The decade of the consumer: what Spanish fashion CEOs think

In the sixties, product; in the eighties, brand; in the aughts, store. And now? The fashion business opens a new chapter in its history marked, this time, by the consumer. This is one of the conclusions of the last meeting of the 10 Years, 10 Topics event, in which the chief executive officers of many of the largest fashion companies in Spain have addressed the present and future of the sector.

“Millennials, who are our future clients, seek experiences, connections and discover new things,” said Alberto Ojinaga, managing director of Desigual. “The established brands have to be able to surprise them, and that happens to take risks, for collaborations and for creativity” added the executive.

Another key element in this transformation is the online channel that, according to Nueno, will cover 30% of sales. Of these, half will be through Amazon. In this sense, Marcela Wartenbergh, chief executive officer of Pepe Jeans, defended the digital channel as a platform not only transactional but also for communication.

“A large part of the cost of ecommerce is marketing,” said the executive. “For any brand that sells less than 15% online, it is not a profitable channel, but an impressive customer connection channel,” she said.

Elena Carasso, Mango’s online and client division director, stressed the need to put the customer and not the transaction at the center of the strategy. “We are changing the dialogue, which until now was focused on the transaction,” said the executive, who led jump of Mango to online in 2000. In this sense, Carasso defended that the dialogue with the client now “is constant throughout life and does not always culminate in a transaction.” 

Antonio González, Entelgy’s retail business consultant, agreed that “ecommerce will be a showcase, but the most agile thing is to go to is the store, and there what matters more are human aspects such as dealing with the store assistants.” 

Some of the participants also agreed on the importance of sustainability in the future and the possibility that fashion will return to value. “Sustainability is probably the most relevant challenge we have as a sector in ten years,” said Alberto Ojinaga. “It is impossible to know where this will end: if it evolves in a radical way it would mean a total transformation of the sector,” he added.

Ignacio Sierra, managing director of Tendam, stated that progress has been made, thanks in part to the pressure from Europe. “If we are really able to influence where manufacturing is impacting what will change the planet,” said Sierra, who said that Europe is better positioned than the United States because it has created aspirational brands.

"Everyone sees Europe as the platform for the future and change, while in the United States there is still a focus on volume at the lowest price," Wartenbergh added. 

However, this commitment to sustainability and innovation has not translated into an increase in prices, but quite the opposite: fashion continues to be immersed in a price war and promotions that pressure margins and devalue the sector. 

“What worries me is that our innovation produces neither growth nor margin; there is no clear reflection on what our competitiveness is compared to India, China or the United States, which are ahead of Europe, ”said Juan Parés, chief executive officer of Spanish company Textil Santanderina.

Meanwhile, Eduardo Zamácola, chief executive officer of Neck&Neck, and Dora Casal, director of Roberto Verino, contributed with the point of view of a smaller company. “About 95% of the trade is SMEs and we are trying to survive,” said Zamácola, who also chairs the Asociación Empresarial del Comercio Textil, Complementos y Piel (Acotex).

“Small businesses, when they start to gain some size, they wanted to imitate its older brothers and they were wrong, because they thought that the most important thing was volume and along the way they lost their focus,” says Zamácola.

Casal agreed in the analysis. “With a designer and manufacturing nearby, the fight is different; we know our client, but it gets older,” he said. “The focus has to be on the product and the price, which is not even debatable, and how you get young people to enter a store” he added.

Both Dora Casal and Ignacio Sierra defended that the product will recover value, to which Juan Parés, the only industrialist at the table, replied that “the great enemy” of retailers will be “the brand that comes from the industry, because we have something fundamental which is knowledge, ” said the president of Spanish Textil Santanderina.

The leap from producers to brands, Parés said, will also allow industrialists and retailers to be more aligned and communicate the value created with innovation.

Nueno also stressed that consumption is moving from products and services to experiences, and that this will also be transferred to stores. “There will be three types of stores,” the professor stated; showrooms, stores with click&collect and those that provide an added experience or service.”

Carasso recalled, changing the Key Performance Indicators (KPIs) with which the performance of a store is measured, because not everything will have to be destined for the transaction. “We have to offer more than the pure product,” said Clemente Cebrián, co-founder and chief executive officer of El Ganso. “And there is an opportunity because there are few sectors in which the customer identifies more a brand as in fashion.”

Pedro González, managing director of Bestseller in Spain, called for collaboration. “Alliances are more necessary than ever: why not dedicate to creating a brand and communicating, Amazon to generate traffic and stores, to generate experience?”, he said.

Who should we look at? According to Nueno, at 4,000 trendy digital start-ups that are currently on the market. “They are the ones that sell those that the consumer does not find anywhere else,” he said.