Ecommerce “Great Leap Forward:” What Will Be the Impact on The Fashion Industry in 2021 and Beyond?

 

Well, we all know what happened in 2020; we went to ground and tried to live our lives at the same time. What did we have to do to survive? And what could we not do anymore?

No more restaurants and bars; sporting events; shopping at the store (we even may have had groceries delivered); events, concerts, just being with friends; in-person classes. Oh, and going to the office; WFH became as much a part of our vocabulary as WTF.

And it was (the latter).

But, in 2020 as compared to prior crises, ecommerce was developed to a point where it could take up at least some of the retail slack, if not most of it. Maybe it wasn’t as fun or romantic to make a daily Amazon run as it was before to run to the store or the mall, but it saved us. Zoom and other meeting platforms became our default method of communication for business, personal and teaching; sometime during 2020 Zoom became a verb-let’s Zoom tomorrow.

The effect was astounding. Could we say it was the “white swan in a black sea?” Ecommerce, remote learning, an online meeting were increasing anyway, but what happened took everyone’s breath away. The Economist magazine, in their “The World in 2021” issue, called it “The Tech-Celeration.” The article quotes McKinsey as saying “Recent data show that we have vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks.” In the US, ten years’ growth in three months. In Italy, it reports, it was a “ten-year revolutionary leap.”  Yes, ecommerce was steadily growing before, but now, badabing, it gets a new name—Default.

Further, the same article points out the changes in banking and education, citing cashless transactions and remote learning. I can report, as an instructor, that in March 2020 we had to transition to remote learning literally overnight. We got through it, but it was clumsy at best. After myriad articles and meetings (on Zoom and other platforms), we all got some idea of what it took to improve the learning when your students are little squares who may or may not choose to reveal themselves visually. Whereas there is no doubt that both students and instructors would prefer the face-to-face mode (unanimous sentiment when students are polled at the end of semester), we learned somethings that will be valuable in the future, such as: 1. Lectures are boring, I don’t care who you are-much less “sage on the stage;” 2. Students can be engaged most effectively by letting them express themselves through assignments that are knowledge plus opinion-based; 3. The time saved by not commuting can be put to good use.

The same Economist article states that executives they polled were definitely willing to allow more of their employees to WFH permanently. Particularly in the growing technology sector, it reports that 34% of executives, up from 22% the prior year, were willing to allow at least a tenth of their employees to work from home two or more days per week.  We have yet to see what, other than lowered commuting and building costs, comes as a positive when that becomes reality. Does a Zoom meeting have the same impact as a face-to-face meeting? Well, let’s see… You can’t mute the speaker when you are in the same room; and you must at least pretend to be paying attention. As with remote classes, engagement is the biggest challenge. For the workplace,  reduction in takeaways, reaction time, enthusiasm and morale can be business-changing. 

While consumers were able to find almost all of what they needed or wanted to buy online, what they didn’t need or want was apparel and accessories. Early on in the pandemic, I tried to convince myself and others that your attitude toward work or meetings would be affected by your dress. If you dressed smartly, you would work smartly; if you dressed sloppily or casually, it would reflect in your productivity and results. As an instructor, I cannot tell students what to wear or where to sit; as a supervisor, I sure could—if I weren’t guilty of the same lackadaisical habits myself. That said, I believed and still believe my presumption was correct. 

What happened to apparel in 2020? The above Statista graph demonstrates the precipitous drop even better than the numbers:

Per the graph above, clothing store sales hid their nadir in April 2020 of $2194 million, against $21,416 million in April 2019. It doesn’t get much worse than that. Headline-making bankruptcies abounded as a result of this trend and the inability to physically shop (clothing is a high-touch attribute item, and I don’t care how good online shopping is, buying a new shirt or dress online just is not as good, and MUCH easier to walk away from).

What, then, happens to the fashion industry, in particular Womenswear, which has traditionally been the volume leader (also remember women may buy clothes for men as well)? Do people just buy more t-shirts and sweatpants? More structured and function-oriented clothing like suits, dresses, sportscoats, ties etc. go the way of the dinosaurs? When today’s parents become grandparents and show their grandchildren old pictures, do they get asked, “did people really dress like that?”

As with the acceleration of ecommerce due to the Pandemic, other trends will continue to accelerate-even if the trends themselves are decelerating. One clear example relevant to the fashion industry that was well under way before the Pandemic hit was-dressing up. When you watch TV series that were shot in the 50’s or 60’s of last century, you can see everyone dressed up prim and proper-suits, shirts, ties, dresses, hats. That trend had been casualized long ago- for better or worse- and now? Will anyone ever agree to wear a shirt and tie to the office? Or anywhere? Again, I will ask you to consider how that casualization affected people’s attitude toward work, for better or worse, even before the pandemic (I can’t accept “no effect” as an answer because you know it isn’t the case)?

