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Fashion Industry 2043: Risk Mitigation and Long-Term Competitive Strategy Through Scenario Work | Sustainable Brands
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Fashion Industry 2043: Risk Mitigation and Long-Term


Competitive Strategy Through Scenario Work
by Pamela Ravasio (/user/136088)

October 7, 2013

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The fashion industry has gone through dramatic changes in the last 20-30 years. Indeed it
finds itself in the present at a crossroad: Resource scarcity is triggering shifts in business
models and supply chains; waste is the new resource; customers are the sales channel of
the future; and legislation is becoming ever more stringent.
Yet few businesses venture to think about how their industry may look in five, 15, or 30
years time. Radical changes are bound to happen in our world, and its consumer and
sourcing markets, over the course of the next few decades, and we will encounter serious
challenges of running businesses if we continue as we have in the last few.

The value of scenario work


Scenario work (/news_and_views/articles/shell-new-lens-scenarios-predict-near-zero-global-carbon-emissions-
2100) the preparation for future industry realities has proven to be among the most
effective tools for sustained business development across all operations. The changes that
affect the fashion industry, amongst others, are triggering radical market shifts. Only
businesses that can and are willing to anticipate them will survive, remain competitive and
thrive in the long run.

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Many consider any scenario beyond a five-year horizon to be out of touch with reality. The
fact though is: If looking back at predictions of 1950 or 1960, the reality we live in compares
best to the predictions that were considered 'totally crazy' in their time. To name but a few:
home and Internet shopping specifically for fashion (http://www.youtube.com/watch?
v=rpq5ZmANp0k&list=PLq_AdCVpaoXpeVPQqBxyy29oNeCE4CoyL) ; abundant use of electronic
payment means via cards, tele-banking; space technology; mobile phones and wireless
technology It was all there, akin to how we know it today.
In order to develop successful and meaningful long-term scenarios for the business context,
there are three fundamental key points to be considered during elaboration:
Developments of the past are not simply to be prolonged to the future as a logical and
successive process. Technologies and societal shifts embryonic at the time of research are
to be analysed, evaluated and then 'built into' the scenario as the new 'mainstream.' At this stage, a
business' own agenda and vision are not admitted for consideration (yet).
Accounts of extreme events of the present are taken as indicators for common events in a
couple of decades. There is no limitation in terms of factors and impacts that are taken into
consideration the range of which may reach from resource scarcity to high-tech application in
home appliances.

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Application of design thinking techniques is essential to assess consumer response and 'the
practical use' of the different scenario components. New ways, ultimately, must be useful and
desirable to consumers as much as businesses in order to become popular and represent a
potential 'new status quo.'

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Good examples of quality scenario work include Forum for the Futures work on cotton
(http://www.forumforthefuture.org/project/cotton-futures/overview) and consumers
(http://www.forumforthefuture.org/project/which-consumers-2030/overview) .
At texSture (http://texSture.com/) , we researched during Q2 2013, trends, influences and impacts
that will impact and shape the fashion and textiles (/news_and_views/supply_chain/canepa-becomes-
first-textile-manufacturer-sign-greenpeaces-detox-agreeme) industry in the next 5, 10 and 30 years time.
From this research we were able to distil three distinct scenario 'story lines':

Sajin Gangadharan
Good one veronica...
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and Water? 1 hour ago

Scenario 1: Market inversion: What if Asia became today's Europe?


The present:
Asian brands are becoming aspirational for Western consumers and hence compete directly
with Western brands. But: Asian brands, just as Western, target primarily Asian consumers.
As cost of labour increases in Asia, particularly China, factories relocate to cheaper, more
rural areas.
The future:
Asian manufacturers are traders to African manufacturers and producers, but ethical
standards remain low. Workers from Western markets migrate East and are the new cheap
labour. While Asia has become the main market for European brands, Asian and African
culture is shaping the global mainstream.

