Fashion & lifestyle brands may be weathering the economic storm but the shifting retail environment has prompted an increasing number of organisations to address underperforming eCommerce strategies.
After an initially slow start, the consumer has demonstrated a clear willingness to embrace online purchase of premium brands – but only if the experience is right and replicates the high quality in-store environment.
If fashion & lifestyle retailers are to achieve profitable, multi-channel strategies then they now need to evolve beyond stand-alone attempts at etailing. It is only by creating a highly integrated strategy across the supply chain, customer service and performance measurement that fashion & lifestyle retailers will be able to drive quantifiable value from every part of the sales channel, argues Sam Jackson, Chief Executive, Prologic.
Multi-Channel vision
With the notable exception of a few large retailers such as Next, which has taken its successful catalogue business online to become the largest online clothing retailer in the UK, the majority of traditional bricks and mortar fashion retailers have so far failed to implement a successful multi-channel retailing strategy. In fact, few fashion & lifestyle retailers are currently achieving better than 2% to 5% of annual sales from their online business.
Many people used to attribute this low revenue to a lack of consumer interest in buying premium brands online. Yet according to recent figures from Nielsen, 97% of British web users shop online, and over one third (36%) of these buy clothes – an increase of 40% in the last two years. This is a market that can no longer be ignored – irrespective of brand quality or product value.
Indeed, there are growing indications that premium and luxury brands are beginning to take etailing more seriously. Virtual boutique websites such as my-wardrobe.com, net-a-porter.com and yoox.com are increasingly forging exclusive relationships with top designers and posting significant sales increases.
New experience
However, most mid-tier fashion & lifestyle retailers would admit that their current eCommerce solution bears little resemblance to the in-store experience. Most of these retailers have a fairly small network of stores and concessions, and they offer excellent, highly personal customer service. Yet their online product ranges are limited, stock information is at least a day out of date, and there is no link between online and in-store activity which, for example, means that customers cannot purchase via the Internet and then return a product to a store.
Whilst mid-tier fashion & lifestyle retailers have invested in etail solutions, the typical stand-alone eCommerce solution that is in place today is not integrated with robust supply chain, fulfilment and customer service processes. As a result, these retailers cannot meet their customers’ online expectations: it is simply too expensive and resource intensive.
Furthermore, with poor content management it is impossible to offer more than a small subset of the product range online. In a bid to minimise customer disappointment caused by stock inaccuracy, some fashion & lifestyle retailers are ring-fencing products for each channel. But this constrains selling opportunity, increases out of stock messages – even if stock may still be available elsewhere in the business – and leads to further customer frustration.
In reality, these etail solutions are not only generating relatively paltry sales – albeit at a higher margin due to the lower overheads – but they are failing to reinforce core brand values.
Economic imperative
Fashion & lifestyle retailers are now facing new economic pressures. Whilst the premium end of the market is holding up well, retailers are now seriously considering expansion plans. Is it really practical to continue adding high street stores to gain incremental sales growth? Or could a similar investment in integrated etailing that delivers a true multi-channel strategy actually deliver far greater financial rewards?
Indeed, those retailers that have achieved consistent multi-channel retailing have enjoyed a significant sales uplift, with online sales now representing between 10% and 20% of the overall business. Furthermore, traditional retailers are facing growing competition from the predominantly web-based organisations who can deliver an exceptional online customer experience, increasing the pressure to review existing etail ventures.
Fashion & lifestyle retailers cannot continue to dabble with etail. Many of these retailers are already on their second or third incarnation of stand-alone eCommerce technology but, without any integration to core operational processes, are still far from achieving the multi-channel vision.
Consistent experience
There is only one way to achieve that multi-channel vision: by implementing a properly integrated solution that uses a single product catalogue, a single customer loyalty system, a single payment system and, most importantly, a single stock system to support every retail channel.
By taking this integrated approach retailers can ensure that the in-store customer experience is replicated online. Customers have real-time information on product availability; goods located in store rather than the warehouse can be automatically picked and delivered, and customers can browse at the shop and buy online later (knowing that the full product range will be on the website). Critically, this ensures that all stock is sold efficiently through all channels at all times, maximising profits and minimising markdowns.
However, the right technology is just the start. Fashion & lifestyle retail organisations are typically founded by passionate individuals who still walk into their stores and express strong opinions about how the product should be displayed and sold. And yet many have yet to show the same passionate commitment to the online customer experience.
This passion for retail excellence must be replicated online, but it requires more than a pretty website. However good your website looks, it is the customer's total experience that will influence their decision to come back. That means efficient service, fast fulfilment and complete integration with your store and mail order channels.
Quantifiable value
Creating a true multi-channel retail environment provides quantifiable sales uplift, transforming the value of the underperforming etail channel into a significant contributor to annual turnover. In addition, it creates opportunities for analysing and tracking performance by combining on and offline metrics to understand the effect of web sales on in-store activity and vice versa, assessing which product types sell better or worse online or offline, and tracking the effect of promotion on different sales channels.
By integrating this information into the entire process of designing, buying and delivering goods, through an increasingly complex supply chain, fashion & lifestyle retailers can streamline processes and improve the customer offer to maximise the value of each retail channel.
Today, every fashion & lifestyle retailer recognises that true multi-channel retail is the future, but few have achieved that goal. However, by adopting an integrated approach that delivers consistent customer experience, a profitable multi-channel retail strategy is now finally within the reach of mid-tier fashion & lifestyle businesses.