, and the only way we will understand the rest of the picture is by focusing on the business models.

We hope to continue this discovery for the future of fashion, but also explore new industries to “kill”. If you’re interested in collaborating, or ready for the “death” of your industry, connect with us!

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