Pau Almar on AI, Supply Chains, and Industry Secrets | Fashion Made S4E1

When I was in Mango, all the forecasting was really poor. I mean, it was basically manual. It was purely personal intuition. When I was in Tuzana, there were a lot of mathematical analysis of regressions, of simulations and all this. And now with the use of AI, you got the chance of going farther and trying to understand things that you, with these regression models, you weren't able to understand. So definitely in terms of the supply chain, this is game changer.

So, hey, welcome to Fashion Made. Uh, we're relaunching this podcast, so no pressure, Pao, but you're our first guest of 2024. Um, and really great to have you. Thanks for, thanks for joining us. Um, Pao, you've had a pretty colorful career. Um, you've, you know, spent a long time in the Inditex beast, both at Mango and Zara, um, working in their supply chain. So I'm really excited to have you because I think we all know that that particular organization is very secretive about the way they've seen such success in supply chain. And so yeah, really delighted to have you. And you're also a novelist. And one thing I noticed, your first book was drawing comparisons between Pablo Escobar and fashion. So, you know, I'm glad I never worked for you based on your management technique. But yeah, really great to have you here and yeah, thanks for joining us.

Thank you, Stephen. For me, it's a pleasure to meet you and to be here at Fashion Made Today. So let's see if I can enjoy as much as you told me previously.

Yeah, yeah, no pressure on me.

It's going to be really, really interesting. So let's go. Let's get it started.

Cool, man. Well, one of the things I wanted to kind of kick off with was If we can go back to your time at Zara and your time at Mango, what would be the— from your perspective, because I know obviously you're now COO of TXT, which is the holding company that own the brand Lime. And I know that Lime is seeing huge successes in fast fashion in Russia. But one thing I would love to know is, what would be the one thing you would tell an enterprise brand now that perhaps seeing, like a lot of them, fast fashion, they're seeing profits down. They're having great difficulty in this market at the moment. What would be the one thing that you would ask them to address now?

I mean, it's pretty similar. It's pretty easy. The thing is that no matter what's going on in the market, you are always beating yourself. You always have to make it better and better and better. This is one of the key aspects that I learned, especially in Zara, where You do not see what the competitors are doing. You only compete against yourself and you're fighting, fighting, fighting and fighting. So this is a mindset and sitting and saying, oh, the economics are going down. It seems like there is an issue with whatever the economics is. That is not the reason. I mean, when you work in a company like Zara, there is no response and there is only one response and it's making more and more money. So you're thinking all way, all the day in how to make more and more money. So there are no excuses. The economic situation is only an excuse. The problems in the disruption of the supply chain in Suez Canal, this is also an excuse. So no matter what you're doing, you have to push to make it better and better and better. So this is a part of the mindset. And this mindset is one of the, probably one of the untold striking competitive advantages of Zara that nobody has spoken so far.

Okay, so that's interesting. So, so you think that, that basically much of their success— I mean, we can talk about the operations because obviously the operations and the speed and the agility, that is, that is something that is quite unique to Zara and possibly now to Lime. But do you think that ultimately it comes down to the human element, not making excuses, understanding the market, understanding the consumer, understanding the geopolitical pressures, that those are always going to be there. The mindset needs to change.

Yeah, for instance, I can explain to you one example back in my time in Zara. When there was all the Brexit, we were sitting and we were thinking what the reactions we could have for a hard Brexit. So we were sitting and we were discussing what to do. But this meeting was held and we had different scenarios. We took different alternatives. We decided to do certain things. This in another company, they would sit and see what's going to happen if we have a hard Brexit. What are we going to do? And then they're going to react. For Zara, this is not the mindset. The mindset is, okay, we've got this problem, how to solve it and how to do something, how to take action. Because it seems that this is what the market is going to be. Right. So this is kind of the mindset. And this is something that is never told because as you mentioned, all the supply chain is something that you can go and browse the internet and everyone will see. The best stores, the best shootings, the agile supply chain. But this only comes after years and years of evolution. Right. And these years of evolution, what drove this evolution was the mindset of the people working in there. And this comes directly from Mr. Ortega.

That's really interesting. So, I mean, it sounds like the— I'm kind of— I'm already seeing the similes between Pablo Escobar and— but the reality is that he ran it as a business where you couldn't make excuses for not understanding and not being, like, being reactive and not proactive was not an excuse there. And I think that that's obviously a methodology that, that you've taken forward into your other roles as well. In terms of one of the, like, one of the most amazing things you ever saw within supply chain, like something that really stood out for you in your time there, either that you did or one of your colleagues did, is there anything that stands out as like a, a hero success that you experienced there?