Wait, it gets worse for the fashion industry. Fashion business was always best when there was a trend or mood in the country which got people excited to buy more clothes; it is rare that people buy clothes because they really need them. Now, how to popularize a fashion trend? I don’t care how good your image is, clothing needs to be seen in person, touched, felt, tried on. Yes, you can do it after receiving it and return it if you don’t like it; but, by then, the thrill is gone. And, where you could try on 20 items in a few minutes, can you do that now? No. Not even if you get a cute little subscription box that some AI made up for you. Not even Alexa can do that yet—if ever.

So, what’s the hope for the fashion industry? Whatever it is, it is going to be a long road back. Clothing purchased in the future will have to distinguish itself clearly from others- fabric, color, sustainability- to be added to a wardrobe when it isn’t needed. Children who eventually attend school in person will need clothing. As will people who have to go back to the office, for at least part of the week. That said, something bought because you have to carries less weight and volume than, “I love it.” Pockets of consumers, especially Gen Z, will still shop for distinctive items that fit their requirement; but the general public will need a lot more stimulation to get even close to resuming OR restructuring their former habits.

The best hope for the fashion industry is-human nature. What provides the best chance for rebirth of the industry is the fact that, once allowed, human beings will crave personal contact and appreciate it more than before. People who have been sequestered with Zoom meetings will want to have a laugh with someone less than social distance from them. Human beings have been gathering since time immemorial and no Pandemic is going to change that. Will that result in a resurgence of the fashion industry to former volume levels? It could, after a while, but that, I am sure, will be largely populated by people buying fewer, and better apparel and accessories; as well,  purchases will be affected more than ever by brand image and social criteria. Does this mean nobody will buy no-name, disposable clothing anymore? Of course not, but the proportion of total fashion purchases will change drastically- hopefully for the better. 

Sorry, Zara. 

Happy 2021! Here’s to a better world with everyone holding hands, appreciating each other, no matter who or where they are, what their nationality or anything else about them is, and all participating to be a better they. 

12/29/2020

 Footnotes: 

Statista.com, “US Retail: Monthly Clothing Store Statistics, 2017-2020, https://www.statista.com/topics/965/apparel-market-in-the-us/

  The Economist Magazine December 2020, “The World in 2021 Issue;” Tom Standage, “After the Tech-Celeration”

  Ibid.

The Package That Cried

 The following is dedicated to the US Postal Service, who really made people nervous but ended up delivering:

I am a delicate package

Of a delicate painting

Of a delicate little girl.

I hoped to fly swiftly

To the little girl’s home

In time for Christmas.

No! I was crushed for days

Among heavy and bulky

And rude packages of

Food processors

Pots and Pans

Microwaves.

Can’t anybody read?

The sticker on my outside says

“Fragile”

And I am.

Sitting, crushed

In a bag

In a warehouse

On a truck

In another warehouse

On another truck

I began to think

Is this the end?

Will I end my existence

Here among these rude boys

Not with the child?

So I cried

And cried

And sobbed

What else could I do?

It's Jerky to Eat Turkey- a Poem by Michael Serwetz

(Occasionally, I do feel the urge to write poetry. Enjoy your turkey leftovers with this one)

It’s Jerky to Eat Turkey

It’s jerky to eat Turkey

For a whole entire week,

One day after the next,

Endless bones and meat.

I thought dinosaurs were extinct?

The turkey agrees:

“I eat this and that, 

Huge and all over the joint;

Only, I am so, so fat

I can barely walk—Wait--

Now, I get the point!”

Preparing a turkey

Is like running a country

The whole is so, so big

But it’s the parts that count.

So break down and break it down,

Then you won’t feel jerky

To eat Turkey. 

China-US Relations; Clean the Stain and Move Forward

 

China-US Relations; Clean the Stain and Move Forward

Since the Pandemic began, literally thousands of cases of harassment, or worse, of Chinese and Chinese-Americans have been reported, despite the fact that, even if the virus did originate in China, those living in NY and other US cities had nothing to do with it, and are suffering the same dangers as non-Chinese. Unfortunately, this prejudice was sanctioned and even promoted by the White House (repeatedly). This is a stain on our democracy, but unfortunately not a new one.

Don’t think that institutionalized prejudice against Chinese began with Trump. It goes back nearly 150 years to the Chinese Exclusion Act, signed into law in 1882 and only repealed in 1943, which prohibited Chinese immigration into the US. The Page Act, signed into law in 1875, specifically targeted Chinese women. (Wikipedia)

In 1876, Mark Twain and Bret Harte collaborated on a play entitled, “Ah Sin” which told the story of a Chinese immigrant in the mining camp who learns from his Irish opponents how to cheat at cards better than them, and the punishment he suffers for doing what they do routinely. The play was intended to depict the hypocritical attitude of white Americans toward Chinese Immigrants; unfortunately, it had exactly the opposite effect. The play was not well received, and people took its meaning to be critical of Chinese Immigration.

Fast forward. We should first answer the question, “Wouldn’t the entire planet be better off with a productive relationship between the two great powers who have a dominant effect on world politics and economy?” My answer is, “Yes.”

I think we can also agree that whatever prejudice exists, it should not be the White House’ role to promote it. If you believe in Lead by Example, that ain’t it.

So, what do we do now, with a new Administration less than two months away?

