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Managing the risk of fashion – Office®

Office is the footwear brand for the youthful UK and European customer, with the Office brand being positioned as ‘the omni-channel hub for her and all her footwear needs’. Offspring aims to be recognised as ‘the most authentic and connected global sneaker community’.

Proven fashion formula

Office’s London heritage and proven fashion formula ensures that it attracts brands that appeal to the fashionable consumer. Office offers a range of the best global brands in addition to exclusive access to limited edition product through strong brand relationships. These relationships have been developed over many years and Office works closely with suppliers to develop branded exclusives.

Recognised as a strategic account by its branded product partners, Office enjoys product priority on best sellers. It also applies a shared risk model with these partners that allow the business to return, cancel or postpone product should this be necessary.

Office’s fashion philosophy is driven by a consistent buying and merchandising process that allows the teams to continually develop their knowledge of the brands, product and markets. This process has been enhanced in recent years through the sharing of knowledge of Truworths’ robust buying, planning and sourcing processes.

Office’s own-brand product is sourced globally. Suppliers are identified based on their ability to deliver exclusive, desirable product of the best quality. The buyers and the design team select the supplier best suited to achieve the desired styling, while also meeting the required pricing, order flexibility and supply reliability. This approach is supported by regular factory visits by buying and design teams to ensure that supplier relationships are optimised, while understanding factory capabilities and refining the overall design process.

The merchandise team balances short lead-time product sourced from European suppliers against longer lead sources in the Far East that allow for fashion product to be tested in the market with limited risk before maximising sales once the product’s potential is understood.

The buying and design process is constantly evolving to ensure Office is the first to react to trends. While design and buying continue to work seasonally the teams have adapted to customers’ desire to ‘buy now, wear now’ and respond to the need to provide relevant fast product to satisfy the many new ‘micro, flash trends’ that emerge in the fast-paced fashion footwear market.

Office is committed to providing customers with quality footwear. Buying and technical teams work closely with suppliers to ensure Office’s product meets UK and European quality and testing standards. All Office merchandise is fitted in-house by the buying and technical teams to ensure that aesthetics, fit and comfort are all considered.

Refer to Material issues, risks and opportunities for more detail.

Forecasting fashion trends

Designers and buyers work closely with partners to track trends and ensure the merchandise reflects the latest looks. Trend information is sourced through international trade fairs, online subscriptions, social media, international and local retail inspiration as well as global and local street trends. Celebrity styling and events are also analysed to ensure that ‘must-have’ items are available. Early reactions to formulate seasonal trends are expanded throughout the season as further trends become evident, with the buying teams being constantly updated on fast react items and trends.

Speed to market and trend reaction are increasingly important factors for both ladies’ and men’s product as customers are exposed to trends sooner through social media, and react and shop them immediately.

In order to limit fashion risk and test customer response, new branded footwear is trialled and tested quickly in Offspring and then ordered in larger volumes for Office’s store and online customers.

Managing the risk of fashion in 2020

Retailers across the UK high street have continued to discount aggressively and promote to grow revenue and reduce stock. Office has been no exception and weak trading has resulted in markdown sales substituting full-price sales which contributed to the gross margin declining by 3.6 percentage points over the prior period.

The branded footwear market continues to be heavily influenced by social media which can drive rapid changes in brand popularity with limited time to react to changing customer choice. In the past popular brands would be in fashion for several seasons but new and emerging brands are now growing in popularity over a far shorter timeframe.

Following the disappointing performance of own-label made-to-order (MTO) product in 2019, Office refined its product strategy to provide greater clarity to the buying and design teams on product direction and also reduced the number of styles to ensure a more focused range.

The results of the changes during 2019 have been disappointing although COVID-19 did interrupt the process to some extent. Nevertheless poor product choices have resulted in further decline of this once profitable and successful own-label range.

Management aims to increase the contribution from the higher-margin MTO category as a proportion of total sales to increase gross margin and to further entrench its unique market position. As the majority of MTO orders from March 2020 were cancelled due to COVID-19, the benefits of this refined product strategy supported by the Truworths trend forecasting and buying teams, are only expected to be realised into the new financial period.

ETHICAL MANUFACTURING

Office is committed to ethical and fair manufacturing. All own-label suppliers are required to comply with the Office Code of Ethics and Good Business Practice, which is designed to be fair, achievable and promote the ongoing development of suppliers. Regular factory visits are undertaken by the buying and technical teams to ensure quality and ethical production standards are being maintained.

The code of ethics is based on international standards including the Universal Declaration of Human Rights and the International Labour Organisation Conventions. The code’s general principles ensure that all people who are employed through Office’s suppliers must have decent working conditions, not be exploited and be treated fairly and with dignity. All product must be produced lawfully, through fair and honest dealings.

A formal statement from the board is published annually on the Office website in compliance with the UK Modern Slavery Act legislation.