Definitely. I mean, as you mentioned, I was working in Mango for 2 years and then I switched to Zara. So the thing is that when I was working in Mango, the mindset of Mango was really on— I mean, normally in terms of the fashion companies, what you do is you create the collection. And once you see 2 or 3 things that are working more or less okay, then you go and repeat in the short haul. Short-haul is kind of Turkey, Morocco, Portugal, things which are countries which are close to your supply, to your distribution center so that you can react quickly. The way it was working in Mango was very reactive. Again, it's the same word that we were saying 5 minutes ago. It's reactive. So let's see what's going to work and then let's react. What is going on with Zara is Zara balances both the short haul and the long haul. So it, it makes few things in, in, in, in, in Asia and few of and half of it or around half of it in the short haul. So the idea is if something works in, in something from the long haul works, let's go and try to repeat it on the, on the short haul. What happens with the short haul? Since you are occupying these manufacturing facilities, what you can tell them is, okay guys, let's postpone this order back one month and the capacity, the free capacity we're going to use for the repetition. Right. And this is working with the capacity of your, of your, of your suppliers. What happened in Mango? In Mango, you knock on the door of the, of the short haul supplier and you say, when is going to be your next availability? And he would say it's going to be in a month or in two months. So these you were losing in Mango, you were losing 1 or 2 months because what really is very interesting in fashion is reacting very quickly.

For sure. For sure. And, and I think that on that note, it's an interesting segue into the kind of the drop selling and social selling that we've seen over the last 5, 10 years. And, you know, we at our events and on this podcast are going to have some of the more interesting brands that have really been success stories there. And they are operating at the nexus between fast fashion and lifestyle. And in terms of your perspective, and particularly with Lime and your experience with Zara, how do you think that those brands are going to affect the kind of the old guard of fast fashion?

Well, the thing is that fast fashion companies like Zara, they are amazing. I mean, the approach to market is really amazing and everyone is, I mean, almost everyone is buying in Zara, right? Especially when it comes to women. Men and kids are slightly different, but when it comes to women, which is the core business, all women are buying in Zara. More or less every woman is buying. So it's very difficult to beat. So the only manner of beating the market is trying to assess with something different, right? What is the approach of SHEIN? SHEIN is, okay, we're gonna go for cost. Only cost, only price, price, price. But it's kind of similar to Primark. It's called Prime. So the only manner of beating a beast, so you were saying previously, of Zara or Shein, is to do something different. And doing something different, it might be sustainability, it might be quality, it might be branding, but you have to find either this or any of this, something that makes you unique and that all the customers would like to buy you because you are sustainable, because you're providing quality. Uniqlo, for example, what they're doing is basics in quality at the price of being more expensive than what you can find in Primark, you can find in Zara. So the approach is, okay, we got the best quality basics, right? What is a new approach that many companies like Lime or like Adolfo Domínguez are trying to do is like, let's go into trends. But trends of quality, right? So the idea is like, okay, everyone, if you want to buy the best, the latest trends in the market, you go to Zara and then you go and buy it. What is the problem? After 2 or 3 washes, many of these trends, you will see that they start breaking and they are not really good in terms of quality, right? What is the approach? What is one of the approaches in the market? Let's go and try to make things which are more meaningful. So when meaningful, it means that it has slightly more quality, that is going to last more, and that is going to mean something for the customer. And it's going to be kind of trendy because another approach is the approach of Massimo Dutti. And Massimo Dutti is an extremely classical company. They are not into trends. They are more into something extremely, extremely classic, right? They got more or less the same idea of higher quality Tanzara, but they're extremely, extremely classic. So if you are, I mean, if you are able at least, this is one of the positionings in the market that is starting to grow more and more is quality trends, which is both the quality but the trends.

