Every week, The Interline rounds up the most vital talking points from across the fashion technology landscape. We provide our take on what matters, and why. This roundup is also delivered to Interline Insiders by email.
eCommerce and social commerce could further erode the inbuilt advantage of big retail – but only if integration comes through.
The idea that retail has become democratised is definitely not a new one. Ever since platforms like Shopify, Etsy, and eBay emerged, businesses of essentially any size have been able to sell to consumers without the traditional overheads of opening premises or establishing their own channels. This has been almost single-handedly responsible for the rise in home-grown brands and the viable of micro-enterprises – in fashion and in other sectors.
With the pandemic turning online into, for all intents and purposes, the only channel that retailers have to reach consumers, though, those platforms are starting to seem less like the preserve of boutique and small-fry brands, and more like a legitimate threat to the high street.
At the time of writing, Etsy’s stock (yes, it’s a public company) is trading close to an all-time high, after a meteoric rise that has seen it more than triple since COVID broke on European and American shores. Similarly shares in eCommerce platform giant Shopify have more than doubled in price in the last six months, and tripled since the market-wide slump in March. This makes Shopify, at the time of writing, more valuable in terms of market capitalisation than IBM. And if we consider just how vital the latter company was to the legacy of computing, we have, perhaps, some indication of what this might mean for retail in 2021 and beyond.
Similar bounce-backs have been seen across the eCommerce landscape – including the usual suspects like Amazon, but also secondary markets like sneaker (The Interline is getting used to not calling them trainers) destination StockX, which last week revealed that spending on its platform had not only returned to , but actually surpassed normal levels by mid-April.
Now that non-essential retail has had a few weeks here in the UK to adjust to the realities of trading during a global health crisis, the results for brick and mortar stores are less than encouraging. An initial spike the week doors were allowed to reopen appears, according to research published today, to have rapidly tapered off, leaving the future of high street and retail park trading in a very uncertain place. And this is before we even consider the impact of localised lockdowns, which are already happening here in the UK, and which seem inevitable in the growing number of virus hotspots in the USA.
Selling online, however, continues unabated. And while the volume of new styles hitting the market is certainly on a downward slope from its feverish peak in late May, it still sat at comparable levels to 2019 as of the last week of June, according to data provided by EDITED.
To put it as starkly as possible: we have a situation where a similar number of new products are arriving in consumption markets this June / July as there were in the same period of 2019, but only channel is continuing to operate at the same capacity. This has manifested itself, according to new retail sales data for the UK, in an extremely skewed picture: blended, cross-channel sales fell by more than 18% year on year in May, online sales were up nearly 130% in the same period.
Where once physical premises gave retailers credibility and clout, right now real estate is struggling to justify its cost at a moment when clicks seem destined to remain the consumer’s preferred way to shop.
What does this mean for technology? A heavy burden of responsibility, since product-centric solutions and eCommerce platforms not only need to ensure they can cater to huge spikes in demand – and successfully onboard armies of new brands looking to establish or scale digital, direct to consumer operations – but they also need to chart a new course for retail as a whole.
So while the accelerated wider availability of Instagram Shopping (the West’s most promising turnkey social commerce channel) at the tail end of June promises that brands will at least have more choice than ever of online channels to use, there is still an open question as to how these various platforms will be integrated to the back-end, creative, and financial systems that brands and retailers already use.
There are already strides being made in this area, with some PLM and other product development solutions offering PIM or PIM-adjacent functionality that can streamline the path from a style to a SKU ready for a range of different online storefronts. But those integrations will need to become more prevalent, much more quickly, if brands are going to capitalise on this opportunity to use eCommerce as their life raft as we drift further into what look to remain choppy waters for at least the rest of this year.
Once a competitive edge, arms-length offshore production will remain a risk vector without reform – and without integration.
If having a physical store was once the emblem that distinguished a “serious” retailer from a smaller one, then producing offshore, with a complex global supply chain, was the other sign that a business had its house in order.
Not so today. While luxury companies have been, mostly, insulated from the worst effects of supply chain disruption, others whose entire business models were predicated on low-cost, high-volume production in places like China are now finding that they are uniquely exposed to risk.
As several of our contributors, sponsors and collaborators have written since our focus on Factories Of The Future began in June, the right technologies already exist to replicate most of the production process in-country (i.e. in the same markets where the resulting garments will actually be sold) with automation circumventing the need to find new sources of labour. But “most” is the operative word: reshoring is likely to be only a partial solution to the manufacturing crisis that COVID has caused, and creating more dynamic, resilient, and responsive supply chains is destined to be a gigantic effort for businesses that have been accustomed to pushing out orders to overseas partners.
Here, again, technology is being handed a heavy yoke. For a multi-model, agile, bulletproof supply chain to exist – let alone be monitored and improved – a huge array of software and hardware will need to work together. From digital printing to numerically controlled cutting, and from 3D simulation to sewing stations, migrating the supply chain from being risky to resilient is perhaps the biggest challenge that retail has to overcome.
Next week, The Interline will be turning its attention – with the help of a collaborative partner – to solving exactly that problem, as our Factories Of The Future focus continues.