Based in Hong Kong, Kanaiya Parekh is an Expert Partner at Bain & Company and is affiliated with the firm’s Retail, Performance Improvement, and Results Delivery divisions. He has over 20 years end-to-end experience with major retailers such as Tesco and Target. Kanaiya shares his outlook on the apparel industry through his experience in global sourcing, merchandising, supply chain, and operations and touches on how to become more agile by leveraging technology.
Bain & Company published an article in June 2019 titled ‘The Future of Retail: Winning Models for a New Era’ which goes into detail about seven different archetypes of retailers. On one extreme, there are the legacy laggards; these are retailers who struggle to run their business and adapt to changes, whether it was due to financial constraints or lack of capability. On the other extreme are the ecosystem players such as Amazon and Alibaba that have achieved exponential growth over the past few years due to their agility and flexibility.
“A year ago, we saw that of these seven archetypes, only four or five would remain...COVID has just accelerated that. What we thought was three to five years away, has become reality today. The legacy laggards are struggling now.”
Kanaiya’s key piece of advice for retailers is to leverage technology and become more data-driven if they want to emerge stronger post-COVID.
“It’s traditionally been about looking at what's happened historically and a bit of gut feel, etc. Now you can add a lot more science to it in terms of looking at social media trends, fashion blogs, data analytics on key attributes of why products worked in the past.”
For merchandise planners, he speaks about the importance of technology in the allocation of products. Previously, allocation was based on store size or store cluster format, whereas now it can be based on where the highest probability of selling that product is.
“On the manufacturing side, it is largely around reducing waste and speeding up time. For waste I would say, in terms of multiple rounds of sampling, that 3D tech and virtual sampling can help. Or about transparency around the whole critical path and leveraging a PLM system on an end-to end basis. Most PLM systems have leveraged only to upload the design pack and the tech pack. But seeing it all the way through would be much more effective.
Kanaiya emphasizes the need for agility among industry leaders during the time of COVID. He notices that at this uncertain time, decisions are being made much quicker, and people are feeling empowered to make decisions closer to the point of production. The past structures which reinforce lack of trust or people refusing to let go of traditional ways of thinking simply won’t exist anymore.
“I think agility in the sourcing world is fundamentally about shredding complexity and getting rid of duplication of effort. There's a lot of back and forth that goes on. A lot of people checking other people's work and teams on the ground not feeling empowered, which is causing every decision to be pushed back up to head office. So a lot of it is simply around getting rid of that underlying complexity.”
The current sourcing flow could be mapped as a yo-yo, going up and down between head office and regional teams. If you look at that yo- yo, it represents time and cost. Whereas if it’s a linear flow, the process would become more streamlined and efficient.
“Customers are looking for more convenience and an increased speed to market. And retailers that can react quicker to these demands are the ones that are going to win.”
Aside from the use of technology and data, Kanaiya also mentions that the use of test and learn approach is an important lesson we can adopt from these successful companies. The ability to be flexible in conducting trials more efficiently, recognizing if it doesn’t work and applying these new learnings is crucial. He says that at any time, Amazon or Alibaba would have hundreds of trials going on, whilst recognising that not all of them are going to work.
“I think retailers and manufacturers could learn to incorporate a more controlled test environment and rapidly experiment and learn using agile methodology and sprints to find the solution that works for them.”
Despite this time of instability, Kanaiya Parekh believes there are lessons to be learned from COVID that will drive growth in the industry for the coming years.
“A lot of things that were deemed not possible suddenly became possible. For example, it was important for companies to adapt their ways of working and be able to do things that they previously thought needed hundreds of people with only ten people. How do you bottle that up and take that forward?”
If you enjoyed reading this fireside chat with Kanaiya Parekh and found his insights valuable, be sure to check out his Bain & Company profile and follow him on LinkedIn to stay up to date with what’s happening in the world of global sourcing and retail.
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