Disruption of the clothing industry

If you think your industry is safe from major disruption, then I suggest you revisit your assumptions. at least that's what I take away from the latest developments in the clothing industry.

Up until recently the retail business has been relatively predictable. Of course there has always been competition between different brands with some level of innovation, but I don't think many had foreseen the current developments.

In the news yesterday there was an interview with Niels Ralund who is Head of E-Commerce at the Danish Chamber of Commerce. The topic was Shein and how they use AI to radically affect the market dynamics within the clothing industry.

Here are a few of the stats I managed to pick up:

• It takes them less than a week to identify a new market trend and turn it into a new manufactured clothing product.
• They are able to launch 30.000 new products every week (closest competitor can launch about 1.000)
• Even though they are cirtually unknown to everyone older than 30, they have more App downloads than Amazon in USA.
• Their prices are significantly lower than the competitors.

Sure, they might be dealing with various quality issues at the moment, but hasn't that been the story for every disruption in history?

Disruption - Not just a competitor

In my opinion Shein isn't just a new competitor who has found a gap in the market. No, it's much more significant than that for several reasons:

shortened the the clothing industry today is mostly made up by retailers and a few design brands who get their clothes manufactured in large Chinese factories. They then get the products shipped and sell it through their various channels. In the case of Shein, they are allowing the manufacturers to capture the customers directly. This means that they are circumventing the normal industry food chain by cutting out both designers and retailers.

First Shein's approach to AI enables them to tap directly into social media and thereby discover new trends even before they become main stream. This means that they are able capture new ideas faster than anyone else in the market.

Second Shein play straight into the fastest accelerating customer trend by making the products available where ever and whenever it's convenient for the customer, and at a price point that almost removes any of the traditional purchase barriers.

Third Shein has seriously disrupted the process for getting from idea to delivery by taking ownership of the entire flow and then eliminating anything that is not absolutely needed. If they keep sticking to the minimalistic process while focusing on transparency and continuous improvement, their disruption power will only increase.

The key question to ask

Even though this may not mean "game over" for the traditional clothing industry, it will require that the traditional clothing companies are capable of responding fast enough. Not just by implementing new technology, but by questioning some of the most fundamental assumptions about how to do business.

In my experience the thing that really makes a difference when industries are being disrupted, is not just how good their products and services are. Even more important is how effective they are at innovating and adapting to change.

This leads me to the question I bevelive we all need to ask ourselves:

"Is our company ready to deal with market disruption?"

What question would you ask? Let me know what you think in the comments.