Mm-hmm. Mm-hmm. And obviously kind of ethical, sustainable materials. And in your experience, So I'd be interested, and I know obviously we spoke about this previously, but you don't want to talk too much about what's happening at Lime because you have a team there and you want to obviously operate as leanly as possible. But in your experience, I'm interested to see if the technology that exists across the supply chain now, and of course, AI is a— very exciting, confusing, complicated thing. If you're at a C-level within a fashion brand, obviously you're trying to operate as efficiently as possible, save money, sell more products, make sure that you're reducing loss, reducing returns. And AI is— there's lots of different tools, hyper-personalization tools, et cetera, coming in. In your experience now, which tools do you think in supply chain specifically would have been an even more of a game changer when, if they existed 10 years ago at your time at Zara? Are there any tools that you're—

I mean, everything that relates to forecasting. What is, in terms of forecasting, the forecasting of fashion happens twice. So first is when you forecast, when you're doing the purchase. What am I going to sell in 6 months' time? And another, and another thing is the short-term forecast, which is now that I have the products in my distribution center, how I'm going to allocate in the different store networks. So in both cases, it implies a lot of forecasting, right? And I'm not saying mathematical forecasting. The thing is that there are multiple and multiple things that drive customer demand of a certain product that it's very difficult for us, for the human mind to understand. right? And there's millions and millions of different things that they cannot be explained with a regression, right? Which is kind of similar. So when I was in Mango, all the forecasting was really poor. I mean, it was basically manual. It was purely personal intuition. When I was in Tuzana, there were a lot of mathematical analysis of regressions, of of simulations and all this. And now with the use of AI, you got the chance of going farther and trying to understand things that you, with these regression models, you weren't able to understand. So definitely in terms of the supply chain, this is game changer. This is just one application of the AI. AI can be applied into multiple things in order to really to reduce the time to market in terms of design, the mood boards, the, the, the, the photo shooting. So the applications of AI is going to be huge. The thing is that quite probably many of the people in the C-level, they might not be able to understand the impact of this. Why? Because many people on the, on the C-level, they are not able to understand. They are not getting immersed into AI. They do not fully understand what AI is working, how it's working. What is the ideas of the algorithm, what is, what it means training, what kind of things you can do, what kind of things you cannot do currently. So there's currently a big buzz. There's everyone speaking about AI, but many of the people in C-level, they are not experts into fully understanding what it's going to be the impact on. Okay, guys, I have a problem in the creation of samples. Okay, I want to create one sample and out of this sample, which is something physical, I want to create the detailed description, the technical description, right? This is something that can be done in AI. Nobody's doing it now. So the thing is that there's very few people in the C-level who's going to understand how these are going to happen, right? Especially in super big corporations such as Inditex. But that can be really difficult for these processes that have been there for a long time to try to adapt to this new situation. So this is a big opportunity for smaller companies trying to investigate and to be as lean as possible using the AI.

Yeah, it's really interesting. I think that definitely gives a big open door to any consultant, Accenture, Deloitte, you know, because ultimately—

I used to work in Deloitte when I was younger.

Oh, did you? Okay, yeah. But they're doing some interesting work in fashion. I mean, there's lots of interesting people in fashion and I think as with any technological shift and we're going through a big one right now, you have this issue where, and you know, in some ways being successful is almost worse because it's hard to change mindsets when things are going well and shareholders are happy. I think for a lot of the brands that we work with, I mean, I love your attitude, Pao, because, you know, we do speak to a lot of brands at the C-level, and there is a lot of fear and worry around losing, you know, China as a market, around losing, you know, to social media, losing brand identity, needing to understand the consumer. And I think that, you know, you as a consultant to a lot of these other brands would change mindsets because there is— it is always going to be a volatile space, right? This is— it's a volatile market. And you need to adjust. I think from your perspective, how important is understanding the consumer? How important is communicating with the consumer? How does that affect supply chains? I mean, obviously predictive analytics and forecasting are important, but I'm talking more perhaps a level further at the brand level. Do you think that people are doing that, brands are doing that at the moment effectively?

I mean, Zara up until now has been built on an extensive analysis of the product. So that it means understanding fully what the demand comes from and trying to get as much possible the demand from the different countries. So more or less in short, this comes from an outstanding team of people, of product managers calling every day to the stores and saying, you got these novelties, how does it work? How did it work? You liked it or you didn't like it, right? This is how it worked until now in terms of product. So Zara was product-oriented. Your question was more about branding, right? So the branding is usually it's more kind of a push. So this is how I present my brand. And then I start listening if I have to do something, if the idea of the brand that I had is really how the customer is perceiving it. Because one thing is your plan and another thing is how the customer perceives it. So the thing is that this is a big deal of marketing problem. Many of these companies, for instance, H&M or Mango, it's very difficult to tell what is their marketing proposal. For Zara, it's very simple. What we do is the latest trends as soon as possible at a reasonable price. For Primark, the lowest price possible next home. I mean, at your home physically. Shein, latest things. I mean, everything, everything at low price. So each one has different marketing proposal when it comes to H&M or Mango. They're in the middle of nowhere. They are not as trendy or as, as, as, uh, Zara. They are not as low price as Primark or Shein, and they do not have a branding. They do not have quality. So where do, where they are, right? So saying again, your question, for me, the problem of many companies is fully understanding who you are, what your values are, and how to communicate them. Right. The thing is that having worked for 2 years at Mango, I realized that there was no clear understanding of who Mango was, what kind of woman was in Mango. Right. And what was that woman doing? So if you don't have that clear, you cannot listen to anything because you cannot compare to anything.