Thus far, I have seen nothing but what I believe are wrong-footed strategies, even from those who should know.  One example is (with all due respect to my favorite mag) The Economist magazine, which, in the Leaders section of its November 21-27 issue, ran a piece entitled, “The China Strategy America Needs.”  The subtitle is, “As President, Joe Biden should aim to strike a grand bargain with America’s democratic allies.”

For several reasons, I don’t agree with this approach. Main reasons:

1. Democratic is not the issue. A functional one-party government is better than a dysfunctional two-party one. ‘Nuf said;

2. Even if we strike this “bargain,” what are the chances that our weaker allies will stand up to pressure, especially those in Asia who may even share a border with China?

3. It has been repeatedly shown in the past that China is sensitive, even a bit paranoid, about being “surrounded.” Isn’t this one key to why Mao agreed to the Shanghai Communique with Nixon and Kissinger in 1972? So how exactly does that solve the problem? China is supposed to say omigod, I should give in and do anything this group wants? History tells us this will never happen.

I am not just being a smartass here; I have studied, done business with, lived and taught in China for several decades, so I have a lot of empirical background for my disagreement. What do I think we should do?

1. Give up the democracy condition. China is not and never will be a democracy like the US (especially after the example we have provided for the world recently), and, BTW, it no longer fits the Communist profile, and BTW, our human rights record is not sparkling clean.

2. Focus on mutual economic benefit. There is no doubt that both countries have a huge amount to gain from a better business relationship.

3. Give up the “surround China” strategy. Sun Tzu, in his Art of War, states “Win All Without Fighting” as one of his main principles. What is to be gained by a costly war of attrition, by the US or its allies? We should be the leader of a successful effort, not a debilitating battle.

4. Talk to China directly, honestly and with respect for both our and their requirements; set the final objectives, and ground rules toward them. 

5. ALL politics is culturally-based. Make understanding their culture, and our own, good and bad, as a prerequisite for negotiations, with equal respect for both. 

We need to clean our glasses and see both sides clearly. My book, “Travels with Mikey: Business Life of a Global Foodie” soon to be available, will chronicle my half century of immersion in global business from a cultural point of view (yes, food is the focal point of every culture).

For now, I have little impact on stain removal. Those in power do, and, even with their best efforts, it will take a lot of time and effort to remove it. Prejudice against Chinese and other minorities is ingrained into our culture, and we cannot take our rightful leadership position in the world unless we recognize and eliminate it from influencing our attitudes and thus, our policy.

Here's another wonderful quote from Grace Lee Boggs:

Blockchain for Supply Chains 2020: Will this ever work for the Fashion Industries?

 In April of 2018, after some rapturous reading about Blockchain, and with stars in my eyes as to its potential for the Fashion Industries, I wrote an article reflecting my usual optimism for disruptive and innovative solutions: “Blockchain for Supply Chains: A single, immutable truth for our future” which I reposted on my blog www.isourcerer.com . I continue to believe that digitization is a needed solution for the fashion industries; and that we can only hope to realize that solution by first recognizing and admitting where we are in the process today.

Two and a half years later, Blockchain is apparently a renewed opportunity for tech companies to peddle their wares based on the US crackdown on supply chains in China’s Xinjiang Province that (are proven) to employ forced labor.

I recently attended some presentations about technology in the Fashion Industries at which the companies who spoke took the attitude that digitization of the fashion industry was as easy as “getting on to the Internet.” 

I was taken aback by this type of statement. I thought back to my article and wondered, “Have we made such dramatic progress in digitization during the last 30 months? Did I totally miss it?”

After some research and reflection, I believe that the same problems that existed then exist now, and statements like the above by tech companies are, in the least, misleading.

What are the obstacles and problems for digitization of fashion and like industries (such as accessories, home textiles, lower priced kitchen ware) to achieve digitization of the ENTIRE supply chain (which would be necessary for Blockchain to be a fully effective solution)?

1. Supply chains are Analog and Too Big- Even if the final manufacturer of the exported product has the capability to digitize their factory (not likely without major investment in equipment and systems), their supply chains are overwhelmingly analog. The Xinjiang cotton issue is a good example: Even if the fabric mill is proven to not use forced labor, what about the final shipper of the cotton yarn? what about the dyer? The spinner? The cotton broker? The cotton producer? Most important, do any of these have the capability or the willingness to install technology that will not only allow them to report their sources and control their supply chains? If so, does their downstream also have the way and the will?

Let’s take a look at a typical apparel product. In this case, a cotton yarn-dye shirt, made in China, where all the suppliers of the final producer factory are somewhere in China (the situation is more complicated if some parts have to be imported). Let’s list directly product-related ones:

1. Yarn-dyed fabric from the fabric mill. Take into consideration the suppliers of the mill:

a. Raw cotton supplier;

b. Yarn spinner (if not same mill)

c. Yarn dyer (if not same mill)

i. Dye stuffs supplier

ii. Other chemicals supplier

iii. Finishing Chemicals supplier

d. Weaving mill (if not same)

e. Packing materials for finished fabric

(This is just the fabric)

2. Thread

3. Buttons

4. Interlining

5. Collar stay

6. Seam tape

7. Logos or labels

8. Packing materials:

a. Collar band

b. I board

c. Paper under collar band

d. Pins

e. Tissue

f. Plastic bags

g. Clips

h. Tags ie, UPC, brand, store

i. Swiftachs for tags

j. Butterfly clip

9. Packaging materials:

a. Inner cartons

b. Outer cartons

c. Carton tape

d. Carton labels

Did you count? How, in any shape or form, is this “easy” to track with Blockchain? Do you exempt some products from tracking? If so, which ones and how does that stand up to the principle of traceability?

