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Industry Mar 27, 2020 8 min read

The current retail industry landscape

How has the retail landscape evolved over the past six weeks?

retail landscape

How has the retail landscape evolved over the past six weeks? Here’s the lowdown on the trends defining the industry and shaping the market.

We highlight how retailers are growing or slowing, digital and bricks & mortar strategies, product or category line expansions and new retail development destinations.

Want to see the analysis reports Zara, Puma and Marni take into their weekly meetings? Learn more here.

What’s impacting retail?

COVID-19 and digital

According to Neilson Insights, consumers staying indoors has led to a 60% increase in media consumption in the US alone, with Americans spending just shy of 12 hours each day on digital platforms. Additionally, the shuttering of brick-and-mortar stores amidst the COVID-19 era has helped retailers make the leap into AR experimentation, noted as one of the trends that will shape the retail landscape in 2020. We round up how brands are leveraging digital in response to coronavirus and why it’s important.

In mid-March, Shopify rolled out built-in support for 3D models and video for retailers to add to their product pages without the need for custom code. According to the platform, viewing 3D products in AR increases conversion rates by up to 250%. With people unable to physically interact with products before purchasing, now is the ideal time to enhance customer experience and experiment.

Alibaba promoted a Valentine’s Day campaign with ‘online dates’ for its virtual avatar game Taobao Life as couples were unable to celebrate the holiday in person due to isolation. The campaign was a success as it helped drive sales, introduce a younger audience to Tmall Luxury and meet the needs of the Gen-Z consumer looking for entertainment during COVID-19.

Walpole, the trade body representing the UK luxury industry, is actively working to boost its brand’s online sales. While stores are closed, Walpole is advertising their ecomm sites products and promotions on its website, digital newsletter and social media to create a ‘virtual bond street.’ This move creates a larger platform to help small and medium-sized businesses that will be hit hardest by the outbreak. Virtual shopping platform, Streetify, is offering its services complimentary for one year to retailers in the US, Canada, UK, India and Australia, providing free digital storefronts.

Utilizing digital services is a great way to keep consumers connected through open channels of communication and support. With ‘touch services’ such as make-up consultations and bra fitting now on hold, retailers who specialize in products that require physical interactions are looking to digital alternatives. Taking ShapeJohn Lewis and sustainable brand Baukjen are all offering e-styling services through video chat. Diane Von Furstenberg is promoting ‘stay at home and stay in touch’ services, including e-styling and bespoke subscription boxes.

The disruption to the beauty industry has seen cosmetic brands further push digital services and online tutorials. Sephora is directing customers to its Instagram, YouTube, Twitter, Facebook and TikTok channels, as well as its Beauty Insider Community. Australian brand MECCA recently launched MECCA.LIVE – a curated platform with daily updates of products and timely tutorials such as ‘make-up for your next video meeting.’

Bleach London launched a virtual hair salon, guiding customers who no longer have access to professional touch-ups, as well as including celebrity clients such as Georgia Jagger and Pixie Geldof to create content. Homeware retailers such as Design Within Reach and The Home Edit have also offered online complimentary services around space planning and organization.

Streaming: A new era of connectivity

The focus on digital has allowed retailers to experiment not just with recreating in-person experiences but on entertaining consumers – something that wasn’t previously used as much from an ecomm angle. Retailers are also getting creative using mobile and digital platforms to engage with new user bases, unlocking a new social era. Fashion brands have been slow to get involved in the TikTok movement. However, we are now seeing them experiment with content not just to sell to the consumers, but to keep them updated and engaged. Creating these experiences and how brands have interacted with consumers during this time will play a pivotal role in the customers’ loyalty to the brand in the future. Recent examples include:

  • Bottega Veneta‘s Bottega Residency platform, which features musicians, writers and performers as a creative outlet for viewers during self-isolation.
  • Levi’s kicked off its 501 Live this week. A free month-long virtual music festival streamed on Instagram each weeknight with Snoop Dog as the first artist.
  • ASOS and Nasty Gal, to name a few, have created hashtags surrounding staying at home for followers to use, turning their focus to user generated content.
  • The amount of brands using Instagram live has skyrocketed in the past week, with the likes of Revolve and boohooMAN posting weekly schedules on their Instagram feed.
  • As for platforms, TikTok have launched a Happy At Home series and Instagram released a co-watching feature for video chats. On a similar thread, the sudden spike in app Houseparty and Chrome extension Netflix Party further speak to consumers desire to feel connected.

Fintech & money

Is now the time for digital currencies? Democrats in Congress are looking to develop a digital dollar as a way to distribute aid effectively to Americans most in need.

We could see a move towards adoption of digital banking services. UK based, Revolut, has had a timely launch into the US. Aimed at Gen-Z, the company have an ‘influencers’ tab on their webpage. Users can also receive their pay for the month two days in advance, a similar service that Monzo offers.

