Licensing Industry Tailoring Business for Fast-Fashion
With the apparel industry — pushed by the success of fast-fashion retailers such as H&M, Zara, Uniqlo, Asos and others — quickening its pace to meet demand from trend-conscious consumers, the licensing industry is responding by speeding its own operations, including in the design and all-important approvals process.
“You have to be nimble and you can’t be an organization that stops everything and doesn’t do approvals quickly when you are dealing with fast fashion,” says Roz Nowicki of Peanuts Worldwide. “The digital age has changed everything and people that are aspirational want to have whatever was walking down the runway and they want to be timely and on top of every trend.”
Adds Hybrid Apparel’s Derrick Baca: “Licensees are willing to push the needle because it is not just fast-fashion retailers, but all retail that wants things done quickly,’ says Baca. “The old model (of licensing) needs to shift because business is tougher than ever and you have to be faster to market. Outside of Walmart and Target where things are planned out, no one wants to wait 8-12 weeks for things.”
While executives say it is unlikely the industry will match the turnaround times that have become the norm for the fast-fashion crowd, owners of licensed brands and their licensees are increasingly required to adapt to this new reality. For licensed fashion brands, that can mean designs being developed, approved and delivered to store shelves in 4-6 weeks and the number of annual “seasons” doubling to 6-8 annually.
Speed isn’t always about fast fashion for the masses. Sometimes it’s about the cachet of having something that only just appeared on the runway. House of Holland took the see-now-buy now approach for its licensed Ben Sherman collection during London Fashion Week in June, making elements of the line available within about two weeks after it was in the show, says Cory Baker of brand owner Marquee Brands.
To get the faster turnaround, Marquee quickened approvals to a matter of days from a more typical two weeks and House of Holland had the collection manufactured in the UK. The combination of the shift in production from China to the UK and smaller quantities drove the retail price of a shirt, for example, to $90 from $50-$60, but sales were strong, says Baker.
“The customer in this case doesn’t mind paying up because they are getting something that is close to an archival collector’s item, as opposed to something that is available at a mass retailer,” says Baker.
Peanuts Worldwide has at times handled approvals within 24 hours and worked with 12-week lead times to accommodate demands from Uniqlo and others, says Nowicki.
In the case The Hershey Co., collaborations with fast-fashion retailers typically begin 12-14 months in advance of product hitting store shelves. Yet at the same time, to accommodate shorter deadlines, some approvals are being done virtually with electronic images rather than hard samples for retailers or licensees who have a track record with a brand, says Ernie Savo of The Hershey Co., which has done several t-shirt DTRs with Uniqlo.
“We do virtual sampling once we establish a benchmark with an existing partner, so if a licensee is using the same blank for t-shirt that they have for the last three programs and using the same printing technology, I’m ok going with virtual samples,” says Savo.
He likens it to the adjustment companies need to make in their brand communications operations in this social media age in which “you have to relinquish some control” to keep up with the marketplace
On the fashion side, Baker and other industry executives concede the see-now-buy-now approach has a more limited run than one in which licensed apparel lines are re-freshed more frequently. Indeed Zara releases new items four to five times faster than do traditional retail brands, according to apparel consultant Alvanon. And ecommerce-only retailers such as Boohoo and Asos update their sites with new styles daily, speeding the arrival of new trends and heightening consumers’ awareness of them.
In working with H&M on a Powerpuff Girls collection, Cartoon Network shortened the approvals process and addition of fast-fashion has enabled it have product available to meet a sudden rise in a program’s popularity, says Cartoon Network’s Peter Yoder.
The more rapid pace is also affecting the breadth and depth of collections. For example, CAA-GBG worked with fashion designer Marc Jacobs on a 20-piece collection for a brand it represented, discussions of which began last November with product arriving on store shelves in April, says CAA-GBG’s Patricia Mercer.
