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0 Randi Nolan Principal Kurt Salmon Associates Slide 2 1 If a man can make a better mousetrap the world will make a beaten path to his door. -Ralph Waldo Emerson, 1803-1882 Slide 3 2 If a man can make a better mousetrap the world will make a beaten path to his door. -KSA, 2005 offerfashionable every 8-10 weeks, ^ all of his doors ^ Slide 4 3 1.Define your consumer 2.Define product development strategy 3.Define assortment strategy/positioning 4. Accelerate speed to market 5. Balance efficiency and effectiveness 6. Integrate sourcing and development activities 7. Enhance information availability Slide 5 4 Effective Product Development Newness Speed Discipline Slide 6 5 Newness Speed Discipline Slide 7 6 Newness retail leaders see results 4.4 7.0% 5.5 6.8 16.2% 10.6% Turns Margin Turns Margin Turns Margin Traditional model Updated model Newness model 6.8 Source: KSA Analysis Slide 8 7 Finding the right new product Slide 9 8 Too many of todays fashions are designed for younger consumers Clothing manufacturers dont understand what styles I like Base: Total Respondents: % who agree strongly/somewhat Source: KSA Bi-annual Consumer Outlook Survey 2003 Chasing hot fashion frustrates consumers Slide 10 9 Have you defined your Stephanie? Clearly define your target consumer: Style Lifestyle Hobbies Entertainment Demographic Slide 11 10 Source: KSA Survey 2003 Have NOT defined a target consumer INEFFECTIVELY integrated consumer input into product development process Stephanie is not pervasive Slide 12 11 Who is doing newness well Talbots: We want customers to know that if they see something they love, they should buy it now, because it may not be here in a few weeks [Chicos] has been able to sustain stellar sales growth over the past several years because of the retailers reputation for flowing in new merchandise. To the consumer, it creates a sense of urgency and the need to shop frequently. WWD, 02/24/04 Slide 13 12 1.Define your consumer 2. Define assortment strategy/positioning 3.Define supply chain strategy 4. 5. 6. 7. Slide 14 13 Newness Speed Discipline Slide 15 14 Source: KSA Survey 2003 Comparing apples and oranges Retail Timeline Branded Wholesale Timeline Market Week Lead- times 6 Months 9 Months Slide 16 15 Todays wholesale cycle times are highly inefficient -11-7-5-3 0 In-store Design begins before read on previous seasonal sales Seasonal overlap makes it impossible to focus Starting too early allows everyone to change their minds Issues Market Week - 13 Months 6-7 Months 5-6 Months -9 11-13 Months Slide 17 16 Retailers view of the timeline will shift 2007 -11-7-5-3 0 In-store - 13 Months -9 Today Market Week Fashion Injections (reserved OTB) Continuous Market Week Slide 18 17 Stop studying Zara!!! [Zara] can design, produce and deliver a new garment and put it on display in its stores worldwide in a mere 15 days -Harvard Business Review 11/04 Slide 19 18 Collaborative Spec Development / Transfer Activities to Vendors Elimination of Separate PD and Sourcing Groups Visibility to Product and Process Performance Tomorrows top 3 Phase Develop Decisions Create Greater Overlap of Design, Technical Development and Sourcing Create Strategic Alliances Todays top 3 How can you reduce cycle time? Slide 20 19 Who is doing speed well Slide 21 20 1.Define your consumer 2.Define product development strategy 3.Define assortment strategy/positioning 4. Accelerate speed to market 5. Balance efficiency and effectiveness 6. Integrate sourcing and development activities 7. Slide 22 21 Newness Speed Discipline Slide 23 22 Leaders have three traits 1.Integrated process/ calendar 2.Calendar management process and adherence 3.Planning throughout the supply chain Slide 24 23 A calendar or a marriage? Slide 25 24 Do you really have a calendar? Source: KSA Survey 2003 1. Integrated calendar 2. Calendar management process 3. Strong calendar adherance Slide 26 25 Whats your plan? Slide 27 26 How do the leaders instill discipline? Web-based PLM tools Collaborative Development and Product Information On-line Visibility to Process Tracking Alerts, Notifications, and Exception Management Slide 28 27 Discipline: Just Do It PLM tools, not only to help manage information about their products, but also to standardize the process that controls the commercialization of styles while [providing] reporting visibility -Paul Herring, CTO, Nike Apparel Magazine 12/01/04 PLM tools, not only to help manage information about their products, but also to standardize the process that controls the commercialization of styles while [providing] reporting visibility -Paul Herring, CTO, Nike Apparel Magazine 12/01/04 Slide 29 28 1.Define your consumer 2.Define product development strategy 3.Define assortment strategy/positioning 4. Accelerate speed to market 5. Balance efficiency and effectiveness 6. Integrate sourcing and development activities 7. Enhance information availability Slide 30 29 1.Define your consumer 2.Define product development strategy 3.Define assortment strategy/positioning 4. Accelerate speed to market 5. Balance efficiency and effectiveness 6. Integrate sourcing and development activities 7. Enhance information availability Slide 31 30 Newness Speed Discipline Slide 32 31