Contactless maximum spend will increase in the UK to help retailers and shoppers feel safer and minimize physical contact. The limit will rise from £30 to £45 on April 1st. In 2018, 3% of banking cards were contactless in the US and 64% in the UK. Hygiene concerns could propel the US to latch on to the payment function.

Paying in kindness? The financial and emotional impact that coronavirus has had on many brings the value of kindness into focus. ‘Paying it forward’ is already something that’s commonplace in physical coffee shops. What can retailers do with this sentiment to demonstrate goodwill?

Runway landscape

The landscape of seasonal fashion week and trade shows also sees disruption from COVID-19. Trade shows Panorama Berlin and Pitti Imagine are choosing either to cancel, or looking to methods of digital communication. Similarly Shanghai Fashion Week moved its presence online, streaming designers AW20 collections from platform Tmall. Despite such significant disturbance, key players in the industry are doing all they can to aid the fight against the virus – LVMH announced a pledge to produce and deliver hand sanitizer to French authorities free of charge, while Kering Group will buy 3 million masks from China.

@lvmh
@lvmh

For a broader view of the impact the coronavirus outbreak has had on the fashion industry, trade shows and upcoming events, read our report covering the impact of coronavirus on fashion.

The future of rental & recommerce

Rental and resale platforms aren’t exempt from the impact of COVID-19. With businesses across the globe turning to remote working, the future of traditional tailoring and occasionwear is uncertain, and the cancellation of weddings and other events will impact demand for renting these categories. Despite resale platforms’ circular business model, supply levels may be impacted as in-person consignment appointments with merchants are being canceled while others have moved to online.

While there is no evidence to support the virus is transmitted through fabrics, retailers stocking second-hand goods have communicated their cleaning processes to customers. In a memo sent to Rent the Runway customers at the start of much, the retailer outlines its cleaning process after each rental ‘are designed to kill viruses such as the common cold and flu. While scientific information is still developing, we have no reason to believe that our processes are ineffective against COVID-19.’

coronavirus

Trade during COVID-19

  • Nike: Coronavirus caused stores to shutter in China last quarter, resulting in the brand’s first drop in sales for the region in six years. Q1 2020 saw online sales bounce back by 36%. 80% of stores in China have now reopened.
  • Neiman Marcus: Reportedly considering bankruptcy as it struggles to manage $4.3 billion amidst store closures.
  • Burberry: Reported sales in the final weeks of March would drop between 70-80%, causing fourth-quarter sales to be 30% lower.
  • Reiss: A potential sale of its business has been delayed due to the coronavirus outbreak. Earlier in March, the British retailer reported positive sales, up 21.9% compared to 2018.
  • ThirdLove: Permanently closed its NYC store with COVID-19 halting its future expansion into bricks-and-mortar.
  • Laura Ashley: The fashion and homeware retailer filed for administration last week as it failed to secure an emergency funding lifeline, leading it to appoint advisory firm PwC as administrators.
  • Inditex: Reported March sales fell by 24% and took a nearly €300 million impairment on its spring/summer stock.
  • H&M: Reported Q1 sales in China dropped by 24%.
  • House of Holland: Early in March, administrators were appointed as it seeks additional investment to continue operating. This news came a week after Founder and Creative Director Henry Holland announced he’d be stepping back from the business.
  • Tigerlilly Swimwear: The Australian retailer fell into administration this week, saying the outbreak attributed to a loss in sales.

Sustainability

  • Bureau Betak, a production company which hosts numerous runway shows has stepped up its efforts in sustainability. The company outlined 10 commandments that it will be following moving forward such as ‘enforce 1% donation for the planet’.
  • Anya Hindmarch launched the ‘I am a Plastic Bag’ campaign during London Fashion Week, filling its city store windows with plastic waste.
  • Chanel launched Chanel Mission 1.5, a sustainability pledge which aligns with the UN’s climate goals. As part of the initiative, the designer aims to use 100% renewable energy by 2025.
  • Similarly, Burberry is aiming to reduce its carbon footprint, starting with the FW20 which was 100% carbon neutral.
  • Prada has partnered with UNESCO for an educational program for secondary school pupils which focuses on the preservation of the planet’s oceans.
  • The current pandemic has caused many events to be canceled or postponed, COP26, the UN’s climate change conference is under debate as to whether it should go ahead or not.
  • Vegan fashion week, taking place on April 3rd & 4th has decided to stream its shows live to attendees rather than postpone the event.
  • Bureau Betak, a production company which hosts numerous runway shows, has stepped up its efforts in sustainability. The company outlined ten commandments that it will be following going forward such as ‘enforce 1% donation for the planet’.
  • Anya Hindmarch launched the ‘I am a Plastic Bag’ campaign during London Fashion Week, filling its city store windows with plastic waste.