As the dust settles over another hectic festive
peak trading season, it’s clear that fashion retail has changed considerably
yet again this year thanks to this annual trial by fire. The factors behind the
changes prove to be as disparate as the changes themselves. Here we analyse
some of the key ways consumer behaviour has helped shape the fashion retail
sector this Christmas.
Forget about Black Friday and Cyber Monday, this year November was transformed by many UK fashion retailers into Black-vember as they began their big sales marketing push at the start of the month and often extended it right up to Christmas day and beyond.
The result is that the fashion retail calendar has been permanently altered. Discounting now dominates the peak-trading season, where once it was strictly a post-Christmas tactic to draw out the long tail of festive spending.
Does the new discounting landscape benefit retailers? The answer is unclear. UK footfall traffic, for example, fell 3% on Boxing Day compared to 2017, which Springboard Retail Intelligence blamed on ‘almost continuous discounting…over the period from Black Friday onwards’.
Fashion chains including Primark, Superdry and Italy’s low-cost OVS all warned of weak sales in the crucial run-up to Christmas. And while Zara owner Inditex (ITX.MC) resisted discounting, it reported disappointing sales. “Customer behaviour is becoming more and more difficult to predict,” Stefano Beraldo, chief executive officer at OVS, said just before the Christmas after an 11 percent drop in same-store sales.
Meanwhile, digital pureplay Boohoo and UK department store John Lewis both said their pre-Christmas trading was saved by discounting. John Lewis reported that its menswear and womenswear were up 7.2% and 8.5% respectively after the department store cut prices and lured shoppers into stores, reversing weeks of declining sales.
Whatever the result, UK retailers are now locked in a growing discounting cycle which only the bravest, or most foolhardy dare to resist.
The UK’s nearest neighbour, France, meanwhile has yet to discover whether its annual new year sales will be a success. The post-Christmas trading period will be pivotal for a country that has seen retail turnover drop by 6.8% in November and an eyewatering 25% in December, triggered by the nationwide ‘yellow vest’ protests.
Known as les soldes d’hiver the sales period traditionally starts on 9 January, last ten weeks and account for 20% of French retailers annual turnover with fashion featuring prominently among the bargains.
The yellow vest protests have contributed to the lowest levels of confidence in the country’s retail sector in nearly a decade and caused the Dior Men’s Show in Paris to be rescheduled.
This Christmas, the online fashion sector has finally tackled the thorny problem of ‘fit’. The physical store’s answer to ‘fit’ is elegantly simple – the fitting room – try a garment on to see if it is the right size and cut. But, until now online fashion shoppers have had to gamble on buying multiple sizes and hope this costly, scattergun approach proves successful.
This Christmas, however, various tech innovators have finally broken through, harnessed the power of data analytics and artificial intelligence to ensure shoppers no longer have to tread the tightrope of inaccurate clothing sizes, which result in poor fit.
This may sound like using a tech sledgehammer to crack a walnut, but the effort is immediately justified when you consider shoppers waste £32,000 on poor-fitting clothes in a lifetime. Tech innovators tacking fashion’s ‘fit’ problem include True Fit, a global firm that counts Ralph Lauren, Kate Spade, Kenneth Cole and Levi’s among its clients.
The online share of fashion retail has been steadily increasing over the past decade, standing at 17.5% this Christmas. Digital solutions that tackle obstacles such as fit will only help accelerate this growth further.
The big shock for fashion retail this Christmas was an unexpected and unprecedented profit warning from Asos, the doyenne of digital pureplays.
Asos halved its forecast profit margin from 4% to 2% on the back of a ‘significant deterioration’ in sales - news that immediately wiped more than a third off its share price.
This earthquake sent shockwaves through the sector with Asos’s German rival Zalando suffering a 13.6% drop in share price, wiping off almost £900m off its valuation. Shares in fellow pureplay Boohoo also slumped 18% and H&M fell 8.5% despite sales figures in line with expectations.
The key take-home for the fashion retail sector was that seemingly secure pureplays such as Asos, may not be as stable as we assume.
The on-going drive to create truly personalised shopping experiences for consumers really started to pay off this Christmas. Take the example of MATCHESFASHION, which targets the UK, French, Australian and South Korean markets, attracting over 100 million visitors to its website annually. The retailer, which boasts an average basket value of £542, has long been a champion of personalisation, but this Christmas its prowess really came to the fore with a new 90-minute delivery service, launched just in time for the party season. CEO Ulric Jerome was widely reported saying the new service was routinely receiving individual orders worth over £1,000 – placed early in the morning so that garments could be worn the same day. If nothing else this shows a high level of consumer confidence that retailers like MSTCHESFASHION can get successfully deliver personalised fashion choices.
Whether it was the federal shutdown in the US which triggered a stock market slide, Brexit fears in the UK, stalling economic growth in Germany or the wave of ‘gilet jeune’ protests in France, the world seemed a less stable place this Christmas and this translated to reduced consumer spending and, inevitably the fashion retail sector. The French retail federation estimated stores lost at least 1 billion euros as a result of four weeks of ‘yellow vest’ protests in France, leaving piles of clothes unpurchased.