The truth is, that even most of the final producers of the exported article don’t have this technology installed, and how many are willing to spend the money to do so? Most factories I have worked with, for example, keep their fabric receipts and inventories in a notebook. 

These factories also know that their supply chains are far from digitization. And that their supply chains have too many elements to control effectively.

For example, a typical yarn dye shirt has 14-15 materials and findings to produce the final article; and those suppliers have their own list of suppliers.

(Note: The above does not matter which country it is imported from. All have to make the same shirt. What does matter is that certain countries will have to import some materials from other countries, which makes the process even more difficult.)

So, we expect buyers, small or large, to mandate their suppliers to control all of this via digitization? And to have accurate information for presentation when needed?

2. Especially in today’s world, who is willing to invest the money and disruption that such a conversion will require?

• Factories? Who are experiencing drastic reductions in their business and buyers cancelling or refusing to take orders already finished?

• The Factories’ Suppliers? Who are also affected by the above circumstances, and who would generally have more work to do in controlling their supply chains.

• The Suppliers’ Suppliers?

• The Buyers? Certainly, if you are a small to medium size buyer, you cannot change the supply chain world. Saying that you could find suppliers who had achieved or had potential to achieve digitization, how much more would you have to pay?

• Large Buyers? Are they willing to spend the multiple millions it would take to solve potential ethical issues, or even to streamline their supply chains? They would be on the hook for subsidizing the entire downstream?

So we have can’t and maybe won’t facing us as obstacles to digitization of the supply chains. NOT “as easy as connecting to the Internet” by a long stretch. And stretch are what those claims are.

3. Who is willing to lead by example? If digitization, as sustainability, is a worthwhile goal in the medium to long term, which of the major retailers or brands is willing to step up to the plate? Make no mistake about it, as I said in 2018, this is what it is going to take to get digitization off the schneid (starting point).

4. There are more important things to worry about in the fashion industries, like why people aren’t buying clothes.

This is still a worthwhile goal. As is sustainability. But until something happens that will get them moving, they will be just talk or, at best, small efforts with big talk.

My conclusion is that we are basically at the same point in digitization of supply chains in low-tech industries as we were two and a half years ago. At the starting gate with an honorable goal. And, more than likely, we will never get to the point of complete digitization. IF, in fact, we even should spend time and money on it.

In every industry, there are leaders. Leaders need to lead. Sometimes, however, leadership requires taking money out of your pockets. So, let’s see some of the industry giants lead by example first; spend some of your profits or C-Suite compensation on something worthwhile..

Until that time, I urge you all to look at the reality of digitization today. Those of us who have traveled the world of sourcing know what that is. For those who haven’t, don’t buy sales pitches at face value.

Sustainability, the Fashion Industry and Cow Farts: Is That All There Is?

You try. I Googled “Sustainability efforts” and a few variations of that search term. What I did get back was a very interesting article about how Burger King has introduced lemongrass to its cows’ diet, which will make their intake easier to digest, resulting in fewer cow farts, which in turn results in less harmful methane gas in the environment. 

What I didn’t get was any articles on page 1 (or 2 or 3) from the search results referring to efforts made by apparel or textile brands or retailers.

When I added “Major Apparel Companies” to my search, I did get some news about companies you would recognize like Adidas, H&M, Burberry detailing some sustainable products or events that are geared to warm your heart about sustainability. 

Sorry to say, for me it didn’t do much. Sustainability in apparel is not a small matter; with the millions of tons of apparel that are purchased—and thrown away—every year, a style here or there does not solve the problem. 

Who Can Make a Real Difference?

Further, the apparel industry volume is dominated by a few huge companies. Therefore, it stands to reason that, even if thousands of small companies made huge efforts to totally or overwhelmingly cleanse their lines of products that were not sustainable, it would make little impact, at least in the short term; one article in Business of Society, for example, said that “The top 20 companies in the clothing industry, mostly in the luxury segment, account for 97% of its economic profit (McKinsey, 2019).”

So, it stands to reason that, without major, tangible and measurable efforts by these big companies, sustainability is going nowhere. If companies, driven by profits and overwhelmingly answerable for those, are corporately giving lip service to sustainability to placate customers, or trying to answer the sustainability call while also satisfying the CFO, Board and shareholders, no measurable progress will ever be made. 

Does anyone care?

Clearly, today’s customers are very interested in sustainability and are willing to put their money where their mouth is. The same report in Business of Society claims:

 94% of Gen Zers believe that companies should address social and environmental issues (Cone, 2017). 