Yeah, yeah, it's interesting. It's like the human element of, of fashion. Like, who am I? Who is Pao? What makes us happy? What makes us sad? What do we align with? Like, all of those things I think are really important. But, but what you're talking about as well is just, it's, it's so clear, it's so obvious to us as consumers because I understand Zara to be that, right? I understand that I'm going to look good, if I dress in Zara because it's gonna be contemporary and I'm gonna spend a couple of hundred pounds and I'm gonna have 4 outfits, right? So it's like, it's a very clear value proposition. One thing, one thing that would be interesting because we are at our events and, and through all of the things that we do at Pi Power, we're getting more and more brands that are coming into this space and they may have seen quite quick success via social and, and are now looking to take that next step, you know, moving on from drop selling selling to something more meaningful. If you were gonna be in a position to sit down with one of those brands now, with the owners of one of those brands now, and they said, okay, I'm gonna give you 5, 5 guides, 5 points that, that you need to do before you do anything else, right? Before you do anything else, what are the 5 things that you would say to them they absolutely have to do? To kick on to the next level and become an enterprise brand?

First of all, you need to know who you are, right? So thinking strategically who you are and why you're doing what you're doing, why you're selling fashion. So that's step number one. Step number two, you need to be consistent, right? And consistent means consistent in the marketing, which is the easy part. Consistent in the product and in the store and in the unboxing, in everything that touches the customer. Because it's not like I want this, it's I want this and all the different details that it has across the supply chain. The third thing is that details. I mean, everything is about details. So take care of every, every, every detail. The fourth, AI. AI, I have no doubt. I mean, AI is here to stay. So we stay away from the buzz, stay away from the, from the bullshitting and let's get into reality. Okay, let's go. Let's do some training for all the C-level of what AI means. Right. And I'm not saying to do prompt engineering for ChatGPT and Midjourney. I mean, What are the possibilities? More or less slightly to understand how the algorithms work of all these. And then once you understand all these, see it and see what you can do, right? See what you can do. And finally, the last point is to try to train the people in your organization to do the best. One of the things that I learned a lot in Zara is that only the people who knows the business is the one who transforms and creates competitive advantage. It's not a consulting firm. Sorry, people from McKinsey. Sorry, people from these. I mean, if you want to— I mean, McKinsey and Boston Consulting Group, they are amazing in terms of cost cutting, of setting the right direction. But in terms of setting or creating a commercial strategy, What, what is the marketing that I am addressing to and how am I gonna do it? What are the core values? What, what are the, all the intangibles? This is something that is significant, significantly better done internally than externally. And of course, if you have these people, you, you should take the risks.

Yeah. Now that mindset, that winner mentality, and I guess that all starts with the brand, understanding who you are, understanding what you should be doing, understanding you shouldn't you know, suffer mistakes, that, that you need to have a team that love the brand, that love the message, but also love the chaos that comes with fashion and find a way to overcome a challenge as soon as it comes. And it will come every week, every month, every year. Um, I like that. And in terms of— I, I know obviously you mentioned you can't talk too much about the work that's happening at Lime, but we have a project called Retail Rebels. And one of the things that we're going to be talking about there is AI-to-AI commerce, right? Because some of the predictions are that within 5 to 10 years, 90% of all transactions will be AI-to-AI. And so what that would mean is that Lime, or Zara, or Inditex, or any of the brands that we've been talking about will need to have a living, breathing store, e-commerce store. What is your prediction for— for AI within the brand that you're working with now? Do you see, is there plans being made to prepare for that already?

