Industry

Fashion

Date

Insights

Why retail transformation is disrupting the fashion supply chain

The influence of e-commerce and social media on consumer buying behavior is arming consumers with more product choices, greater access to pricing information and stronger feelings of psychological ownership; the thinking of the product or brand as an extension of themselves. This empowered consumer is altering the retail model and urging fashion manufacturers, brands and retailers alike, to adopt new tools, and practices to remain competitive.

What today’s fashion consumer expects?

Consumers are demanding fast, frictionless, tech-enabled shopping experiences that reflect their personality.

The rise of the connected consumer results in

  • greater access to pricing and product information;
  • making it easier to engage in competitive price shopping
  • buy, sell and promote secondhand clothes;
  • and more broadly, purchase products that respect society and the environment.

The result is consumer preference for products, brands, and experiences that demonstrate sustainability, circular fashion, and a commitment to ethical business practices. 

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Fashion's retail transformation impact on cost

To meet consumer demand for new products, many fashion companies are seeking innovative ways to produce only what customers are willing to pay for by processing more orders, in smaller volumes, within shorter deadlines.

This fast-track approach to production is a way of managing costs in an environment challenged by increased production costs and thinner margins. "Indeed, pure online retailers typically operate on considerably lower margins than multi-channel and brick-and-mortar business models. Our analysis shows average pre-tax profit margins for pure online retailers across the key European markets analysed resided at 1.4%, compared with 5.4% for the total industry."[1]

 

Fashion's retail transformation impact on product quality

In many instances, consumers are seeking higher quality products that have a longer lifespan and possess other sustainability attributes.

In order to streamline production processes and control costs without compromising on quality standards fashion companies will need to gain greater control over quality to increase product durability and respect sustainability regulations.

79% of consumers are changing their purchase preferences based on social responsibility, inclusiveness or environmental impact.

 

Fashion's retail transformation impact on sales

The increase in marketplaces and the multiplication of sales channels makes it difficult to know where fashion companies should promote and sell their products and where their product are available on secondary markets.

A burgeoning after-sales market suggests an increase in revenue streams for fashion companies but also makes it difficult for fashion companies to know where and in which secondary market their products are available for sale.

75% of Gen Z respondents said they bought secondhand in order to reduce consumption.

 

Fashion's retail transformation impact on consumer expectations

The influence of e-commerce and social media on consumer buying behavior is arming consumers with more product choices, greater access to pricing information and stronger feelings of psychological ownership.

E-commerce technology is enabling consumers, via search and social channels, to connect globally on a peer-to-peer level with others who share their fashion sense.

48% of Gen Z are using social media sites to gather clothing ideasa.

 


[1] https://www.retaileconomics.co.uk/retail-insights-trends/continuing-shift-towards-online-further-impacts-retail-profit-margins