How retailers turn royal favor into big rewards

By | 4 minute read | May 17, 2018

In the lead-up to Meghan Markle’s wedding to Prince Harry, the “Meghan Effect” seized the fashion world.

The British glove manufacturer Cornelia James is often in the public eye. Since 1979, it has provided gloves by royal appointment to the Queen of England, and more recently it has dressed megastars including Rihanna, Taylor Swift and Madonna. All those high-profile customers are great for publicity, but nobody drives sales quite like Kate Middleton, said Genevieve James, the company’s creative director.

“We get far more of a spike in sales when someone like Kate wears them. When it’s a celebrity like Madonna, it’s not the girl next door. But when it’s somebody like the Duchess of Cambridge, the public, particularly in the US, can relate to that,” James told IBM.

James first confirmed that fact in 2012 when, at a ceremony for Remembrance Sunday, Middleton wore a pair of Cornelia James’ merino wool gloves. On a typical day at the time, James said, the company tended to receive about 10 or 15 orders for those gloves through its website. But on that Remembrance Sunday the company saw about 100 orders, and sales quintupled the usual amount for nearly a week thereafter. “Everything she wears, people just want it,” James told IBM.

Keeping up with Kate

The sudden sales spike that comes with a tacit Middleton endorsement is called the “Kate Effect,” and it’s affected businesses big and small—from jewelers to handbag designers to dressmakers— since Middleton’s engagement to Prince William in 2010. In 2012, Newsweek estimated that the “Kate Effect” contributes more than $1 billion to the U.K. fashion industry annually. Today, blogs including What Kate Wore, Dans le boudoir de Kate Middleton, and Kate’s Closet obsessively track Middleton’s outfits and drive royal watchers to the brands the Duchess of Cambridge favors.

In the lead-up to Meghan Markle’s wedding to Prince Harry, a similar “Meghan Effect” seized the fashion world. When Markle carried a bag from the Scottish brand Strathberry at her first official appearance after the engagement, it sold out in 11 minutes. In January, she wore a pair of black jeans from the Welsh brand Hiut Denim, forcing the company to move to a bigger factory to fulfill ballooning demand.

“I do think that Meghan’s impact on the industry is going to transcend Kate’s in the long term,” Susan E. Kelley, creator of What Kate Wore and co-creator of What Meghan Wore, told IBM.

“A two-headed animal”

Luckily, James said, her company has been able to assemble the extra material and labor needed to manage several instances of the “Kate Effect” in the past six years. But other fashion companies that have unexpectedly received the royal spotlight haven’t been able to manage the consequences as easily.

When Middleton joined Prince William to announce their engagement in November 2010, she wore a blue dress by the little-known British label Issa. The dress sold out in five minutes, and the brand struggled to scale production. It closed down five years later. A month after the engagement announcement, Middleton wore a pair of earrings from the British jeweler Links of London for her official engagement photos. The earrings sold out quickly, and online counterfeiters moved fast to fill in the supply gap. Links of London estimates it lost more than $10 million in sales as a result.

“It really is a two-headed animal,” Kelley said. “While it has been a tremendous boon and exposed a lot of brands to the general public, it also places enormous stress on companies, particularly smaller, boutique brands that are not well-equipped to deal with the flood of orders, not to mention the media attention.”

Tools of the trade

Today, said Kelley, the challenge for fashion manufacturers and retailers is perhaps even greater than it was when the “Kate Effect” first emerged eight years ago. Consumers have gotten used to seeing an item they like in their social media feeds, easily discovering its manufacturer, ordering it instantly, and receiving it quickly. Buying impulses are often short-lived, and brands need to act fast to make the most of a golden opportunity.

“I know our customers. They don’t like to wait too long,” James said. “People change their minds. They move on.”

In an effort to move more swiftly and efficiently in this environment, more companies are harnessing AI to improve demand forecasting and order fulfillment. They’re also building secure blockchain networks on the cloud to drive greater visibility and transparency across the entire supply chain. Faced with a sudden disruption in the global marketplace, or an unexpected swing in demand, they can move quickly to adapt.

“Chief Procurement Officers (CPOs) and supply chain management leaders are now equipped with volumes of data generated using IoT, social media and big data available in the public domain. The biggest challenge for today’s business is to quickly recognize this opportunity and stay ahead of the game,” wrote Girish Mutagi, a managing consultant for IBM’s Global Business Services.

Supply chain managers may not be able to predict when Middleton, Markle, or any other high-profile figure might cast their influence over one of the products they supply, but the right technological tools can help ensure seamless production and distribution of a product once demand starts to swell. Effective use of those tools could, for instance, transform an instance of the “Kate Effect” or the “Meghan Effect” from a royal pain in the neck into a golden opportunity.