The pace of retailing is quickening, a trend that largely started in the fast-fashion sector. But the effects have spread, such that today, luxury brands are experimenting with new approaches and timelines for introducing and selling their latest fashions. Rather than issuing a winter and a summer collection each year, as has long been the pattern, some of these innovative designers are trying “drops”—frequent introductions of limited product lines—to excite and appeal to consumers.
The drops usually occur about 10–12 times per year. Each one gets promoted on social media, to build buzz and hype. But the offerings are limited in number and assortment, seeking to create a sense of urgency among shoppers. If they miss out on an appealing fashion during March’s drop, they are not going to encounter it in the store in April, for example. This model is notably different from previous designer approaches, which sought to ensure ready accessibility to their fashions, especially at the start of each traditional season, and then marked down the items later in the season to move them off racks.
Thus stores run by famous names like Burberry and Alexander Wang are starting to mimic tactics used by Zara, though they prefer to cite popular streetwear brands such as Nike and Supreme as their main inspiration. Those desirable brands get shoppers to line up around the block for the latest introductions of their product. Although a luxury fashion shopper is unlikely to camp out overnight for the latest Alexander Wang dress design, the company hopes that she will be motivated to ensure she visits the store on the very day the dress arrives.
However, other luxury brands reject this approach; the CEO of Louis Vuitton explicitly dismissed the idea by noting that “‘Supreme-like’ drops, for us, is not a fundamental business model.” As an alternative, Tom Ford and Ralph Lauren have experimented with a strategy called “see now, buy now,” such that they move merchandise into stores immediately following their introduction during runway fashion shows. Overall, the question for these designer brands appears fundamental: Can changing merchandise timing change their performance and sales outcomes?
Discussion Question:
- How do more frequent “drops” affect strategic profit model ratios?
- Is this approach really “new”? Do other retailers employ similar strategies, and how?
- Which components of the merchandise budget plan would more frequent drops affect?
- Can changing merchandise timing change performance and sales outcomes?
Source: Ray A. Smith, The Wall Street Journal, July 23, 2018