business model innovation in the fashion industry

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Business Model Innovation in the Fashion Industry

Eva Willemen

Master dissertation defense to obtain the degree of Master of Applied Economic Sciences – Business Administration

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Table of contents •  Introduction •  Research questions •  Modus operandi •  Desk research

-  Business model innovation -  Trends/challenges in the (Belgian) fashion industry

•  In-depth research •  Conclusion

•  Discussion

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Introduction

(headlines in the Belgian media)

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Research questions

•  Does business model innovation occur in the fashion industry? -  Subquestion: ‘Which types of business model innovation?’

•  Can BMI propose a solution for the challenges of the Belgian fashion industry?

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Modus Operandi

•  Qualitative research -  Own qualitative research + interviews with industry experts -  Best-practice examples of business model innovation

•  Sources of inspiration: -  The Business of Fashion -  FashionUnited

•  Why this is the most adequate way to research this topic: Innovation is a phenomenon in the present and the future. It cannot be found in bulky textbooks.

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Modus Operandi (2)

Goal •  NOT to dictate what are the best/most innovative business models!

-  Individual cases -  Environment changes very fast

•  BUT to demonstrate the different ways in which the fashion industry can accomplish business model innovation

•  AND provide insights and inspiration to companies that consider BMI

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Business model innovation

Business model Representation or blueprint of a business Transaction of value/money between company and customer > ‘HOW’

Business model innovatie Restructuring of activities and competences to offer customer value that breaks

with the industry recipe

Business model canvas Visual representation of a business model (Alexander Osterwalder) 9 building blocks

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Bron: BMC workshop, Flanders DC

Who are your partners?

What do you do?

What do you need?

What do you offer?

What are your most important costs?

How do you keep in touch with customers?

How do you reach you customers?

Who are your customers?

Where do your receivings come from?

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What do you do?

What do you need?

What do you offer?






How do you benefit from your partnerships?

How can you get more out of your activities?

How can you optimise your use of resources?

How can you make a difference?

How can you lower your costs?

How can you improve contact with your customers?

How do your customers want to be reached?

Who can become your customers?

What do your clients want to pay for?

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What do you do?

What do you need?

What do you offer?






How do you benefit from your partnerships?

How can you get more out of your activities?

How can you optimise your use of resources?

How can you make a difference?

How can you lower your costs?

How can you improve contact with your customers?

How do your customers want to be reached?

Who can become your customers?

What do your clients want to pay for?

Resources-driven Customer-driven

Finance-driven

Offer-driven

4 types of BMI

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Trends in the fashion industry

•  Cheap labour vs. brand value •  The internet changes the game •  Prosumers (the consumer as a producer) •  Media and retail meet in the middle •  Fast fashion, shorter collection cycli •  Technological innovation of fabrics •  High-end meets low-end fashion •  Market polarisation •  Renewed focus on menswear •  New growth markets •  Hyperpersonalisation

(Raf Simons)

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Cases: BMI in the fashion industry

Wearables

Sustainable fashion

E-commerce

S-commerce

Curated fashion

Customer integration

Africa = new market

Outlet sites

Pre-tail

Crowdfunding

Fast fashion

(Based on the Business Model Canvas, Alexander Osterwalder)

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Conclusion (1)

BMI in the fashion industry? Types of BMI?

TREND: Business model more and more customer-focused! Prof. Marion Debruyne: “It is important to look at the BM canvas from the right side to the left side. One

should be able to answer the market needs and extend this to ones activities, partners,..”

The strong competition in the fashion sector and the economic crisis stimulate the customer-centered business model. Only the most market-oriented players survive.

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Conclusion (2)

BMI = solution to Belgian fashion industry? •  The fashion sector is in turmoil

-  3 BMI drivers are present (Seizing the white space, M. Johnson) •  Radical changes •  Transformation of the existing market •  New markets

•  Innovation is a necessity Prof. Marion Debruyne: “One should constantly adapt to the changing environment and be sufficiently innovative. The

Belgian ‘problem’ is too much focus on the product and losing track of the rest of the business model.”

•  Only possible solution? -  Processoptimisation & great product = base -  Competing with huge production in China, Bangladesh = impossible THUS reposition competences > compete based on innovation

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Conclusion (3)

Some remarks •  DO NOT innovate for innovations sake

-  Is the opportunity big enough to justify the expenses? -  Is the BM truly novel to the company and the market? -  Not every business model works for every company. Pick your battles! THUS verify best practices for individual relevance.

•  Obstacles -  Lack of management thinking, especially with the designers -  Product focus (tunnel vision) -  Practical arguments -  Praktische argumentations: ‘lack of resources’, ‘lack of time or attention’, ‘too hard’ -  Difficult economic situation: investing in the future often comes in second place

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Conclusion (4)

Little evidence of BMI in the Belgian fashion industry BUT..

-  Vente-exclusive (online outlet website) -  JBC and Walter van Beirendonck (designer collaboration) -  Essentiel (e-commerce) -  Bruno Pieters (new sustainable, transparant fashion label ‘Honest By’) -  FashionAngel (crowdfunding)

“The only way to survival is based on our creative and innovative power.” (Herman Van de Velde, 2012)

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