It's, I mean, it's about training, right? Right now we are doing the training. We need to understand what can be done. And after that, we will start working on what to do, right? I mean, it's not, I mean, I really find it really difficult and this is is probably something of what I was telling about the mindset of Zara, of my tenure in Zara. I think that only if you understand what you want, only if you own the business, the business is mine. My supply chain is my core business. It's mine. My stores are mine. My e-commerce are mine. Maybe what I can do is try to copy something that I like from the competitors or copy it and adapt it or whatever, but it's mine. This is what I'm good at. Right. So going to the— I mean, the first thing is that we need to understand what AI can offer and then we will go and see what is the best option. We can do it internally, we can do it externally, but only if you know what AI can offer and only if everyone in the company, especially the C-level, is able to understand what AI can offer, can go and pick one tool and say, okay, this tool I want it, but they want it like this, like this, like this, and like this, because my own manner of doing is this one. And my own manner of doing is my competitive advantage. It's my brand. It's my whatever. So the thing is that currently, I think that in most companies, especially, I mean, Lime, Zara, or whatever, It's just a time for understanding what can be done.

Yeah. Yeah. So it's, yeah, I mean, and I think you're right. And I think that a lot of the software vendors and supply chain companies that we work with, you know, are positioning themselves as AI solutions. But ultimately, I think that we all know that all they're doing is just simplifying certain processes. But But that is, I think, you know, it's important to recognize that each brand has their own identity and therefore they need to search for bespoke customized tools.

For instance, when it comes to forecasting, what is the thing? Only if you know exactly how all the supply chain in your company works, you will be able to make the right questions. So in order to understand if the tool which is being given by a vendor is able to respond to this problem, right? Yeah. Most of the, most, for instance, one of most of the, of the, of the forecasting or the allocation systems, they go from one distribution center into one store. Yeah. What happens if we want to put the omnichannel in between? What happens if it goes from the distribution center to the, to the e-commerce fulfillment center and then to the, so that is kind of example, which is okay, the tool works and I know that it's gonna be far more effective than, than But in my supply chain, where I have all these, how can we make— how can we train the system in order not to have A to B, right? Have A to B to C and to D, and to take into consideration the omnichannel, the returns, anything that we can have in the middle, all the in-transit. So that's kind of the manner of thinking that I'm currently in. I mean, that's my current opinion, right? So I mean, especially because many vendors, they are doing, especially when it comes to bots, right? Everyone, I mean, I receive more than 10 emails a day providing solutions for bots for marketing, right? So I mean, AI is not this. There's many more things that we can do with AI.

Yeah.

Definitely. If you want to be a game changer, you need to fully understand what they can offer. And only if you do it, you will be able to make the right questions.

For sure. That's really interesting. And then in terms of, like, in terms of one of the— I actually had a conversation with one of the practice leads at one of the consultants we've just been speaking about. And they were talking about the legal issues of supply chain, particularly in different— even within different states in North America, notwithstanding globally. During your time both at Lime and previously at Mango and Zara, was that a big issue for you? Have you seen a big change in terms of restriction? Like, we've got the digital passports coming into the European space quite aggressively in certain countries. How important do you think that is for supply chain?

I mean, it was not part— direct part of my day-to-day. I was more into the commercial. This was managed by the customs department. I know that they were suffering a lot from this. So this is a— I mean, when you are in the customs, when you're in a global company like Zara that has 87 different countries with stores, right? And then they got the cross-border e-commerce. So when you have such an outstanding number, you need to fully understand what the customs are in each of these 87 countries, right? So this evolves every day. You've got digital passports, you got, in Argentina, you got physical stamps. So depending and adapting, this is like, this is changing every day, right? The thing is that on my, on my side, on the commercial side, if I didn't have the impact in the lead time, in the transport lead time, for me it was not a big issue. And what I can tell is that the people in Inditex, and this is something again, part of the mindset is like, what can I do so that all these things which are currently a more paperwork, eventually it's more paperwork. How can I do it and get to the store in the exact time that I was getting before this change was being made?

Yeah. Yeah.

So I can tell you after 10 years in Zara, there was no zero issue about customs. There were issue more, the issues were more related to the capacity of the planes when it comes to delivery to the USA, for example. Because there were, there was not much capacity in the, in the planes to, to, to USA rather than anything else. I mean, customs was not a big issue.