 Gen Z alone will account for 40 percent of global consumers by 2020. (McKinsey, 2019)

 90% of Millennials would boycott or otherwise refuse to buy from a company that is doing harm (Cone, 2017)

 Consumers want to support brands that are doing good in the world, with 66 percent willing to pay more for sustainable goods (McKinsey, 2019). (Business of Society)

The above speaks to their motivation to buy clothes. If clothes are seen as a negative influence, or just not a positive one, there is no urgency to buy. Spend your money on something else.

How do you Measure Sustainability?

So how to hold major companies accountable and show customers whether they are really making substantial efforts toward sustainability? I am pretty sure Burger King has already devised some sort of fartmeter to measure the efforts of the cows’ diet change (I really want to taste a Whopper fed with lemongrass!). What can the apparel industry do?

Metrics have been developed to measure sustainability efforts, but I feel they are too obtuse to clearly measure all of the efforts that could possibly be made on a major scale by major clothing companies:

 The TBL, or Triple Bottom Line, put forth by John Elkington in the 1990s, seeks to add environmental and social dimensions to financial reporting. As the researchers at Indiana University stated,” The trick isn’t defining TBL. The trick is measuring it.”

 The Sustainable Apparel Coalition (a very well-meaning organization with precious little clout) has developed the HIgg Index, which seeks to measure sustainability efforts in each segment of the apparel process, from design through delivery. Again, well meaning, but can you imagine VF or PVH paying for the technological changes to measure what are sometimes vague steps from the beginning to the end of their supply chains?

What I propose next is that the industry leaders be mandated by customers to develop some metrics that can be easily understood and followed, which will be required for financial and business reporting on a quarterly and annual basis (AKA CSR?), such as:

 Amount spent on sustainability efforts, to be specifically detailed;

 Cost of measures taken to reduce waste and environmental damage in processing, packing, packaging and shipping; again, specifically detailed and defined;

 Average lifecycle of garments based on testing, compared to previous periods;

 Number and weight of garments recycled per period, regardless of original brand.

It will take better accountants than me to clarify and quantify these types of measurement, but guess what? These large companies all have them; and if they don’t, they have the money to hire some. The major question is, again, will they spend the money to institute these measures? And the more important question is, will they actually DO something that shows up in the measures?

Easy, Do Now Steps to Radical Improvement.

To ease the path, I would suggest some simple and straightforward measures that could be taken, such as:

 Say NO to plastics and synthetics, as in ALL of them. As stated in the article, “Sustainability Trends that will Shape the 2020’s”, EcoEnclose suggests, ”Changes to our relationship with Plastic”. Yes, as in NONE. The damage done by plastic and synthetics to the environment is incalculable. From packing, packaging to microparticles in the laundry water, it is easy to eliminate or change everything NOW. For example, no plastic bags on garments or in packaging; no plastic bags in shipping to customers. NONE. What is stopping you other than the bottom line? Can any of the large apparel companies tell us that this is a BAD MOVE?

 Follow this guide in every stage and product of the supply chain. This logic should be carried to the entire product: buttons, thread, the fabric itself can be sustainable. NOW.

 Be Investment Dressing; make better quality, easy-care garments. As we did from the outset at Lotus & Michael- The Art of Shirts-- make quality garments that will last longer, that require cold washing and NO drying. As the writer of the BOS article quoted earlier said, 

o “I am often asked what one can do as an individual to be more sustainable when it comes to fashion.  My answer is in two main parts.  First, buy fewer, better quality items and wear them for longer.  Classic, good quality pieces will wear better and last longer.  Even if they cost a bit more at purchase their extended life makes them a more affordable option in the long run.  Second, re-think how you care for your clothes.  Washing them less, at lower temperatures, and hanging them to dry will all result in gains for both your energy bill, as well as the environment, estimated at a 3% carbon reduction (WRAP, 2017).  “

 Start a Recycling program- NOW. Every garment made and shipped to customers should be clearly marked as to how it can be returned for recycling- permanently and next to the care label.

 Communicate with your customers. Let them know what you are doing and make them into supporters and fans. There is no doubt that, if they are fans of your efforts, they will:

o Spend more on their clothes;

o Buy more garments (if you make them interesting);

o Become brand ambassadors, telling their friends, colleagues etc. by WOM or Social Media.

o Tell you what they like and don’t like, as well as give you suggestions, so the relationship feels two-way. 99% of Brands today talk AT their customers, not TO.

o Only the customer can be the driver of these efforts. Without significant pressure on their sales, companies will not make significant changes.

I understand.

That moving big companies is a bit like turning the Titanic. While there is a lot to do even to execute simple steps like I have proposed above, the Power of the Ship will be awesome once the turn is made.

And, if Leadership sets and implements priorities of action that maybe leaves the Finance guys grumbling, I believe it could happen surprisingly fast.

Let’s leave it at, in this case, something is not better than nothing. Everything is better than something. We need measurable, significant action, not a style here or there. 