“With smaller collections you are not creating that much more product over the year,” says Baker. “You are just sequencing deliveries differently and you end up with better sell-through since you haven’t bombarded the customer with hundreds of the same shirt and hope that they will miraculously sell. Rather, consumers come in and see that things are changing enough that it is worthwhile coming to a retail store [more often]. With licensing in this case, fast-fashion becomes more frequent fashion.”
And sometimes the frequency is preprogrammed well in advance as a way to keep customers coming back to the store in search of new looks. Retailer Lane Bryant last year licensed Conde Naste’s Glamour brand for a DTR collection that was updated each month, backed by the magazine’s editorial to help raise awareness.
The more frequent deliveries also are tied to most of licensing deals with fast-fashion retailers being DTRs. Forever 21 uses existing Peanuts licensees such as Hybrid Apparel, Freeze and Mad Engine as suppliers for its DTR. Hybrid’s Baca says the company tries to get approvals from Peanuts for their designs before meeting with Forever 21 to speed the production process.
As we reported earlier this year, sourcing giant Li & Fung is in the midst of a program designed to cut its apparel production cycle by more than half, to 20 weeks, by 2019 across private label and licensed brands as it seeks to keep pace with ever-changing fashion trends. The company last year launched an effort that calls for spending $150 million over three years to digitize its production chain. About 20-30% of its apparel and home goods are currently produced in around 20 weeks (compared to an earlier standard of 40-50 weeks), Li & Fung’s Marc Compagnon told us in January.
Most of Li & Fung’s efforts thus far – the company is less than a year into a three-year process — have focused replacing shipments of actual samples with increased use of 3D modeling technology that allows for virtual fit, sampling and delivery. That can cut design approvals to a matter of days instead of months, and fitting can be completed within several hours, Fung said.
Li & Fung formed a design center as part of a “speed playbook” that has helped some customers’ cut lead times by 50%, Fung said. And shortening the product cycle to 15-20 weeks could double revenue, slash inventory and reduce the number markdowns needed to clear unsold product, he added. A faster supply chain could also move up the start of development for holiday to July or August instead of January, something that would help in better keeping pace with changes in fashion trends, Fung said.
“If you make a decision in June or July, or even October, you can guarantee you will have something that is more aligned with what a consumer wants,” Fung said. In a February interview with Women’s Wear Daily, Xcel Brands Chief Digital Officer Kate Twist referred to the supply chain as “a very cross-functional business,” citing the company’s Quick Time Response program. “Marketing, design, merchandising, planning and retail partners will work together and be touching a lot of different things at one time. Speed to market is crucial, and we need to work as quickly as possible.”
Another way to shorten response time is to keep production close to the market in which the goods are sold. Zara, whose parent Inditex is based in Spain, sources 60% of its products in Europe and has a typical five-week turnaround time, according to a report by Fung Global Retail and Technology. And UK-based Boohoo sources more than 50% of its goods from its home market, the report said.
“If there is no time on the water for shipping, that means a couple weeks versus a couple months” in terms of getting merchandise to retail shelves, says Baker.
CAA-GBG, Patricia Mercer, Licensing Dir., 646-786-2424, firstname.lastname@example.org
Cartoon Network, Peter Yoder, VP, 212-275-6535, Peter.email@example.com
Conde Naste, Kim Awad, Business Development Dir. Product Licensing, 212-286-3166, firstname.lastname@example.org
The Hershey Co., Ernie Savo, Global Licensing Dir., 717-508-3112, email@example.com
Hybrid Apparel, Darrick Baca, EVP Global Licensing, 714-947-8347, firstname.lastname@example.org
Li & Fung, Marc Compagnon, Group Pres., +852 2806 7942, email@example.com
Marquee Brands, Cory Baker, Chief Operating Officer, 646-661-7780,firstname.lastname@example.org
Peanuts Worldwide, Roz Nowicki, 212-293-8555, email@example.com
Xcel Brands, Kate Twist, Chief Digital Officer, 347-727-2474 x7801