The 2020 pandemic left buyers and suppliers in a delicate state. In response to the crisis, many large fashion brands canceled orders they made with manufacturers, refusing to pay for completed goods. These canceled orders devastated some manufacturers and resulted in a strained relationship between buyer and supplier. Even the strongest manufacturers couldn’t avoid the impact on their supply chains. For example, Shahi Exports, India’s largest exporter of ready-to-wear clothing and the producer for brands like Gap, Nike, and Uniqlo, reported buyers purchasing 20 to 30 percent lower product quantities than they did before the pandemic.
This decrease in spending reveals the larger inequities between suppliers in developing countries and Western buyers. Because buyers are traditionally empowered to reduce expenditure and supply risk by any means necessary, manufacturers often feel pressured to concede to buyers’ prices and terms. But working relationship problems go beyond the power disparities between buyers, suppliers, and producers. Since the fashion industry depends highly on more globalized operations, retail manufacturers are one of the groups most vulnerable to initial supply chain disruption. That can result in buyers ultimately paying more to get their designs from point A to point B to avoid supply chain disruption.
With supply risk at stake, how can buyers better support their partners to ensure that resources are optimized and production lines are well-planned?
What is Product Assortment?
Product assortment refers to a range of products that a retailer or brand presents to its consumers. When strategizing a fashion brand’s ideal product assortment, it is important to consider two elements:
Breadth (or width) - how many different types of products a retailer offers
Depth (or length) - the number of categories of a particular product sold by the retailer).
For example, if a fashion brand wants to focus on wider assortment breadth, rather than purchase two different styles with 5,000 pieces each they would buy four different styles with 2,500 pieces each. The main caveat for focusing on wider breadth is that more breadth means finding and doing business with more manufacturers who are willing to accept lower quantities per style. By contrast, a brand focusing on depth would invest more in the style selection. In other words, instead of a fashion brand selecting 10 styles and purchasing 1,000 pieces each, they would only select four styles and buy 2,500 pieces each. Brands with more product assortment depth means that they are less diversified. Therefore, if a brand chooses to focus on depth, they must also carefully track and analyze product/style decisions based on sales data because a wrong decision could intensify any negative impact on sales.
Considering breadth and depth is crucial when strategizing product assortment because it plays an important role during the retail planning process. When brands consider product assortment during the retail planning process, they can gain more insight as to whether the brand is meeting their financial and inventory targets and how they are meeting those targets. In addition to gaining better insights into financial and inventory targets, product assortment strategy is also important because it interweaves with a fashion brand’s identity. Indeed, a successful product assortment strategy will effectively communicate the stylistic scope—and thus the creative voice— offered by a fashion brand.
Breadth or Depth?
So, how should a fashion brand decide whether to focus on breadth or depth? In short, it depends. A fashion brand should certainly choose one or the other. Usually, the only brands that can afford to focus on both breadth and depth simultaneously are big-box retailers or their fashion brand equivalent because they are typically the only ones with the space large enough to store and display an exceptionally wide and long product assortment. Not to mention big-box retailers and brands are usually the only ones with the resources necessary to discount big-ticket items, which ultimately (as part of their strategy) undercut specialty stores and smaller retailers.
One advantage to focusing on wider assortment breadth is that a fashion brand can appeal to bigger demographics. However, the caveat of appealing to bigger demographics is that it becomes more difficult to engage more dedicated and loyal niche markets. A 2021 McKinsey State of Fashion report offers insight into how to go about strategizing product assortment. According to the report, fashion brands had to make bold decisions during the pandemic and in other disrupted environments. Thus, the report argues that better product assortments emerge from novel strategies that focus on “profitability, value, simplicity, and downsized collections, rather than discounting and volumes.” Practical steps towards this include securing high-quality and reliable production capacity. In addition, when partnering with trusted fashion brands, reliable suppliers should make concessions in the form of bundling. Navdeep Sodhi, a pricing consultant expert and author of Six Sigma Pricing: Improving Pricing Operations to Increase Profits, recommends bundling “fast- with slow-moving products, newer technology with legacy products, products with value-adding services, or standard with custom products.” Another practical step towards making novel strategies includes what McKinsey calls, “making the long-overdue shift” towards a demand-focused model that can function in a disrupted environment. Leveraging volume commitments and partnering with reliable and high-quality manufacturers creates a win-win exchange– fashion brands can help manufacturers gain some financial stability and improve their brand’s ethical commitments.
Fashion brands should find some hope for what lies ahead. According to a United Nations Conference on Trade and Development report, a strong global trade recovery is expected. It is important for fashion brands to regularly evaluate their product assortment strategy, considering its tight connection with other aspects of a fashion brand’s business such as supplier partnerships, and communicating the brand’s identity and values to consumers. They must continually look for pockets of momentum that can improve its durability and overall success. The pandemic revealed just how important it is for fashion brands to create their next plan. Given the rapidly changing state of the fashion industry and its highly competitive market, by giving product assortment further reflection, fashion brands can take the right steps towards a stronger business—one that can thrive even in times of disruption.
Frida Plata studied the Humanities at the University of Chicago (MA, 2020). She is currently a Content Marketing Intern at MakersValley. An avid museum-goer, Frida enjoys learning about art and fashion from all over the world.