It would be easy to say that fashion retail is in a state of flux. After all, the whole world is in a state of flux – suspended in limbo between the strictest lockdowns of this spring, and the promise of widespread vaccination swooping in to herald a return to relative normality by next spring.
But while nobody can say with any confidence which stores will remain open over winter, and where, focusing on the physical channel is denying a clear trend towards digital channels. This is not by any means a new trend; eCommerce has been the rising star of retail for some time, with a share of global retail sales that had almost doubled between 2015 and 2019. And in the same timeframe, new physical stores were being opened less often (at least here in the UK) and existing ones were being closed more frequently.
It feels almost cruel to look back at an article – such as the one Shopify published in January of this year – that was written in happy ignorance of what 2020 was going to bring. But it’s nevertheless a useful tool because it establishes what the world thought would be a high watermark for eCommerce growth (22% share of all retail by 2023) and showcases just how suddenly and comprehensively predictions can be upended.
By contrast, eCommerce’s share of all retail sales in the UK rose from 19% just before COVID hit, to nearly 33% in May. Some of that growth was retraced by summer, but a recent survey of direct to consumer brands revealed that the majority expect this holiday season – of which alarmingly little remains – to set a new benchmark for online sales.
To be blunt: eCommerce was always likely to become one of the driving forces of retail, but the shift to online selling that resulted from the pandemic has accelerated the timeline. And of course the impact of this has been felt keenly by retailers and direct to consumer brands of every stripe. Those that were able, through prior investments in infrastructure, to translate store sales into online sales saw eCommerce growth of more than 90%. Those that weren’t either scrabbled to find alternatives or became corporate casualties of the outbreak.
To date, 2020 has actually seen fewer retail stores closures in the UK than 2008 – the time of the financial crisis – but the scope of these closures has been wider, affecting close to 10,000 more employees than the 2008 figure. On the flipside, Amazon’s revenue is the highest it’s ever been as of Q3 2020 – approaching four times what it was for the same quarter in 2015 – and the eCommerce giant has made a series of power moves throughout 2020 that are all but certain to consolidate its power. Hiring up to a quarter of a million workers worldwide to cope with spikes in demand, who joined 33,000 corporate and technology workers the company also brought on amidst the pandemic.
To summarise, this year has presented a very different picture depending on which side of the retail coin you fall on. Those organisations that had pre-existing eCommerce platforms, processes, and channels have, for the most part, been able to either survive or thrive. Those that were focused on physical retail exclusively suffered. And the past tense is probably not the correct one for me to use, since last week saw the collapse of the Edinburgh Woollen Mill Group, taking with it thousands of jobs and four long-established UK brands, precipitated by their being “ill-prepared for the massive switch to online shopping brought about by the pandemic.”
At the same time has being a year of hardscrabble competition for retailers, 2020 has also crystallised long-fomenting changes in consumer behaviour that now have a good chance of becoming permanent or at least persisting for some time. And retail, both online and off, is going to have to change to keep up.
“Now more than ever, consumers are embracing online shopping, and they want their shopping experience to be frictionless,” Jean Shin told me. Jean is Director of Strategy & Content at tyntec, and we spoke earlier this month about how customer expectations are changing
“A move driven by millennials and Gen Z, the new e-commerce customer experience is mobile-first and focused on conversational clienteling. Messaging platforms, particularly the world’s most popular choice WhatsApp, are at the centre of this interaction as businesses are meeting their customers on their preferred communication channel,” Shin said. “Brands are now recreating the high-touch, in-store customer experience right on this digital channel, with personalised purchase recommendations based on customer data, rich media content that assists the customer with vivid visualization – all with the speed and efficiency that the new-gen technologies such as conversational tools and AI provide.”
That answer incorporates a lot of technologies, but that’s by design. The Interline has written recently about retail’s biggest challenge right now being the need to back up outward optimism – which fortunately appears to be well-founded, given the fact that the world is going into 2021 with potentially three vaccines ready to deploy – with operational excellence. And that excellence is going to hinge, to a large degree, on brands’ and retailers’ levels of technology adoption.
In physical retail, delivering the level of service shoppers expect is going to rely on digital ecosystems and infrastructure – whether the store is serving as an experience centre or a destination for fulfilment and returns. Online, the requirement for virtual photography, 3D assets, and seamless consumer experiences is about to put a great deal of pressure on all departments – from design to distribution. And across channels predictive planning, algorithmic trend analysis, and automated market and consumer testing solutions could be the difference between stocking what the consumer wants, where they want it, and falling out lockstep with the market.
From today until the end of the calendar year, The Interline will be covering all these angles. Between late November to the end of December we have exclusive collaborations, op-eds, interviews, and more lined up – all targeted at answering the most important question our industry faces going into 2021. What does it mean to sell, and sell well, in a world that’s changed more than anyone could have imagined at the start of the year?