 

REPOST: Sun Tzu's Six Principles- Wait- 2,500 year old strategy still works today? Yes, It does

(This is a repost of an article originally written in July 2019. One Pandemic Later, standing in the graveyard of iconic brands, I believe we should understand that data, while it everyday gains in importance for us, will not give us the answers. STRATEGY comes from the human mind. The below might be good to print and paste on your wall at home or wherever from you are working..)

Timeless, spot on and still studied today, 2500 years later.  Sun Tzu wrote a lot about Strategy and Leadership, but these six principles are the cornerstone of his teachings, and continue to apply to business today.

First, here they are:

1. Win all without fighting

2. Avoid Strength, Attack Weakness

3. Deception and Foreknowledge

4. Speed and Preparation

5. Shape your Opponent

6. Character-based Leadership

Now, let's look at their application in today's business world:

Principle 1- Win all without fighting

1. Gain business and/or market share without:

1. Spending large sums on gaining that share-eg., advertising; advertise cleverly and use social media for your advantage;

2. Compromising your product by reducing price and/or quality

3. Do not use price as a strategy- fashion merchandising which makes your offering special will get you an advantage (Inditex)

4. Analyze costs of growth- more business does not necessarily mean more spend (Think Big, Be Small)

Principle 2- Avoid Strength, Attack Weakness

1. Find your Market NICHE- what separates you from your competition?

2. Don’t try to COPY dominant product- IMPROVE or REINVENT it;

3. Find a customer who has not been served or served properly;

4. Find a new Geography- eg., urban vs. rural

5. Fill a need- eg., Untuckit

6. Incumbents have more money than you so do not compete head on;

7. Incumbents may not have the will to enter a new market segment-it will cost you less to start up than it will them.

Principle 3- Deception and Foreknowledge

1. THOROUGHLY research and know your market, your customer- what they have, what they need, what their shopping habits and fashion choices (Untuckit);

2. Never stop research and discovery-even for a day;

3. Use all available resources provided by technology (AI, CDP, Social media);

4. Always be first-do something new every day

5. There is no limit on disruption (Amazon)

6. Keep your competition guessing;

7. Know your capabilities- don’t bite off more than you can chew;

8. FOCUS on what you do best;

9. Have better fashion insight than your competitors- hire the team that can see the future.

Principle 4- Speed and Preparation

1. Speed to Market- be faster better cheaper (maybe)

2. Gather the best information available

3. Never give yourself too much credit for what you did yesterday;

4. Prepare your offering with Common Sense;

5. Use the best technology available for information and customer service;

6. Have better and faster service than your competitor;

7. TALK to your customer;

8. Be decisive- sometimes you will fail, but not if you don’t try;

9. Shorten your design/delivery cycle;

10. Think It Through.

Principle 5- Shape Your Opponent

1. Make your competitors chase you- not the opposite- make them play in YOUR sandbox;

2. Second is last- be FIRST

3. Update/change/grow your offering faster than the competition (Apple)

4. Your fashion and product/brand image should be an EXAMPLE your competitors want to follow;

5. Your offering must be simple, accessible, easy to understand and buy.

Principle 6- Character-based Leadership

1. Hire PEOPLE, not RESUMES;

2. Hire by CHARACTER fit, with at least the following characteristics:

1. Courage

2. Will to Succeed and Win

3. Intelligence

4. Loyalty

5. Likability

3. A leader will only succeed with a strong TEAM whose skills complement each other;

4. Build Great Captains, whose character and skills will help you as you grow;

5. Challenge to change and react, never sit;

6. Original Thinking-the Fashion Industry is build on CHANGE;

7. Open- Minded Management

8. Humility- Never get too impressed with yourself;

9. Lead By Example-all the above won’t work if it is not part of your style.

Sounds simple, right? How many of you business leaders can state with perfect honesty that the above is exactly your management philosophy, style and execution? (I can)

When we attend the funerals of those brands and institutions that have passed on, we can look at the above and always find the causes.

Study it. Learn it. Succeed. Or don't.

 

CORRECTION: Macy's is NOT "The Asteroid that Killed Retail." Who is?

 CORRECTION: Macy’s is NOT the Asteroid that Killed Retail. Who Is?

 

 

In April of 2018, I wrote the article, “Macy’s: The Asteroid that Killed Retail”  in which I blamed Macy’s (which is now Federated) for changing the face of retail by buying and absorbing 85 distinguished Department and Specialty Stores, some of which had century-old histories, and sanitizing them with the sometimes unknown and unrespected name of Macy’s. Let’s look at the list again, it is as tragic in 2020 as it was when it was done, and in 2018 when I examined it in the above article:

Fast Forward to December 19, 1994. Federated Department Stores “bought” Macy’s (but yet it was Macy’s management that ran the show and still is). Eleven years later, in 2005, Fedmacys bought May Company Stores, completing the hat trick the same year with the purchase of Broadway Stores. By March 2005, All units were converted to Macy’s stores. The other names, their histories, and maybe their loyal followings, were dead.

