fashion

A Turbulent Year in Retail Comes to an End


2020 has been a year like no other. Fashion retailers were hit
especially hard early on by the Covid-19 pandemic. Since then, they
have been racing, fighting even, to adapt, evolve and innovate fast
enough to save their businesses. Changes that were once part of a
long-term strategic plan had to be implemented immediately, often
remotely and with less staff. In some cases, this acceleration of
change helped to stave overall losses. For some, it even provided an
opportunity for brand growth and scaling. But for many it was an
acceleration towards insolvency and bankruptcy.

You can also listen to this story. Joshua Williams’
podcast with Massimo Volpe is published here
.

For those who made it pass these initial hurdles, the focus turned
to the fourth quarter, the most important season for fashion retailers
in terms of overall sales. For most retailers, this meant putting more
emphasis on e-commerce, restructuring promotional timelines and
realigning direct-to-consumer distribution strategies. For others,
this included more drastic measures, such as reconfiguring physical
stores to be pick-up only locations, or even “dark stores” or
warehouses.

Now, as we near the end of the fourth quarter, retail executives
are hoping to see that their efforts have paid off and will provide a
foundation with which to rebuild their businesses in the short term,
post-pandemic.

So, what is the verdict leading into the holidays? How have retail
expectations held up? “It’s a very interesting and complex question,
because we have to speak about different geographies,” declares
Massimo Volpe, Co-Founder of the Retail Hub, and Founder of Global
Retail Alliance, an association that connects leading global
retailers. ”We’ve seen an increase in Q4, especially in the US market,
up by almost double digits. We definitely have seen a higher double
digit in the Asian market with China in the leading spot. And we’re
still struggling in Europe. We had a rebound all over Europe, but
because of the last, and current wave of Covid in specific areas like
France, UK, Italy and now Germany, we’re seeing people have kind of
slowdown a lot. So, It depends a lot on the geography you’re talking
about.”

While that might sound positive at first glance, at least for China
and the US, these double-digit number increases are still below
overall expectations and below year-on-year growth. But in a turbulent
year, executives have had to be more sanguine than usual. ”At the
beginning of next year, we weren’t expecting to see an increase,” says
Massimo. “We’re probably not going to match our forecast. We probably
have to wait until spring to see a decent comeback in the fashion
system.”

But there are silver linings. One of the key accelerations that
have led to overall positive growth in the retail industry is a more
strategic focus on e-commerce, and its position within an omni-channel
retail structure. According to Massimo, e-commerce has grown by 40%
for most companies, which represents a large shift. When asked if
these increases will continue post-pandemic, he suggests that after
Covid, these numbers will likely decrease to 20 or 25%. “But still,”
he reminds us, “it’s a huge increase compared to last year when for
most of the companies e-commerce was 10, 12%, if not lower.” And
what’s more, the pandemic forced many companies to finally set up
their online businesses, which will inform their businesses going
forward.

Massimo emphasizes that many of the adaptations and innovations
retailers will continue to employ post-pandemic are related to
personalization, a focus on the customer experience. “Innovations like
virtual shopping with a sales assistant, can create this omnichannel
situation, where you can have a direct relationship with your store,
with a person that you trust and eventually know, all in a comfortable
situation like home, on your phone, in a safer situation.”

Additionally, Massimo believes that there are key tools and
technologies that will become more front and center in 2021, including
smart speakers, a technology that Massimo has studied for the past
several years. He believes that use of smart speakers will continue to
increase post-Covid, especially as this technology enters new realms
such as gaming. Because it offers customers a substitute to typing, it
can be used in cars. “Now, with smart speakers you can shop when you
drive,” he exclaims.

Of course, launching new technologies in a meaningful way is a real
investment, financially and operationally. And with money as tight as
it is leading into 2021, retailers must be careful to focus on tools
that have the most customer impact. While the recent foray of luxury
retailers, such as Burberry and Balenciaga, into Twitch and gaming
make for very provocative titles and social media posts, these
technologies aren’t probably going to be a part of most retailer’s
short-term strategies. Massimo stresses that this is more likely a
marketing play than a strategy around increasing sales. And yet, he
quips, “I might not be in the right generation to judge it…this is
definitely my personal opinion!”

Massimo also acknowledges that the fashion industry is changing
quickly and companies need to be ready and agile during this moment of
compulsory evolution.



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