It’s yesterday or never. Why ecommerce can’t be ignored any longer
Digitally-native brands are buying up struggling legacy retailers, indicating businesses yet to prioritize and future-proof their ecommerce strategies won’t outlast the pandemic.
The recent trend of fast fashion’s online darlings like ASOS and boohoo bidding to absorb struggling high street retailers is only further proof that the future belongs to digital as the pandemic economy changes the role of brick-and-mortar forever.
If your business hasn’t thrown its full weight behind its ecommerce strategy, it risks calling for a lifeline by one that already has.
In this report, we discuss why digital channels are no longer a nice-to-have. Plus, a sneak peek at the EDITED suite of products that can be embedded in everyday processes to drive higher margins, more sales and react faster to market trends in this challenging new era of retail.
Don’t just take our word for it – read what your competitors have to say.
The face of the high street is changing
Recent power moves have symbolized the end of the high street as we know it. Companies are basking in the online boom accelerated by the COVID pandemic, proving the limitless opportunity through ecomm to thrive in this challenging new era of retail. Digitally-native boohoo snapped up the Debenhams’ brand and website for £55m in a deal that will see the 242-year-old department close all its physical stores for good. Following Arcadia’s collapse, online-only ultra-fast fashion player ASOS has bought Topshop, Topman, Miss Selfridge and HIIT brands in a £295m deal. Boohoo is in talks to buy the remaining Arcadia-owned brands Dorothy Perkins, Wallis and Burton.
These sales offer a glimpse into the future of retail where ecomm is king. To compete, retailers need to underscore enriching digital experiences and rethink the “store of the future” – two trends highlighted in our report of conquering the retail landscape in 2021.
Only digital is profitable
Since the Global Financial Crisis, ecommerce has been instrumental to retailers’ bottom line and the pandemic has only accelerated this trajectory. Despite the challenges of 2020, retailers enjoyed a boom in online sales and those investing appropriately are reaping the rewards.
Fast Retailing’s Uniqlo has prioritized investment in ecommerce over physical retail since 2016. Last year, it pumped an estimated 80% more funds into this channel over its home country’s brick-and-mortar stores, while announcing plans to boost investment to expand online shopping in Japan, China, Southeast Asia and the US. With these calculated moves, Fast Retailing emerged from 2020 relatively unscathed, reporting a minimal drop of 7.2% in sales YoY while ecommerce sales in Japan surged 48% for the quarter ending November 30. Additionally, companies including Nike, Lululemon, Mango and more all reported online sales as the bright spot of their 2020 results.
On the other end of the spectrum, Primark maintained its staunch refusal to sell online to keep its prices low, even during lockdown, by minimizing operational costs and avoiding processing high volumes of returns. The company lost an estimated £1 billion in sales over the pandemic – a lesson for all retailers of the risk associated with a lack of an ecomm presence.
Work from home is here to stay
At the start of the pandemic, WFH seemed like a temporary measure. Now, all fashion businesses have taken cues from tech companies and transitioned into remote work – even Parisian couture houses!
This new (now normal) way of working means businesses need to invest in state-of-the-art platforms to support these digital-first approaches. We launched the EDITED Teams feature to help streamline internal processes that foster shared data, collaboration and knowledge retention.
Additionally, international travel restrictions have made it harder to attend runway shows and buying trips, calling for a digital overhaul to these once-routine tasks. The EDITED Mobile app enables retail professionals to access world-class retail and runway analysis through their phones, an essential tool to respond with agility to the changing digital market.
The importance of retail data
The pandemic has acted as the final nail in the coffin for physical retail, making an airtight ecommerce strategy imperative to trading successfully in retail’s new frontier. Savvy brands know it’s more important than ever to use retail data to back up every decision – especially when a wrong one can be the cost of an entire business.
The evolution to ecomm has made the industry faster and more unpredictable. This means brands need to react faster than ever before if they want to be market or trend leaders. The EDITED Market Intelligence platform gives retailers the power to understand when trends are ramping up or cooling down in real-time, providing your business with hard data to support decision-making.
For example, consumers spending almost a year at home has lead to loungewear saturating the market and the term “sweatpant fatigue” being bandied around the industry. How can a retailer gauge the jumping-off point for this trend? Traditionally, buyers and designers relied on gut instinct. However, with retail one of the industries hit the hardest by the pandemic, there’s no room for error and retailers need to back up their decisions with hard data.
Using EDITED data to track the lifecycle of a product or a trend across the market allows retailers to see with granular detail how it is faring. In this case, across the US and UK, the number of sweatpant styles selling out of 100% of SKUs online weekly continues to outpace new arrivals, meaning they are still a hot commodity and disproving declining consumer interest in comfort dressing.
On the flip side, retailers can also use data to minimize risk with trickier items or fading trends. Interest in skinny jeans was already waning pre-pandemic and cozier items challenged overall denim sales. Weekly sell outs of the once-mighty skinny jeans have remained stagnant, yet new styles continue to drop in the market, highlighting money that would be better spent on sweatpants or more comfortable silhouettes.
One of the greatest challenges when selling online is determining pricing structures. The EDITED suite of pricing analysis charts demonstrates how products at your competitors stack up globally, from when they arrive to when they’re discounted.
Analyzing the jacket styles at UK fast fashion retailers arriving and selling out within the past six weeks at full price gives insight into the price points enticing consumers at competing brands. Pinpointing the sweet spot in pricing minimizes the risk of over or underpricing stock and can help spot untapped opportunities in real-time to increase reactivity.
As ecommerce retailers continue to build their brand portfolios and gobble up market share, brick-and-mortar businesses are fading into obscurity and racking up debt. On average, renting in London’s Oxford street is £143.75 per square foot. The Debenhams department store in this location clocks in at 370,000 sq ft, making yearly rent £53.1m – nearly the same amount boohoo deemed the brand to be worth.
Taking into account footfall slumped 63% during the first wave and then 65% over the November lockdown, that’s a nauseatingly high operational cost with no return. A similar predicament is noted in the US on Fifth Avenue. Despite last year’s rent dropping below an average of $700 per square foot for the first time since 2011, businesses such as Tiffany’s and Bergdorf Goodman continue to pay $3,000 per square foot while Saks’ rent is upwards of $50m annually.
Throw business tax on top of that and brick-and-mortar is becoming commercially unviable, further underscoring why investing in ecommerce is business-critical in 2021 and beyond.
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