That's interesting. That's interesting. And then like, so taking, putting on the more of a commercial hat, um, one thing that we've been talking about internally as a team is like, and I love your approach to understanding the human element of first of all, who are we as a brand? What's our niche? What's our USP? Right? Are we fast fashion? Are we cheap? Are we luxurious? Are we special? Are we— what trend do we satisfy? And let's own that. And then let's make sure that the staff working within the business own that and own their job. But one of the things that I'm noticing is, and we've been talking about, is, is how, uh, on these upstart kind of new brands coming through, they can quite quickly find their tone of voice, right? Their identity as a brand. And if you look at bigger brands, let's say that have more of an established footprint, they're turning over in the billions. How important do you think experience is gonna be on the commercial side? Like giving customers experience, whether that's entertaining them or whether that's changing the narrative so that they can be, so that they can kind of rise above almost the legacy of the brand. How do you see that as being an important thing that brands need to look at now?

Yeah, definitely. It's the thing. I mean, it's not only about selling— more and more, it's not about selling pieces of clothing. It's about something else. And that's why, for instance, in Zara, you have the opening of cafes. You have the— like the one in Mall of Emirates, the one in Plaza España, in some flagship stores. The idea is that these flagship stores, they do something else. And by something else, it means that you got cafe, you got one certain area for sitting, something which is not normal, right? So the flagships are going to be more and more sophisticated. They're going to be more engaging. They're going to be more things for people to spend time. And then on the other side, the e-commerce, the e-commerce is going to be more and more image-based. So what you can see, what you can see in the latest year and a half for Zara is that they are spending more and more and more in collaborations, in, in new drops and all this is becoming kind of magazine. Back in the time we used to, we used to, to, to, to buy Vogue and see Vogue and browse the Vogue every week. So what they, what they can, what the customer is doing now instead of doing, instead of buying a Vogue, going to the Zara website and going and seeing what the fashion looks like. It's kind of replacing these fashion magazines into apps and all this, right? So if you— if this is what you want to do, you need to create the frequency. And by creating the frequency is creating content so that the customer comes at least every week, every month, or depending on your drop strategy. But that's kind of the idea, right? What is the problem? There is the flagship, which is going to be quite experiential. And then you got the e-commerce. The thing is that what happens in between, which is art, which are stores which are not as big as a flagship, those stores which are in a commercial mall in the suburbs of every city or in minor cities, all spread all over the world. What's going to happen with them? Because they are not going to be experiential and they are not going to be from a point of view of the image, they are not going to have, they are not going to bring as much impacts. So that's the big question mark in the market because for those small stores, it doesn't make sense to pay the price for installing a café or for trying to bring this customer experience. So that's personally one of my biggest question marks of how it's going to evolve. Because why? Because this means that that if they continue to be like this and there is nothing thought or nothing designed for them, they go there, they will be closing one day. Yeah. Because a great deal of the traffic will go to the, to the, to the, to the e-commerce.

Yeah. It's interesting you talk about the experience because this shirt, just as you were talking about, is from Arket. And Arket, you know, in London opened their flagship store and it was designed to be, you know, a cool place to go and hang out. And, and I often think that there's, uh, there's probably a gap to do with something with children, right? We, you know, spaces where kids can play and where families can come. And so I, I completely agree with you that the experience is, is what, is what the High Street will need. And what does happen to those other spaces? Because whilst that's happening and whilst brands are trying to develop that identity of experience you know, the technological advancements of e-com are going to increase. And maybe we have a hyper-personalization product where we don't need to go to the shop in the same way as we do. And so I'd be interested, like, from your perspective with Lime, how much of it is, is it a similar model to Zara where bricks and mortar is kind of the fundamental of the brand? Or is it equal e-com?

Yeah, it's more or less exactly the same as Zara. I mean, it's only certain brands natively born digital. All of them are more or less more into the retail and then slightly part of the e-commerce. The thing is that what it looks like in this landscape is that the e-commerce is going to grow more and more and more. At the cost of closing progressively those stores which are in the middle of nowhere. Right. For instance, one store in, in any small town close to London has nothing to do with the store in Regent Street, in Oxford Street. Those are the flagships. So you will never have the same sensation once you got to one of these flagships rather than when you are buying somewhere else.

Unless there's some way of someone being extremely creative and finding some cohesion between that shopping experience that does make sense, that doesn't cost as much. I mean, I can't think of it straight off the top.

I mean, if I were to answer this question, Mark, the thing is that these stores are being kind of convenient stores. I mean, stores where it's easy to hang out, to go to the shopping mall, and as part of your free time to go and grab something. It's not going to be extremely meaningful in terms of what you're buying is not going to be the best image in the brand, but it's going to fill your free time.