 

Look at the list of those stores sanitized to be Macy’s (Wikipedia, The Dead Department Stores–you can see the rest of the names in the graveyard here:

 

·      Abraham & Straus (Macy's in 1995)

·      D. M. Read Macy's In 1990

·      Ames (Eastpoint)

·      Bamberger's (Macy's in 1986)

·      The Bon Marché (Macy's in 2005)

·      C.C. Anderson's Golden Rule (The Bon Marché in 1923)

·      The Paris (The Bon Marché in the early 1980s)

·      Barnes-Woodin Co. (Yakima, Washington, The Bon Marché in 1952)

·      Columbia River Mercantile

·      A. M. Jensen's (Walla Walla, Washington, The Bon Marché in 1951)

·      Missoula Mercantile Co. (Missoula, Montana, The Bon Marché in 1981)

·      Montague-McHugh (Bellingham, Washington, The Bon Marché in the 1950s)

·      Runbaugh-Mclain (Everett, Washington, The Bon Marché in 1952)

·      Stone-Fisher Co. (Tacoma, Washington, The Bon Marché in 1952)

·      Russell's (The Bon Marché after World War II)

·      Bullock's (Macy's in 1996)

·      Bullocks Wilshire

·      Burdines (Macy's in 2005)

·      Maas Brothers

·      Carter Hawley Hale Stores (merged into Macy's West 1996)

·      The Broadway (Southern California). Headquartered in Los Angeles.

·      Emporium-Capwell (Northern California)

·      Capwell's (East Bay)

·      The Emporium (San Francisco and South Bay, North Bay)

·      Hale Bros. (San Francisco and Sacramento)

·      Weinstock's (Sacramento and Reno)

·      Davison's (Macy's in 1986)

·      The F & R Lazarus and Co. (Macy's in 2005)

·      Shillito's

·      Rike Kumler Co. (Rike's)

·      William H. Block Co. (Blocks)

·      Joseph Horne Co. (Horne's)

·      Herpolsheimer's

·      Famous-Barr (Macy's in 2006)

·      William Barr Dry Goods Co.

·      The Famous Clothing Store

·      Filene's (Macy's in 2006)

·      Filene's Basement (separated from Filene's in 1988, closed in 2011)

·      G. Fox & Co.

·      B. Peck & Co. (sold to Gamble-Skogmo, Inc.)^[1]

·      Steiger's

·      Foley's (Macy's in 2006)

·      May-Daniels & Fisher

·      Daniels & Fisher

·      May Company Denver

·      The Denver Dry Goods Company

·      Z.L. White

·      Sanger-Harris

·      A. Harris

·      Sanger Brothers

·      Gold Circle (discount store chain) Founded in 1967 by Federated; merged into Richway in 1988 and later dismantled during 1990 bankruptcy

·      Gold Triangle (discount store chain for electronics, appliances, home building supply, sporting goods, photography, housewares) Founded in 1970 - closed in 1981, 6 Florida locations - 3 Miami, Plantation, Tampa and Orlando.

·      Goldwater's

·      Goldsmith's Merged into Rich's in mid-1980s. (Macy's in 2005)

·      Hecht's (Macy's in 2006)

·      Castner Knott (Hecht's in 1998)

·      Miller & Rhoads (Hecht's in 1990)

·      Strawbridge's (Macy's in 2006)

·      Thalhimers (Hecht's in 1990)

·      Woodward & Lothrop

·      I. Magnin, owned by Federated 1965-1988 and R.H. Macy Co. 1988-1994; most stores closed 1988-1993, remainder of stores converted to Macy's West and Bullock's or sold to Saks Fifth Avenue. Union Square, San Francisco location eventually incorporated into adjacent Macy's.

·      John Wanamaker or Wanamaker's (Philadelphia and New York City flagship stores), sold to Carter Hawley Hale in 1979, then Washington DC-based Woodward & Lothrop owned by Alfred Taubman; sold to May Company in 1995; merged with Federated Department Stores in 2005 (now known as Macy's, Inc.)

·      The Jones Store (Macy's in 2006)

·      Jordan Marsh (Macy's in 1996)

·      Kaufmann's (Offices merged with Filene's in 2002, Macy's in 2006)

·      May Company Ohio

·      O'Neil's (department store)

·      Stark Dry Goods - Canton (department store)

·      Sibley's

·      William Hengerer Co.

·      Strouss-Hirshberg

·      L.S. Ayres (Macy's in 2006)

·      Stewart's

·      H. & S. Pogue Company

·      Wolf and Dessauer

·      Liberty House (Macy's in 2001)

·      Marshall Field's (Macy's in 2006)

·      Dayton's (Marshall Field's in 2001)

·      Frederick & Nelson (defunct in 1992)

·      The Crescent (department store) (defunct in 1992)

·      Lipman's

·      Halle Brothers Co.

·      Hudson's (Marshall Field's in 2001)

·      J.B. Ivey & Co.

·      Meier & Frank (Macy's in 2006)

·      Zions Cooperative Mercantile Institution (Meier & Frank in 2001)

·      O'Connor Moffat & Co., purchased by R.H. Macy in 1945, renamed Macy's in 1947. Their Union Square, San Francisco location is Macy's flagship West Coast store and headquarters of Macy's West.

