[Expert Talk] The business of fashion and retail with Stefaan Le Clair from Berenike Global Fashion Management (Part 1 of 2)

This episode kicks off a mini series of industry specific expert talks. The objective of industry talks is to help investors to structure their thought process when evaluating companies operating in these industries. It also helps entrepreneurs who are looking to start a company in these industries.

Today we begin with fashion and retail industry. And our expert guest is Stefaan Le Clair, the Managing Director of Berenike Global Fashion Management. Stefaan’s past industry experiences include being the VP of Retail Europe at Espirit Group, the CEO of denim brand Lee Cooper, the General Manager of Hudson’s Bay Benelux which is also the parent company of Saks Fifth Avenue, the CEO of Galerie INNO which is a department store chain in Belgium. 

Our discussion is divided into two episodes. In this first episode, we begin by working through the different stages of the value chain in fashion and retail. Starting with product development, looking at how brand positioning influences design and manufacturing arrangements in a business; and how supply chain efficiency became the new norm, so shifting value differentiation to other elements. We then went on to discuss Sales & Marketing considerations, such as revenue mix between wholesale Vs retail and the importance of being present in multiple channels.

 

Key highlights from our conversation

The cost of a product today is influenced by factors beyond the direct cost of production
In today’s world, the actual cost of a product is no longer the key determinant of the price of a product. The cost is often influenced by the pricing power of downstream sales and distribution channels and how a product enters such channels (e.g. the number of middlemen and their commissions). Increasingly, consumer demand and price sensitivity also play a big role in determining the cost. So, we often have to turn the box round and calculate margins and costs backwards.

Efficient supply chain is no longer sufficient to drive and sustain value
Supply chain efficiency is an important value creator in the past. But by being more efficient and better controlling the cost are no longer sufficient in driving and maintaining value for today’s brands. What are more important for value creation are the speed of bringing products to market and the process that followed.

Greater emphasis placed on consumer feedback in product creation
In the past, products were created by product managers within the company. And today there is a greater emphasis on customer centricity with an increasing trend of product co-creation using consumer insights captured through data.

Achieve growth by widening assortment is a better strategy as compared to creating sub-brands
Widening product assortment under one umbrella brand is a strategy that will deliver more value than splitting one brand up in multiple sub-brands as that will dilute the core DNA. It is better to focus on your core customer and surround them with a 360-degree product assortment.

 

It is important to adopt a multi distribution channel approach

We have seen traditional wholesale business venturing into retail to seek growth and manage risk. At the same time, vertically integrated retail brands are selling via wholesale channels too in an attempt to further broaden its customer base.

 

Content at a glance with time-code

(02.06) Stefaan’s personal background story
(04.21) Compare and contrast different business arrangements of product development
(09.18) How supply chain efficiency is no longer a key value creator today
(12.03) Can luxury brands still create value through unique designs?
(18.31) How to balance the need to stay true to a brand’s core and respond to ever changing consumer demand?
(25.26) The future of fashion business is a conglomerate structure with multiple brands under one company
(30.34) How value has been shifted away from supply chain to later stages such as sales & marketing
(32.52) What does consumer centricity mean?
(35.26) Wholesale Vs Retail distribution channels
(43.45) How franchising and licensing can help brands succeed in areas that are outside of their core strength

Episode links
Berenike Global Fashion Management: https://www.berenike-gfm.com/bio/
Galeria INNO: https://www.inno.be/