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The global fashion retail business stands at the cusp of disruption. Retail Business in India is also undergoing a rapid transformation propelled by several factors such as rising household incomes, increased e-tailing, favourable demographics, use of technology and easy credit availability.
The lockdown and the travel restrictions amid the pandemic accelerated digitisation and provided a fillip to e-commerce. Compared to the brick-and-mortar model, e-commerce enjoys several advantages: doorstep delivery, various hassle-free payment modes, speed, data-driven customer insights, and more. Hence, e-commerce exemplifies convenience, flexibility and cost-effectiveness. As e-commerce doesn't require an investment into offline infrastructure, it has provided an opportunity for several entrepreneurs to adopt an e-commerce-only model for their small-scale businesses.
COVID-19 proved to be an inflexion point for brick-and-mortar retail, reaffirming the need for constant innovation to adapt and navigate complexities.
The sharp surge in eCommerce sales should not be construed as the death knell of brick-and-mortar stores. Both these models will co-exist and, at times, complement each other. To capitalise on this opportunity, retailers should focus on curating in-store experiences to engage their customers and foster their retention.
Experts are bullish on the growth of the brick-and-mortar fashion retail business in 2022 despite steady growth in e-commerce sales. Here is why.
Brick-and-mortar retail cannot be matched by those offered by e-commerce. Physical stores are helmed by sales personnel who talk to customers, let them try on the outfits and address their grievances in person. While people may savor digital experiences, they cannot replace the level of personalisation and human connect in face-to-face meetings. Nevertheless, the pandemic has necessitated revisiting shopping experiences in the post-COVID world.
Fortunately, several brands have undertaken interesting initiatives to augment the shopping experience. For instance, Farfetch, a British-Portuguese fashion brand, has pioneered the use of digital data to personalise the shopping experience. Its new offering -Store of the Future," uses RFID technology to curate customer wish lists based on their browsing history, leading to advanced personalisation of the brick-and-mortar store experience. The brand plans to harness augmented reality and niche payment options to elevate the customer experience.
The in-store experience remains critical to brick-and-mortar fashion businesses and restaurants due to the tangible experiences they offer. Physical stores are still an effective way to experience products before purchasing them. Luxury Institute’s ‘State of the Luxury Industry’ Survey highlights that over two-thirds (68%) of sales for fashion luxury brands take place in-store.
Several studies predict a bright future for brick-and-mortar retail.However, retailers can no longer be complacent in this rapidly-evolving landscape. Today’s discerning customers want a complete shopping experience, and a luxury label alone can no longer lead to success. Fashion luxury brands are investing in experiential retail to adapt to the ever-evolving retail landscape and maximise the customer experience. For instance, the Dolce & Gabbana store in Rome has been aesthetically designed by Paris and Brazil-based studio Carbondale to reflect "a city synonymous with magnificence and uniqueness”. Its salient highlight is a digital fresco created by Paris-based creative studio Pastor/Placzek. The image depicting pastel clouds, cherubs and Ancient Greek deities Hercules and Athena was digitally scanned from an original fresco by 18th-century Austrian painter Paul Troger. It is then projected across the LED-enabled ceiling and giant monitor screens embedded in walls.
Technology can't be more engaging than interacting with smart sales staff. The sales department has been the cornerstone of the fashion retail business for decades. A dynamic salesperson makes several crucial decisions as they engage a prospective buyer, like when to talk and when not, when to push subtly and much more, which cannot be matched by even using sophisticated technology tools in E-commerce. An engaging pitch can play a pivotal role in converting customer visits into in-store purchases. This factor implies that brick-and-mortar fashion is here to stay.
For luxury brands, understanding the customer is paramount. New-age technology such as AI and Data Analytics play an enabling role in improving hyper-personalisation in the product, promotion, and shopping experience. For example, Gucci and Valentino are using AI to help sales staff greet existing customers by their name and offer personalized recommendations based on consumers' preferences and past purchase history.
Clienteling involving personal styling and shopping services designed to foster relationships with high-spending customers — is the key sales driver for luxury fashion businesses. These brands have identified frequent shoppers with high spending potential and are investing in them. For instance, Burberry developed the "R message" in 2019 to expand the omnichannel model, which included the ability for sales associates to sell to people who weren’t necessarily physically nearby. Neiman Marcus has purchased Stylyze, which makes outfit recommendations based on customers’ purchase history in an endeavour to enhance customer experience.
Once referred to as outlets and stores, brick-and-mortar fashion has transformed into experiential hubs. Customers can now check an item's availability, purchase products and find coupons for in-store purchases before heading to the store. It has led to the emergence of new trends such as 'curbside pickup’ and ‘buy online pickup in-store (BOPIS).' Take the example of New York-headquartered Bonobos. Founded as an eCommerce label, it now provides high engagement offline to supplement its e-commerce presence. These outlets showcase products in every colour, size, fit and fabric available to try on but do not keep any product in stock for immediate purchase. Hence, these stores exemplify high touch, a highly personalised experiential journey which is why Bonobos acquires a significant proposition of customers through guide shops rather than online. Several brands use geofencing, augmented reality, exclusive coupons, etc., to increase sales and enhance the customer experience.
Compared to e-commerce, brick and mortar fashion is better positioned to deliver a wholesome experience rather than just online product fulfillment. For example, Charlotte Tilbury launched her iconic make-up range in the UK with an iconic campaign #WhoCouldYouBe. As part of the campaign, shoppers were invited to choose among Tilbury's make-up personas- The Rock Chick, The Bombshell, and The Golden Goddess. After being prepared by Tilbury artists in the celebrity look desired, customers were required to create a GIF GIF at the booth, which was displayed on large screens in an eye-catching display to passers-by entering the store. The customers were also given a link to the GIF GIF for sharing from their personal accounts on Facebook, Twitter and Instagram. The result of the campaign was happy customers and substantial social media traction.
The pandemic has upended the world like never before. However, the fashion retail business has shown steady growth since 2021. The innovative practices implemented by brick-and-mortar fashion brands during the pandemic, now form an integral part of the curriculum for students of fashion designing as well as fashion management. Going forward, the fashion retail business will thrive on an omnichannel model with a harmonious co-existence of both brick-and-mortar retail as well as eCommerce. The critical challenge for the companies would be to ensure seamless integration of the 'phygital model’ to maximise customer experience. They need to reorient various channel approaches towards a unified customer-centric strategy. Such a strategy should use several tools to harmonise multiple marketing channels and enable a customer with several options to choose from.
Some brands, such as Kohl's, have already taken the lead in this direction. It has partnered with Sephora and Amazon to accept the online retailers’ returns in Kohl’s physical retail locations to foster customer retention and secure their loyalty. Another reigning trend is pop-up stores, which is a route for retailers to showcase their product physically. In 2021, Los Angeles-based apparel retailer Revolve Group unveiled a pop-up shop during New York Fashion Week, featuring products from 13 designers as part of the West-meets-East Coast collaboration.
With widespread parity in pricing and offerings in the post-pandemic world, the customer experience will be the dominant factor in influencing sales. This implies experiential retail is here to stay, and the fashion retail business will rely on technology to deliver value to customers. Flexibility and resilience across the value chain will be the key for fashion businesses to meet customer demands seamlessly and stay ahead of their peers.
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