Digital companies are shaking the fashion world, but incumbents are fighting back

Olga Torras

20 November 2017

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Saturday morning. You have to buy batteries. Also, the cold has suddenly arrived, meaning your To-Do list now also includes buying a black scarf. Finally, a task inherent to Saturday mornings: enjoy Saturday morning.

Various options to resolve the equation: Firstly, to add both items to the shopping basket of an online shop and go out for brunch. Secondly, do the errands and forget about having fun. But perhaps there is a third option? An intermediate solution, a breakfast in the brand new Flax and Kale of H&M and buy myself the scarf? A concert in Fnac’s cultural space and I will go after for the batteries?

Let’s stop to think for a moment about this dilemma, an anecdote or are we in the waiting room of the new retail revolution?

Movements in the market, both digital pure players and agents based in brick-and-mortar (commercial activities done offline) occur at a uninterrupted rhythm.

But before taking out the crystal ball, we start by recapping the evolution up until now.

The digital pure player (Amazon, Aliexpress…) is searching and capturing the succulent cake of the fashion market. Thus, they are launching convincing signs through initiatives like Amazon Wardrobe and the physical shop that opened Alibaba in the middle of this year.

The stakes are clear, but what is the value proposition for bringing the client out of the closet?Amazon wants to sell clothes, but “the clothing world” is in fashion, and perhaps Amazon’s buying process is not optimized to fit the right criteria. If I want to buy headphones or batteries, it’s clear to me: Amazon offers me variety, social layer, comparative quality/price, etc. Amazon gives me everything. But what if I have to buy a dress for a wedding? It’s a type of purchase that is governed by other criteria, I don’t want to see what other users bought, I want a look proposal, it’s not just the composition of the fabric, I want to see that fabric in motion to appreciate the fall. Amazon optimizes Convenience at a tremendous pace while that “fashionable” experience lags a little behind, Amazon still sells clothes and not fashion.

Buying fashion is a purchase with components in exploration, inspiration and seeing the fashion in movement. This digital purchase process leads us directly to our next big group of agents, the fashion pure player, or ASOS.

ASOS captures the idiosyncrasy of this process and brings it to digital perfection. We have already spoken about ASOS in 2014, where the challenge was usability, convenience and understanding the digital environment. ASOS has followed this path and made incursions into the off world, however, how do you keep eating your pie? Who will take his share? Are pop-up stores an inescapable future?

It seems then, returning to the crystal ball, that the pure players of online sales (Amazon) have to improve in this consumer journey, who is looking for fashion and not clothes, if they want to attack the retail cake in all its depth, as well as the pure players of online clothing sales (e. g. ASOS) not forgetting the physical component, either with pop-up stores or with other more innovative concepts.

The brick-and-mortar?

Finally, the house records, in recent years both brands and wholesalers have boosted their e-commerce, assuming that from the moment you sell something you can no longer talk about being or not being an ecommerce. In the middle of this year Walmart bought a digital pure player, but how do they implement it in store? How do they sell more than just the product? How do they make the store is not converted into a showroom of another distributor? How can we make your physical establishment fit and add value to your ecommerce strategy? Daniella Vitale, CEO of Barneys New York says it’s a matter of having a holistic approach, as she commented in this interview with Fortune: “we’re not in the business of just the retail anymore, we’re in the business of entertainment, service, hospitality, personalization, food even… it really needs to be a different kind of experience now, and that’s something I think is lost on our entire industry

It is clear that if I have to get out of bed for merely a transactional matter, I will do the shopping online.

Companies that have physical spaces available have to learn how to take advantage of them, either through their inclusion within the digital strategy and/or through a unique store experience, unattainable in the online environment.

Regarding the digitalization of the physical space, right now, for a retailer a shop can entail a darkroom for its relationship with the customer. Loyalty cards, beacons, intra-store geolocation and basically data driven marketing will be elements sine qua non for the key to success.

As for a unique experience, let’s see what H&M has done wisely, if your Saturday plan is to have brunch and go shopping, let’s take brunch to the store, and following this line, why not fashion shows? And why not a makeover in store that you can ‘take away’?

We live in the evolving era, where products move to services and services to experiences. The sector no longer sells a clothing garment, not even a fashion garment, it has to sell a complete experience and the question is, how will we go from experience to personalized experience? we will have to put the data driven to the service to search for this experience and connection with the client. Much remains to be explored in this sense and it will have to be done quickly. As Sephora America’s President and CEO, Calvin McDonald, said in an interview: “an emotional connection will help the retailer resist being a commodity. “If you can answer that statement, there’s purpose for your physical location,” he said. “If you can’t, you’re in trouble.

A bot should not be far away that, based on your shopping history, guides you through the store to buy you a dress, and in the process proposes a complementary garment for your partner. The same data for customer service that will alert the sales assistant with what we scored so well last time you went to the dressing rooms.

Another way of planning the future is to develop strategies already seen in other sectors. In this way, the Daimler Group understood that the future of the automotive industry was not to sell cars (the product), but to offer a service: mobility, which is why it launched Car2Go. The retail sector has been offered a similar opportunity – why not – to permit a fashion experience that does not necessarily involve the transaction of clothes, opening new business lines and offering complementary services, why not offer Mango or Desigual a shooting service in store.

If this agent scene is not complex enough in itself, new models such as Chicfy, the fashion wallapop or 21 Buttons must be taken into account.

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All this is in a context where, as in any other sector, barriers to entry disappear, time is accelerated and the consumer becomes a more knowledgeable and demanding agent of personalized solutions.

It is becoming increasingly clear that the irruption of new players and start-ups poses a threat to traditional companies. Where there used to be economies of scale, logistical advantages and large manufacturers had the ability to impose a brand, we now see how it is possible to access production environments in emerging countries (without having to guarantee a minimum of production), to benefit from shared transport networks but, above all, to efficiently transfer, thanks to new media, a different brand image, transgressing and much more related to a young public and less influenced by “prestige” as an intrinsic brand value and looking for different brands with another kind of narrative behind it. There are multiple cases like Nasty Gal or Happy Socks.

So, what historically had to optimize each one of these players now overlaps and the function to optimize includes all the criteria for all the agents, in a proportion to be decided by each company. It seems that a common lever will be data driven marketing, which will allow real customer centric strategies and where the brick-and-mortar can benefit in this new environment, apparently so unfavorable for their current leadership, leveraging on the competitive advantage of the data they have against smaller companies, taking more advantage of their physical stores as a source and application of data and as a center where to create an experience and unique thanks, again, to those same data.

Movements do not only respond to continue optimizing the business model, they go in search of new levers, new services to attract the customer and basically new models. The breeding ground for a revolution in the fashion industry is a reality.

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Between glimpses, we plan another Saturday morning in the near future. The cold winter is behind us and we are in the wedding season. You get out of bed early because you have given your fiancée a complete makeover in-store and you will have breakfast there. The dress for the wedding? From a Canadian designer who also paints. In addition, you make sure that nobody goes like you; Shoes, ASOS; you will look for bag in Chicfy; and accessories… who knows? Maybe the store’s own app will recommend something for you, The batteries? You’ll pick them up from Amazon’s delivery center at the shopping centre you’re going to.


Happy Saturday.