The pace of change in the ecommerce world is ever constant. Today’s online fashion retailers are facing both huge challenges and tough trading conditions, but for the bold and intrepid retailer comes tremendous opportunities too.
Whilst fashion companies continue to face into tough economic environments on both the high street and online, fashion retailers continue to seek out new markets, new technologies and ever deeper insights into the shifting sands of their consumers, in order to discover new opportunities to grow.
For us here at Williams Commerce, working with a number of high profile fashion retail businesses over the last decade, combined with research across a number of credible sources has allowed us to identify those common factors that are helping retailers achieve ongoing success. What emerges is a combination of specific ingredients that leads to sustained growth over time.
Be Nimble, Be Agile.
Those businesses living and breathing an agile approach are transforming their business success and positioning their company to compete in the future. Traditional companies are built on structured and siloed hierarchies with decisions flowing down from the top, as opposed to the agile organisation who create teams (squads, cells) that have the freedom to operate within rapid learning and decision making cycles and operate iteratively, in that not everything can be planned up front. (source Mckinsey and Company, May 2019 “The journey to an agile organisation)
“We are 3,000 people on a giant cruise ship. But what we need to be is 3,000 people in a few hundred yachts.”
To move to a truly agile approach, a business must embrace comprehensive transformation across every facet of the organisation including people, process, strategy, structure and technology. Some companies are born agile (like Spotify) others take a more bottoms up and systematic step by step approach.
If an organisation can embrace agility and fundamentally changes the way work is done, there are huge benefits including creation of clear accountabilities and pace of decision making and basically getting stuff delivered and done.
Agile transformations acknowledge that not everything can be known and planned for and that the best way to implement is to adjust as you go.
How agile is your business?
Online retailers we observe who are working towards embracing a more agile approach are constantly learning on the go, whether that be operating a more holistic digital marketing approach that can flex with the ebbs and flows of the business; seeking out a much wider variety of data to analyse, to create data-driven insights, leading to iterative optimisations; and experimenting fast, at low risk, via spreading investment into more unknowns and are aligning their in-house and third-party resources to deliver against these and more.
Harness the power of emergent technologies.
Many businesses nowadays are seeking to build or improve upon their automation capabilities, and streamline the repetitive or mundane parts of running a business. Advances in artificial intelligence, software robotics, machine learning and innovative technology platforms are enabling companies the exciting opportunity to improve performance and drive greater efficiency, all leading to a reduced costs to serve customers.
But to get there, a business needs to make automation a strategic priority and align realistic investment accordingly. If a business is struggling to implement some levels of automation, elevating the role of IT in the business can be the catalyst for real change in this area.
To what degree has your business automated processes to drive great efficiencies?
Bricks and mortar fashion retailers who co-exist with their online ventures are harnessing powerful multi-channel enterprise resource planning software like Microsoft Dynamics Navision or Prima Solutions to control their order management, integrate stock control, product and customer data, integration with EPOS in store and CRM solutions to allow retailers to be fully connected in real time, across multiple sales channels, whilst creating back office operational efficiencies, reducing cost and boosting sales.
Personalisation is a key focus area for automation for many fashion retailers, and the options to integrate with sophisticated third-party software from market leaders like Nosto and Clerk.io are simply amazing. These platforms take your customers behaviour and using intelligent AI, automatically optimise elements such as search results, product recommendations, and marketing campaigns on email marketing and social media for example, to offer a more personalised experience. All with the opportunity to generate a 10-30+% increase in revenue.
Email Marketing is another key area for businesses. No longer does the one size fits all approach work. Savvy consumers will swiftly unsubscribe if emails are irrelevant. Providers like DotDigital offer a comprehensive suite of tools via their Engagement Cloud to empower business to create personalised 1:1 emails to engage customers and boosts ROI. Through the automation of triggered email marketing, and the use of AI to create highly targeted, relevant content, businesses are saving time and resources. Emails can now be completely personalised to a single end user, personalising the email campaign based on the subscriber data, including first name salutations, super relevant dynamic content, and products completely unique to the recipient. Sounds amazing? That’s because it is. And all this software is out there, ready for fashion ecommerce retailers to harness and accelerate their growth online.
Capturing the Omnichannel customer
Consumers in this day and age are shopping across channels. They might research a product online and then visit the shop to buy in store. Or they might visit a store to check out products and end up buying it online. Or they may buy online via click and collect or reserve in store, visiting the store to collect their purchased item. High performance fashion retailers are super curious as to the interplay between online and offline customer decision making and might be adapting the ‘who gets the credit for the sale’ approach, removing these barriers and adopting a more omnichannel view of total performance….
Savvy fashion retailers are adjusting their view on the role of the physical store and looking at the alternative roles the instore experience can offer. A destination to buy products of course, a showroom, a fulfilment centre for online orders, a place to exchange or return items, and a destination for finding new innovations and inspirations, or the place to get the perfect instagram pics.. “It's entirely possible for a store to have weak sales and profits within its four walls while being a strong contributor to the retailer’s overall performance.” (Sources; McKinsey and Company July 2018 Article Who’s shopping where? The power of geospatial analytics in omnichannel retail.)
The most sophisticated retailers are utilising a number of data inputs, including customer traffic sources, consumer behaviours data (e-receipts and mobile location data) combined with machine learning to generate powerful new insights that are helping retailers take better decisions around their physical stores footprint and take actions in shops to improve performance. The moral of this story? Dwindling sales in bricks and mortar shops can be viewed through a different omnichannel lens...
Quenching Consumer’s Desires for Variety, Sustainability and Affordability
It is said that the fashion resale market (ie: pre-loved, second hand, vintage) could be bigger than fast fashion within ten years. The likes of Spotify, Netflix, Amazon Prime, Boris Bikes (!) are all evidence of a shift in consumer’s behaviours to access over ownership. In the fashion world, there is evidence of a behavioural shift, with the emergence of the dress agency that sells quality second-hand clothes on behalf of private clients on a 50-50 basis for example and the emerging trends for refurbished, repaired and rented fashion items. There are also predictions for a growing proportion of consumers whose wardrobes will be made up of pre-owned or rented products, especially for higher value clothing and accessories such as handbags.
Millenialls and Generation Xers crave newness, but desire sustainability. The rental, resale or repairs approach to fashion can hit the button for these consumers. Established brands are now dipping their toe into the preowned and rental markets. Patagonia who pioneered a repair and resale model states “The single best thing we can do for the planet is keep our gear in use longer and cut down on consumption.”
Fashion retailers exploring the move towards access over ownership (source Mckinsey February 2019 Article The end of ownership for fashion products) are right now looking at ways to incorporate these shifts into their own business stories, with the aim of setting themselves up for future success, as consumers needs continue to evolve towards variety, sustainability and affordability.
Part 2 of this series will discuss the customer experience, the power of free, shoppers trust, and data driven decision making.