The fashion industry has been struggling across Europe for a while, and the concern is that the UK, which has up to now maintained a flat performance, may start to decline. With Brexit yet to start in earnest, and the full impact on longer term prices, consumer confidence, and discretionary spending still to play out, fashion may be one of the areas under threat if consumers decide that belt-tightening is required.
Brands have always had to strive to maintain relevance in such a constantly shifting market, but this becomes even more critical in a declining one. The extent of the impact, both at a market level, and for individual retailers and brands, will be determined by a number of key factors, and it will interesting to see who the winners and losers will be.
Of course people will always need clothes, but the fashion industry is reliant on consumers wanting to continually update their wardrobes, and therefore needs to constantly engage and inspire. Whilst there will always be a sub-set of the population for whom the latest trends are an absolute must-have, the indications have been for a while that this mentality is becoming less widespread. Instead, today’s fashion savvy mix and match their wardrobes, wearing both luxury and low-cost brands, and combine old and new items, to create their own style.
For a while we’ve seen a move towards buying into the ‘latest’ fashion trends at the cheaper end of the market, with consumers perceiving these items as ‘disposable’. This has led to lower spend on fashion, and it will be interesting to see that if consumers do ‘feel the squeeze’ they continue to trade down or if they just buy less in general.
The UK market has balanced the move towards cheaper brands with growth in the luxury sector, as items such as expensive bags and shoes remain highly aspirational, and add value to a cheaper outfit. It remains to be seen whether consumers will still consider these a worthy investment if personal circumstances decrease as much as they fear they might; in the immediate aftermath of Brexit consumer confidence regarding their own personal household finances dropped 7 points, into negative territory for the first time in over a year
The explosion of social media means almost half of global consumers (46%) value ‘doing things’ over ‘owning stuff’, which is likely to have contributed to the diversion of spending away from fashion and other physical goods to travel, cultural and leisure activities, as experiences become the social currency du jour However, people still need to look good in those all-important selfies, so there’s still an important role for fashion to play.
There’s a huge opportunity to engage via social platforms, (by which we mean a coherent and consumer engaging multi-platform campaign designed to drive specific brand interactions, not just buying impressions on Facebook!), and brands that facilitate socially engaging activities will also benefit as they make themselves relevant. #LiveTrends from Topshop, which engaged almost 4 million consumers and delivered a 75% sales uplift, is a fantastic example, as are #NIKPHOTOiD and the long list of interactive Burberry campaigns which started with #ARTOFTHETRENCH and continued through Burberry Kisses and the personalised My Burberry perfume campaign.
Minor fluctuations aside, retail footfall has been declining all year as consumers continue to move towards online purchasing.
Whilst omni-channel shopping brings many benefits to consumers and retailers alike, it remains more challenging to inspire spontaneous purchases, particularly within fashion. Whilst some retailers try hard to engage and inspire customers with trend (next) or celebrity (Missguided) themed communication and ecommerce merchandising, the majority are lagging behind, still requiring customers to have a rough idea of what they want to buy in order to navigate the site effectively. We predict the next decade will see many major retailers undergoing digital transformation projects to fully leverage their ecommerce potential; at the heart of this needs to be a solid understanding of how to inspire and engage fashion audiences.
Most retailers recognise the role of physical stores will undergo some change in the next few years, but nobody has yet defined what the future of retail stores will look like. However we do know they will focus more on delivering differentiating shopping experiences, rather than purchasing transactions. Already Topshop encourages customers in for a wider range of activities with nail bars, ear piecing and Eat cafes all available in store. Many fashion retailers will be watching with interest the renovations taking place at nearby Apple outlets to learn how to create enticing environments where shoppers like to hang out.
As well as creating socially appealing spaces, future store innovation will likely focus on trends such as personalisation and convenience (with personal shopping experiences increasingly available outside of the store itself), all of which will be supported by innovative technologies.
With the changing face of fashion shopping, the one thing we do know is that there are interesting times ahead. Those who succeed will be innovative, creative and inspiring in both the online and physical shopping environments – everything a good fashion retailer should already be!