Ismael Bena
Great objective and seemingly possible, ...
others will follow when accomplishing such
stretch goals.
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Practical implications for brands:


Operations: New sourcing channels will have to be built in order to cater to African markets using
specifically local materials. African non-oil countries will become the new sourcing hot spots for
cheap labour.
Technology: Control-of-origin systems will be standardised in order to follow orders though
production. Increasingly, they will be integrated with tight (international) legal and reporting
standards, and industry best-practise requirements.
Business models: Asian manufacturers and brands will compete head-on with Western
manufacturers and brands, specifically in the high-end market segment. Mass-customisation is key.

Scenario 2: Local, high-tech economies: What if everyone was a maker?


The present:
Made in [your country] is experiencing a revival across all Western markets. Virtual reality
from sampling to dressing rooms is entering the retail landscape. Raw material prices
keep rising. And at a time when 3D printing has finally matured sufficiently to become
mainstream, physical and virtual maker markets such as Etsy are popular.
The future:
The situation is paradox: On the one hand localism (/news_and_views/upstarts/manufacture-new-york-
new-sustainable-model-us-fashion-production) reigns, but on the other the world has never been more
global. Made in [your area] products are sought after, but rather than being a luxury they
are the typical way of life. Fragmentation is the key word both for manufacturing and retail:
Independent boutiques are proliferating and communities are geographically semi-isolated
yet technologically hyper-connected.
Practical implications for brands:
Operations: Shipping of physical goods is progressively only worth it for very high-value items. As a
consequence, most production is taken care of by local craftsman, artisan and micro units.
Technology: Distributed working technologies will increasingly be used, and serious results are
achieved in their development to better account for and integrate 'inter-human bonds,' specifically
for teams.
Business models: Intellectual property (e.g. of designs and patterns) will become a brand's principle
'product.'

Scenario 3: Collaborative-competitive markets: What if we didn't buy to


own?
The present:
Swishing is a new lifestyle, and eBay and Amazon are where people peddle their unused
goods. Repair services are part of the offering of certain fashion brands. Car sharing, tool
sharing and skill sharing are being rolled out on a large scale. The sharing economy is
valued at $460 billion and is expected to grow at least 15% in the next 15 years.
The future:
Cotton, polyester and most other 'traditional' fibres are difficult to obtain. New-generation
fibres cannot cope with the demand. World population has grown to an extent that
agricultural activities are geared towards food. Few products are discarded; broken and
ripped products are valued as raw material sources. Buy-to-own is not the predominant
lifestyle any more, but is considered a luxury. Communities offer rental services for more

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Fashion Industry 2043: Risk Mitigation and Long-Term Competitive Strategy Through Scenario Work | Sustainable Brands
expensive and rare items, including clothing.
Practical implications for brands:
Operations: Need for diversification of raw materials used in design, and hence products. Search
and development of alternative materials for which scaling does not pose any, or at least fewer,
long-term problems.
Technology: Refinement of recovery and recycling technologies, specifically in efficiency and
complexity terms. 'Closing the loop' acquires proprietary traits (again), so that recycled materials
may remain reliably within a specific company's raw materials stream.
Business models: Lease-and-take-back schemes will become popular even for fabrics. These go
hand in hand with recovery and recycling schemes.

The benefits of scenario work


If integrated into corporate strategy development and investment strategies, scenario work
helps to illustrate the vulnerabilities of a business, such as lack of agility to react to emerging
business models (e.g. shift of B2C to C2C, the impact of 3D printing on consumer demand or
the proliferation of forgeries) or input-material sourcing challenges.
Scenario work further encourages and facilitates the collaboration of executives from
different departments as it enables development of a common vocabulary around key issues
that will become dominant in the mid to long run. Sharing the same vocabulary is of
paramount importance to enable shared vision and gain buy-in and support across multiple
departments. This is particularly the case for managing change in reaction to short- and mid-
term pressures around environmental and labour rights issues.
And last but not least, scenarios are a point of departure that can serve as inspiration on how
to turn risks into opportunities. After all, sustainability ultimately is the key ingredient to
maintain long-term competitiveness.
Pamela is a strategy specialist with a Ph.D. from the Swiss Federal Institute of
Technology in Zurich, Switzerland - Einstein's Alma Mater.
Over the course of the last 15 years she has accumulated international experiences
working and living on 3 continents - amongst other in Japan. She had her first [Read
more about Pamela Ravasio] (/user/136088)

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