Every week, The Interline rounds up the most vital talking points from across the landscape of fashion technology news. We provide our take on what matters, and why. This roundup is also delivered to Interline Insiders by email.
Why this one-season windfall could be just the start of eCommerce competition.
It seems inevitable at this point that the 2020 holiday season is going to be an online shopping bonanza in most markets. If the model provided by the first wave of COVID – and its attendant lockdowns – in spring wasn’t enough evidence, there are daily analyses and survey results indicating that eCommerce is set to be a major force in retail for the final few weeks of 2020.
A survey of US and UK shoppers published yesterday revealed that more than 60% intended to shop mainly online for the rest of the year, and that close to the remaining 40% did not see themselves visiting a physical store at all until 2021. During singles day in China, luxury sales through the online JD.com platform were up anywhere from 140% to 10X, depending on which brand and what timeline you examine.
And two new pieces of research published this week suggest that it’s not just large e-tailers and online marketplaces that are the beneficiaries of the swing towards online selling. More than 80% of direct to consumer brands – i.e. those that sell through their own digital channels – are expecting the next month to set a new benchmark for sales. At the same time, brands that are prepared to sell direct to consumer online are also poised to sidestep the pattern of sweeping discounting that has come to characterise holiday shopping events like Black Friday, and sell through more products at or near full price.
All of which suggests that eCommerce is essentially a green field – an opportunity for DTC brands and retailers that have seen their in-store sales dwindle to not only reclaim lost revenue, but also to seize entirely new opportunities. But the reality is, as it often is, more complex. Because this holiday period, coming at the second peak of a global pandemic, is a highly singular situation, and as such it benefits from a degree of fair play and non-competition that will not last far into 2021.
As an example, consider Amazon France’s act of largesse this week when it announced that it would postpone its Black Friday event for a week to avoid provoking the ire of smaller retailers that are currently closed as a result of the country’s second lockdown, which could lead to Amazon capturing an unfair share of event sales. Whether you believe the altruistic motivation or not, there’s no denying that this is an extraordinary act that is highly unlikely to bee repeated; companies do not typically voluntarily step back to help their competition out.
And while France is not Europe’s top market for eCommerce, it’s also not too far behind Germany and the UK, so it’s not as though Amazon France is leaving a small amount of potential money on the table.
This story also has an analogue here in the UK, where our second lockdown led to greeting card stores – of which a few remain – complaining to government that supermarkets and hypermarkets were permitted to keep selling cards and gifts despite a nationwide ban on “non-essential retail” preventing them from opening their own stores. This might sound like a very niche example, but similar principles are going to apply to furniture and, yes, fashion. Is it, strictly speaking, “fair” for supermarkets to sell their private label clothes at a time when dedicated clothing retailers are not permitted to trade through physical locations? Morally, probably not. Commercially, anything goes. And once the pandemic begins to ebb away again in spring and summer of next year, morals are likely to take a back seat.
All of this is, The Interline believes, indicative of where the fashion retail industry currently stands with regard to online, social, and all-round digital sales as well. Some supermarkets will, no doubt, choose to withdraw non-essential items from sale during restriction periods, rather than risk public backlash. But once those restrictions end, multi-category retailers’ key advantages – scale and variety – could return with a vengeance.
If we look at eCommerce through the same lens, we’re currently in something of a grace period, where the industry’s sudden need to shift to selling primarily online has created a sense of camaraderie. In reality, though, the eCommerce playing field is far from even, and once the latest set of restrictions is relaxed the major players are likely to return to dominance – with their positions reinforced by serious investments at a time of crisis.
To cut to the chase, the eCommerce competition is just beginning, and when its intensity does pick up, retailers and DTC brands that want to go toe-to-toe with the leaders will need to pit smarts against scale.
From next week, The Interline will be turning its editorial focus to our final topic of 2020: the future of unified commerce. Look for a series of unique collaborations, interviews. and exclusive op-eds as we end the year by considering what it’s going to mean – especially from a technology perspective – to deliver retail excellence next year.
Environmental regulations continue to tighten in Europe.
This week saw the UK government’s long-awaited Environment Bill enter a new phase, after extensive consultation with industry, and ays the groundwork for more granular regulation and accountability in raw material sourcing. While the bulk of the attention is focused on its efforts to rein in deforestation caused by agriculture, the fashion industry will also be affected as leather is one of the raw materials specifically mentioned.
Unlike some other environmental and ethical regulations, the Environment Bill is designed with punitive action from day one: companies deemed to have too great a “forest risk” without adequate explanation will be fined.
The immediate impact of this Bill on the fashion retail sector will be minimal, but when we consider that it also comes in the same week that the UK announced it would ban the sale of internal combustion-only cars in less than a decade, it becomes clearer than ever that environmental regulations are firmly on the agenda for the next few years. So the sooner brands are able to obtain detailed insights into the material supply chains – something we covered twice as part of our blockchain focus – the better.
A new era of cross-platform digital avatars could soon be upon us.
Epic Games – of Fortnite and Unreal Engine fame – this week announced that it had acquired Hyprsense, a company that has been working on real-time performance capture and expressive avatars for the consumer market rather than for film production.
Until recently, the concept of virtual fashion (buying clothing specifically for a digital avatar, or to layer on top of a photograph of yourself) has remained stubbornly niche, frustrated by the lack of any real interoperability between platforms, or incentives for all but the most devoted digital fashion advocates.
This could be set to change if Epic works Hyprsense’s technology – which has already been used for videoconferencing – into its Unreal Engine developer kit, since many of the most popular videogames run on Unreal Engine, as well as several recent online experiences and virtual fashion shows developed by (or for) brands. By encouraging consumers to identify with their digital avatars by having them accurately interpret their actions and expressions, and by making those avatars potentially portable between titles and platforms, this move could solve multiple problems at once.
After all, as we near the end of 2020, the idea of having an immaculately-dressed and groomed avatar stand in for us on a Zoom conference seems rather appealing.