Globalisation is nothing new to the fashion industry. In fact it could probably be said that it was one of the first industries to exploit the specialisation of particular parts of the world to trade silks, fine jewellery and other pieces of antiquity. For decades manufacturing has been switching largely from West to East as relatively cheaper labour could execute the ‘low-value’ side of the production cycle, while the more ‘high-value’ design and creative processes were retained in the country of origin.
Technology is now poised to disrupt the production cycle yet again. The disruption largely yet to be felt is that around what economists call global labour market arbitrage. Put simply this is where you can engage someone or some company, somewhere else in the world to perform the same task that you would at home, for a fraction of the price. Manufacturing has been doing this for decades, but the true disruption yet to come will be in white-collar and professional occupations.
Already sites like freelancer.com allow one to engage a designer, copywriter, strategist, technology provider, and other services to perform their respective actions remotely at a fraction of the domestic full employment cost. Setup similar to an auction site freelancer allows you to post a project, review quotes from suppliers, the reputation, feedback and history of suppliers, allocate budgets and milestones for your project and process payments.
All of that is great for a fashion label looking to update their website, build an iphone app, or craft some fresh copy for their SS launch, but what are the longer term implications? Thinking about it, it means that the people conducting the operations of your business in the next few years may have to compete with someone in the second and third world who can achieve the same outcome as them, hold the same qualifications, and potentially have a higher service ethic. What there is the potential (and I say ‘potential’ as this is not some kind of dooms-day prediction) for a reduction in first world incomes should labour markets not adjust accordingly. Reduction in incomes means less spending power. Less spending power means less money spent in the world of fashion. Yes clothing is an essential item, but that $1,500 handbag can probably wait.
What would such a world mean for particular players in the fashion industry. Brands with a global presence will be able to exploit and leverage changes in discretionary spending as wealth transitions around the globe. Brands unable to escape the confines of their home boundaries (especially in the west) will most likely feel the strongest effects. Especially if there have not carved themselves a well-defined and serviced niche in the marketplace.
Australian strategist and author Mike Walsh is exploring such a world. Mike’s latest book Futuretainment encompasses the traditional forms of media and entertainment and reveals how the rise of the internet, mobile devices, social networking, audience networks, user generated content, ubiquitous networks and the ‘adaptive web’, amongst other advances, has affected them forever. Futuretainment explains how consumer behaviour has combined with new technologies to enact these changes. The opportunities provided by the digital age for new ways of accessing and providing information have been embraced across the world and diverted the course of media. Entertainment and broadcasting are now in the hands of the consumer, rather than the media executive.
Whether the impact of this will threaten western labour markets is yet to be determined, but what is clear is that the world is changing, and change can mean with opportunity or ruin. In the natural world natural selection takes care of the problem. History shows the business world and that of fashion is no different. How can you make sure your brand and product is selected to evolve and not be left behind?