What is happening today is a most profound shift in the retail and apparel space. the shift from a supply-driven world to a demand-driven world, and the cultural change needed to thrive today. I came across a very interesting take on whats happening today in the retail sector and a peek at how companies need to correct themselves to survive , leave alone thrive , in this new world order of retail .

Read on .

Retail existed for hundreds if not thousands of years before the internet transformed society. Back then, shopping was a local activity. A shopper could only buy products in her physical vicinity. If brands wanted to sell their products, they usually had to open up physical stores or enlist people to sell their products as door to door salesmen. The impact of retail was physically limited.

Because of this localized reality, merchandisingthe process of displaying, curating and organizing products in a manner that drives saleswas crucial. Buyers, who decided what and where products would sit on the sales floor, were critical to the success of a store and brand. As were designers and creative directors, who dreamed up the styles and designs each season. These teams held an immense amount of power, often relying on gut and sometimes historical data to inform their decisions.

During this time, retail was a supply-driven world. Designers would design products and buyers would buy products that they thought shoppers will like. Six to twelve months later, these products would show up on the sales floor for the moment of truth. The feedback loop was slow, which would repeat every season. Design and merchandising reigned supreme. This often created a monologue between brands and shoppers, as the former would do most of the talking and shoppers were expected to listen. Sometimes there was a dialogue, but the brand’s response or acceptance of the shopper’s requests were often slow, if existent at all.

As internet adoption skyrocketed in the late 1990s and early 2000s, browsing and buying products moved from a local to a global activity. Shoppers were no longer bound by the limited selection of products in their town. They increasingly had access to millions of products around the world as the number of choices and competition grew exponentially.

Then social media happened, further catalyzing the shift from a world of gatekeepers who governed supply to a world where shoppers increasingly wielded the powers of demand. The introduction of Instagram in 2010 might have been the final nail in the coffin, as the platform unleashed the most important discovery tool in fashion and apparel today. The retail store used to have a monopoly on discovery, but the internet and Instagram have relentlessly challenged the conventional wisdom.

The industry used to think about a shopper as the ending. Today, a shopper is the beginning. The feedback loop that often took nine months to get a shopper’s opinion on a design collapsed to weeks, if not days or minutes. It’s as close to real time as it’s ever been.Thriving in this world required two related changes: 1) brands have to move more quickly; and 2) be more decentralized than ever before.

Requiring the CEO of a company to sign off on most designs and orders is no longer acceptable, nor are products that take nine months to get from design to delivery. The increase in speed and decentralization are directly at odds with the supply-driven world that existed before the internet. Today, no single person can ensure the fate of a brand, and the quest to hold on to this long-gone reality is futile.

This is exactly what happened. A new crop of “fast fashion” brands expanded rapidly, as they were able to build their culture around the demand-driven world of the present, not the supply driven world of the past. Zara and H&M, the two most well known brands, thrived as they cut lead times down to three weeks. They also gave what were traditionally extreme levels of control to lower level managers and merchants who were closest to the sales floor. They had daily calls with headquarters and were allowed to request products without the approval of higher ups.

We’re now seeing merchandising move from a differentiator to just another input. It’s no longer about talking, but listening. As a result, the profession is radically changing. A job based on gut is moving to one based on data, assuming the job exists at all.Like Amazon’sgrowing listof private label brands, which use the company’s unparalleled data to build demand-based brands that are nearly guaranteed to sell. Amazon only creates supply when there is demand, not the other way around. The results are promising as Amazon is about to become the largest apparel retailer in the U.S., and an increasing share of its haul will be from its private label brands.

When industries are shifting, the reasoning lies not in the symptomscertain brands struggling or trends evolvingbut in the root causesthe shift from a supply-driven world to a demand-driven world. It’s because of a fundamental shift in the mechanics of commerce, arguably one of the most profound changes the industry has ever seen. But challenges for some are opportunities for others, and brands that are brutally aware of the shifting consumption landscape will continue to succeed. Those that aren’t conscious of the earth shifting below their feet will only solidify themselves as relics of the past.