Yeah, yeah, yeah, exactly, exactly. And different cultures around the world, like in the Middle East and in India and Southeast Asia, there is a kind of more of a culture around spending your time in a shopping mall, spending the day there as a family. So I guess it depends on different geographies. How important do you feel like, um, let's say that I'm starting a brand in Amsterdam and, um, what, what do you think needs to go in? Because I'm, I'm very interested in your opinion on this because of Lime and how important the geopolitical situation is around the world in terms of where you should go next. How important do you think kind of geopolitics are on, on, on a brand success?

I mean, brands are brands. They are not into politics. That's, that's, that's, that's the reason. The same. I mean, it doesn't matter if the, if the brand is, is a sports, it doesn't matter if the brand is, is fashion, whatever it is. Right. The thing is that many brands are held hostage by, by, by governments in order to, to, to define themselves politically. Right. Back in the time when we were working in Zara, there was a big issue when it comes to Hong Kong. Right. In Hong Kong, there were strikes all over the place. So the thing is that one communication inside the company said that all the employees that couldn't make— I mean, they had to go to their stores, but if they couldn't, right, because there were strikes all over the place, they were allowed to stay at home. That was the message. What happened back then is that this was seen by the Chinese government as a clear attack to the Chinese culture and nationalism. This was seen as supporting the Hong Kong revolts back at the time. That was not the issue. The thing is that, okay, guys, you are You need to come here. We understand your rights. So the thing is that if you don't— I mean, it was giving the freedom and being absolutely without any type of political message behind. So the thing is that back at the time, Zara was held hostage by the Chinese government. So it's more about— I mean, brands should be brands, should be dressing people, should be completely agnostic to politics. But it's clear that some governments might take advantage of it and might use it, right? But in terms of, I mean, in terms of working in the day to day, nobody's thinking in none of the companies I've been working for in the fashion about politics. Another thing is that if your marketing proposal is to be I mean, I'm going to go for those that support Trump. Okay. If that is your point of view, okay, you take it and you're going to face all the problems. Right. But if that is your, if that is your, your, your, your, your proposal, right. That is your, your, your marketing approach. But for the rest, no company, luxury, fast fashion, sports is going to, should be messing with, with politics.

No, no, I agree.

You could be messing with sustainability, with, with understanding the customer, with doing many things, but not with politics.

Sustainability is a really interesting one because I think I explained to you one of the things that we wanted to do to try and, try and engage the fashion sector in a slightly different way. But one of the things, how much of sustainability in, in the brands that you know, because obviously you've worked for a long time in this space, but not just the brands that you've worked with, how important do you really think it is to fast fashion? Because from what I can see, it's greenwashing, you know, it's not— yeah.

I mean, the thing is that 5 years ago it was a marketing thing, right? You could, you could say I'm sustainable and you could, you could bring some attention from the, from the, from your potential customers. What is the thing in the European Union? There was a big change, which was the Green Deal, and the Green Deal was a big regulation set in order to manage all the needs for the circularity and sustainability around fashion, about many other things. So the thing is, this really was a game changer. This changed the rules of what everyone was doing. right? So this was really what is changing the market. What was done previously, I mean, it was done a lot of things. The things that in Zara, we were working with this ideal. I mean, the ideal was very simple, was to work in the— there was the Join Life program. And the Join Life program was, okay, in 5 years, we're going to have as much possible, recycled polyester, recycled cotton, and to try to work on this, right? The thing is that Zara now is far from the best. Honestly speaking, it's far from the best, but they are on the way to doing things, right? What is the thing? All the people behind, or many of the competitors behind, they are not even doing anything, right? Zara is far from perfect, but they fully understand what the regulations are and they have a plan for making it true. Right. Another thing is that quite probably these regulations by the EU, they are, they set such a high standard that it's almost impossible to comply with. Right. It's a good direction. It's going on that way. And the thing is that if Zara is pushing that direction, if Inditex as a whole is pushing in that direction, and so does H&M, The thing is that this is changing all the manufacturing, is changing most of the manufacturing facilities, which is where the problem is. Right?

Yeah.

