BackDan Cotton | Trends aren’t led by the West and followed by the East any more
WGSN Group's Cotton talks about India's retail potential and the blurring fashion lines between the East and West
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WGSN Group, the UK-based trend forecasting and analysis company that works with large global retailers such as Marks and Spencer, Next and Diesel to help them design and create inventories, is also helping Indian exporters and manufacturer that serve the European market. In India to meet his clients, the company’s general manager, Asia Pacific, Dan Cotton talked about India’s retail potential and the blurring fashion lines between the East and the West. Edited excerpts from an interview:
What macro trends are you working on?
The way trend forecasting works is that, we work on a two-year horizon. So now, for instance, we are working on macro trends for the Spring-Summer 2016 collection. That would be inspired by talking to artists, we look at music, architecture and also influential designers within the apparel industry across a range of markets. We look at a whole range of influentials such as shapes, materials, colour which we know will eventually be relevant to consumers. We also look at macro demographic trends, macro political trends, to get a sense of forces that will impact consumers. We look at it not just globally but even in smaller markets (at a micro level). So we pull in a mix of global and local information and filter that to churn out trends that might become commercially viable in different markets.
Is there a time lag between fashion trends in Western markets and emerging markets like India and China?
On one level, the time lag is almost non-existent because all those influencing media and images which would affect buying decisions are now available globally. So there will be some local differentiation but access (to global trends) is there. In fact, trends are not driven or influenced by the Western markets alone. We just did a report on top women’s retailers in China and that will be widely read because people want to know what’s going on in emerging markets. In fact the most influential city our group has led out to for the Spring Summer 2016 collection is Seoul in South Korea. So trends are not led by the West and followed by the East any more.
Are local/smaller retailers warming up to the idea of retail forecasting in markets like India?
It’s a potential market but we need a different product for them because by the time they reach that scale, the level of investment they require to use our product is relative to the investment they are putting in planning their product ranges.
Getting a colour slightly wrong will get 10% of their range wrong and that will have an impact on their margins.
Where does India figure in your scheme of things?
The two growth engines we see in Asia are India and China, and India has immense headroom to grow. That’s partly driven by the demography of the country and the economic environment. You have a 350-million-strong middle class and a very young one at that. India also has a retail environment which is very technologically advanced, which will go in to e-commerce (electronic commerce) and m-commerce (mobile commerce) quicker than other markets and that almost by definition will drive a lot of innovation in brick and mortar formats in the coming years. We will see a lot more domestic spending, we will see a lot more international retailers coming into India, and we will see domestic retailers expand, to serve that demand. So, yes, that’s good for our business and our tools to help with their design planning.
There will also be some very India specific innovations thanks to the e-commerce market. We are seeing innovations rise in retail—things like smart mirrors or tracking which product you take to the changing room. The mirror can give you further suggestions on what you can match with it...We see such innovations happening in Japan, for instance, for brands such as Shiseido and Gieves & Hawkes in Macau. I can see that kind of clever wave integrating brick and mortar with e-commerce, being very relevant to a tech-savvy young market like India.
Are fast fashion companies like Forever 21 and H&M defining global trends?
Certainly, those companies that we know as “fast-fashion" companies have been very successful in a short span of time and the reason they have been able to get so successful is because they are able to respond to consumer behaviour and they get that consumer behaviour data through point of sale.
Data can help improve your ability to plan/design your range and merchandise really effectively where you get margins as a retailer. The advantage fast fashion retailers have today is the ability to respond to that point of sale data.
What sort of growth rate do you anticipate for your business in india?
Very strong double digit growth. I can confidently say that Apac will grow at double digit: 15%+, the counties driving the growth for me are India and China. I expect India to get to 12-15% over the next two-three years. Growth will come from retailers and that’s the focus, a mix of e-commerce and domestic retailers.
What base of exporters do you work with here in India and how are dynamics changing?
We have a seven-year history in India; the initial growth in India came from the manufacturer market, since India is a great export market—the world’s second largest. But increasingly western retailers have entered the Indian market and domestic retailers have grown, to serve the 300 million(+) strong population which is fairly young and continues to grow. The fashion here is quite progressive and with the rampant growth in e-commerce, you have the highest level of mobile commerce, on a per capita basis, so because of that there is a lot of interest in building out local retail to supply to that emerging domestic demand.
What’s happening is a change among that manufacturing base as well. The big change is that currently clients in the West have deflationary economies and the suppliers here (in emerging markets) have inflationary economies so there’s a case of mismatch, where the cost goes up here (on the manufacturer side) and the western markets (clients) are trying to keep the costs down. And the key way big retailers have been able to keep costs low is by getting more value and you get more value by understanding better—the design, retail and merchandising process. So we are able to provide a lot more data to them, to behave well in a competitive environment.
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