·      Rich's (Macy's in 2005)

·      Robinsons-May (Macy's in 2006)

·      May Company California (Robinsons-May in 1993)

·      Hamburger's

·      J. W. Robinson's (Robinsons-May in 1993)

·      Steiger's (May in 1994)

·      Stern's (Macy's in 2001)

·      Gertz

 

No matter who you are, and where you lived, this list brings a memory and a tear to your eye.

 

Now I am correcting myself in the attribution of the death of retail. Macy’s Federated did not kill retail as a whole; they hastened the death of Department Store Retail by robbing their identity and the customer loyalty that kept them going for decades.

 

As it turns out, both Federated and Macy’s, before they merged, and many or most of the above names, were on the sick list before they were absorbed. Case in point: Federated was in Chapter 11 bankruptcy 1990-92 and Macy’s was in that state of business since 1992, and still in 1994 when the negotiations were going on. (Washington Post). I guess all that this proves is that two sick people teaming up do not result in one healthy person.

 

That said, the combined brand and buying power of 85 sometimes iconic or legendary department stores could have been leveraged to create an 85-headed monster that could have competed well for the consumer’s dollar.

 

So Macy’s/Federated didn’t kill retail; they killed Department Store retail. Any chance these hometown units had to compete was erased when they all had to be named Macy’s. That tragic decision goes down in history as one of the most wrong-headed and arrogant decisions in the history of American Retail.

 

What was the disease that made these hometown stores sick in the first place? Same as the fate that befell millions of local stores in rural America. This disease is named Wal-Mart (now Walmart).

 

Then, as time went by, Walmart was joined by a second company named Amazon.

 

My corrected conclusion is that Macy’s was not the Asteroid that Killed Retail- it was one of the dinosaurs that died a slow death due to inability to evolve. IN fact, America was hit by two deadly asteroids: First Walmart, then Amazon. The two together changed the entire retail value proposition for American consumers.

And Macy’s, instead of playing on reputation and loyalty, tried to play in that sandbox. So did many others who have faced the same fate recently.

 

Let’s first look at some numbers which illustrate my point:

 

ANNUAL REVENUE ($BILLIONS)
Date	1994-95	1999	2005	2015	2019
WALMART	82	137.6	281.2	482	519
AMAZON	0	1.64	8.49	107	280.5
COMBINED	82	139.24	289.69	589	799.5
FEDERATED/MACY'S	13	17.7	22.3	27.1	24.5

 

IF we go further back, we can see a day where these department stores, along with others such as Sears and JC Penney, dominated retail. But the fact is, by 1994 when the merger of Federated and Macy’s was agreed, and, coincidentally, the year Amazon got its start, the game was over; American consumers were spending their money elsewhere and department stores became, in the famous words of Perry Mason (and his nemesis Hamilton Burger), “incompetent, irrelevant and immaterial.”

 

So why the hell am I using the term, “killed retail?” Just these two companies are doing a ton of business and making millions of consumers happy every day.

 

The thesis of this article, which I have said many times before, particularly in my article, “Not Understanding the Relationship Between Price and Value Can Be (Is, Was) Lethal”, the price/value proposition in America has been turned on its ear. How Mariana Mazzucato explains it in her great book, “The Value of Everything”(notice the link here is to Amazon:-/):

She says that, previously, the determinants of value actually shaped the price of a good or service. Lately, however, that relationship has gone into reverse and the price of a good is determining its value.

 

There is no doubt that the success of Walmart was and is all about price, and so is Amazon (started by undercutting everyone on books, now is the default site for everything, but still heavily depends on price). So, over the years and more so now, the majority of goods available to Americans fall under this price/value proposition (Walmart and Amazon are not alone; they are joined by Target, TJ Maxx/TJX, Dollar General, Dollar Tree etc. etc.: the lower price I pay, the higher the value to me).

 

This is not the value/price proposition we were raised on in the Department Store era, but it is the overwhelming retail model today. And, when Department Stores as well as Brands like Brooks Brothers abandoned their value proposition in favor of the Walmart/Amazon paradigm, of course they failed.

 

So, this is what I mean by “Killed Retail:” Not one, but two mega-asteroids, Walmart and Amazon, changed not only the face of retail, but murdered what drove retail for the entire 20^th Century:

You pay a little more to buy from the store that you are loyal to, because you have trust in them and the product. When I worked at A&S in Brooklyn during the 1970’s, this is what drove our customers. And when we did give them a sale or promotion, they understood the value and feasted on it.

 

What is worst, it is my theory that this change also contributed to the plummeted standard of living in the US (which I have also written about), and poor working conditions in supplier countries worldwide, because cheap product requires cheap labor, cheap materials, and a cheap experience.

 

What can be done about this situation?

 

First, Brands have to have the courage to stick to the real value price of their products, and not fall into the trap of training their customers to wait for a sale;

 

Second, since loyalty to geography (your local store) is dead and gone, new brands have to give customers a reason to buy other than price: Product, Quality, Business Conduct such as Sustainability. IF enough companies do this, it will start to change minds and the Price Guys will be on the defensive.

 

Disrupt the Disruptors.

 

Honestly speaking, you never know what happens in business, but this might take a while. And it might not.