So when it comes to Zara, there is a great, great— before working for Zara, you have to go through a lot of contracts, very, very long contracts with many things. You have to go through audits. You have to do many, many things in order to comply with these standards. What is the thing? The thing is that you are finally working with a supplier in Bangladesh or a supplier in Cambodia. And the thing is that their incentive is higher, is really high for outsourcing part of the supply chain of the manufacturing into other manufacturing facilities. And you're sitting in, in Arteixo, you're sitting in Stockholm and that is far, far away. So when you go and you do the audits, it's like, say, I mean, you will be visiting all the facilities, but if they are hiding something, it's very difficult to find it out. But I think the rules are there, the processes are there. They are far from being the best. They are in the good way. But eventually, at the end of the day, you rely on a provider that has a high incentive of not going. What is the thing in order to prevent this type of things? What the Zara, H&M, and/or Mango are doing is in case we do an audit and we find you, you're going to be paying whatever and not working for a long time. Even though, even though there's the, some suppliers, they end up running the risk, outsource part of it to— and that's where the problem happens. It is kind of what happened with H&M in China.

Yeah, I remember that. And I think that— yeah, I remember talking to someone about—

so all in all, Stephen, we are far from best. We are far from where we have to be. We are in the right direction. And I think that the big deal was the new regulations in Europe. Which were kind of, which were later replicated in many, in many other countries.

Yeah. Yeah.

But, but unfortunately, I mean, only, only being nice and only this marketing stuff, it's into greenwashing, right? So only when you start with laws which are clear and they apply to you, they apply to me, they apply to the other.

Yeah.

Only then the change happens.

Yeah. Yeah, I think, yeah. And, and like, I think I was, I was amazed when I got into this world 12 years ago and someone said, what's, what's the second biggest, what's the industry that causes the second most damage to planet Earth? And I was like, oh, it's not fashion. Fashion's beautiful, women and, you know, Saint-Tropez and, but, but, you know, and, and We do stuff in Hong Kong. We run an event in Hong Kong and lots of like inspection and testing and quality companies that we've built long-term relationships with. And speaking to them about some of the facilities and some of the chemicals and some of the treatment, and I'm like, okay, you know, and this is the biggest trick the devil ever pulled with fashion is presenting, you know, people who have money with something that they want and making it look beautiful. But under the surface, it is an industry that does need to change. And I'm quite excited about what AI might be able to do there, both in terms of authenticity. But you're right. I think you're totally right, Pal. It's going to be forced on the sector. The sector is not going to change of it by itself. But it sounds like Zara doing some good stuff there, which is cool.

I mean, what we need to keep in mind is that it's far from best. The best. There's still a lot of things to do, but they are in the, in the right direction compared to many other players in the, in the market.

Yeah, yeah. And, um, fantastic. And in terms of— so just a couple of things to ask before we kind of wrap things up. Uh, what, uh, is there one brand in your mind— and then you're not allowed to say Lime— um, is there one brand that stands out to you at the moment? Like, have you been keeping an eye on any brand that you find really, really exciting in the market at I'm in love with Abercrombie again. Okay.

Abercrombie used to be a thing of the past.

Yeah.

The thing is that they are doing really, really good stuff. They changed the product, they changed the image, they're doing good things in the online too. So little by little, it's kind of gaining back its position. Let's see if they are able to do it. There is another one which is a lot Alfa Domínguez. Alfa Domínguez is more niche. It's a Spanish brand. They're doing amazing things about quality, about small boutiques worldwide. It's really, it's a really good place. And apart from this, I mean, of course, in the, in the sports side, Hoka and On Running, they got my heart and the way they are fighting Nike. It's, it's just amazing. And I think that, that there's a lot of things to learn from them. Them.

Do you, do you have a pair of Hoka shoes?

Sure, I run every morning. I run every morning and I have, I have my Hoka. I only run with my Hoka.

What, how, how far did you go this morning?

I only got 5 kilometers.

Every morning it's the same. I did 5K this morning.

Yeah, amazing.

Yeah, yeah, yeah, go us. Um, so, uh, yeah, no, I, and do you know what, it's funny, so the brand, the brand thing, I've, I'm, I'm so loyal to Nike, to Nike key, right? And so I've seen people, like a lot of people where I live in West London, wear the HOKA brand. And I'm one of these people that only adapts to a brand after— I'm sure there's a psychology behind it. I'll probably buy them in 2 years once everyone's moved on. But yeah, yeah, they look good. Fantastic. Well, listen, I really, really appreciate you joining us today, pal. And hopefully we're going to see you in Berlin at the Supply Chain Forum. It'd be great to to see you in person. And yeah, thank you so much for your time and let's catch up soon.

Stephen, it was a pleasure to have this chat with you. It was amazing. And on my side, I'm really looking forward to meet you again in person.