Fashion's top three priortities: digital, digital and digital...
Saying that digital is the future of fashion retail is as much of a shock revelation as saying “sex sells” or “too many markdowns hurt profits”. But it really is worth saying. How so? Digital is too important to ever take your eye off the ball. Digital is still neglected by some brands. And because the digital landscape is moving (and growing) so fast.
April showers
All of these things have been made crystal clear in just the past couple of weeks with our morning shower of news bringing us developments aplenty. We’ve heard about Frame Denim finally opening an e-store; about Prada getting the digital message and set to make its products available through more multibrand sites and debuting on Snapchat “by October”; about digital outperforming at Burberry; Farfetch opening its first monobrand store for Manolo Blahnik; Asos with a rare failure in China; Next Directory seeing an unexpected slowdown as rivals began to catch up; we’ve heard… well, you get the picture. The fact is, this month has seen not just a shower of news around digital retail, but a flood.
Yoox Net-A-Porter: Euros 100m investment
To my mind, one of the most interesting developments around digital in recent weeks was the €100m investment in Yoox Net-A-Porter by middle eastern conglomerate Alabbar Enterprises. Led by businessman Mohamed Alabbar, this company knows its market inside out and its YNAP investment says two things. One is how the combined YNAP is determined to expand its reach into every key market worldwide. The other is that Alabbar, a key player in bricks-and-mortar retailing, is determined that it will be part of the expansion rather than suffering from it.
The ‘O’ word
Yes, it’s that word - omnichannel. This need to balance what’s happening in the physical world and link it up with what’s happening in the digital one is at the heart of the challenge that faces every retailer and brand these days.
The fact is, there’s really no such thing as ‘online-only’. Let’s face it, even a pureplay like Asos has click and collect deals with Boots and a returns deal with Asda, plus it’s set to launch a gift card service that consumers can buy at physical stores. Most of the brands it stocks are available in actual stores too.
Other so-called pureplays like Farfetch actually exist as an online service for physical retailers (plus it owns Browns, which still has its famous warren of stores on South Molton Street), while new initiatives like long-awaited style.com launch are all about building an e-commerce operation that link to Condé Nast’s physical print magazines - those magazines that you can touch, leaf through and that come with the delicious smell of glossy mags.
That interplay between digital and physical means it’s not quite so easy to develop strategy or even to draw conclusions around profitability as it used to be.
Another piece of news this week highlights that. Apparently, Green Street Advisors has come up with a report about US department stores saying that their profitability is way below what it was a decade ago and that about 800 American department stores should close to try to reverse the decline.
The stores themselves disagree. Well, they would, wouldn’t they? But let’s not be cynical. For a start, they’ve already closed a number of locations and secondly profitability per square foot is no longer as simple case of what happens in-store. JC Penney hit back saying that it’s the link between online and physical that matters. In fact, when Penney closes a store, particularly in a small market, it sees its dotcom business going down as shoppers gravitate to other retailers and as it misses out on the burgeoning click and collect market.
The shape of things to come
April has also given us plenty of news giving clues to the future of digital for fashion retail, as well as one major absence of news (around Style.com) that is pretty newsworthy in itself.
Magazine to marketplace: The big news should be the launch of style.com that will allow us to shop the products we see in Condé Nast magazines via the rebuilt-from-the-ground-up website. It seems to be taking longer than anticipated and the last we heard, the launch was scheduled for “early 2016,” but given that it’s nearly May, that timetable is looking increasingly unlikely.
Yasmin Sewell of Style.com
There have been rumours about the powers that be wanting the team to get a move on but nothing concrete. Given that the team is an interesting mix of luminaries from the world of glossy magazines and pioneer e-tail (including fashion consultant Yasmin Sewell), all with the power of Condé Nast behind them, every extra month we have to wait is pretty frustrating.
Once it’s ready, users will be able to order merchandise from magazine-branded websites and digitised magazine editions in app form, as well as the Style.com website itself. The company said the tech will also enable readers to place orders by scanning many of the images appearing in the printed magazines.
It will be interesting to see this model in action, especially given the experience of former Condé Nast property Lucky, which moved from a print magazine to a digital offer to an e-commerce site, and then to a shock closure last year. It’s also interesting that former Lucky editor and creative chief Eva Chen moved to become first-ever Global Head of Fashion Partnerships at Instagram and is also an independent director at rival YNAP!
App happy: One company that showed it can move quickly is Zalando. Europe’s biggest online fashion retailer said this month that its slick new m-shopping app (complete with exclusive mobile content) took less than three months to develop under a new management strategy (dubbed ‘radical agility’) that gives tech teams more autonomy. It saw the need to do this after mobile traffic to its site rose to 60% from 48% in Q4 with a spike to 70% during the Christmas season.
Zalando: putting mobile first
And at the London Digital Forum this week Zalando’s Moritz Hahn (who’s senior VP of market and category management) said apps are crucial because app-based shoppers are “crazy good customers”. They visit more often and spend more, it seems. Because of this, it’s mobile-first for Zalando which, unlike most other online retailers allows customers to pay only once they’ve tried the item on and decided to keep it.
Monobrand vs mutibrand: At all price levels, e-tailers are aiming to get the best brands on board and with even notoriously exclusive companies like Prada finally realising they need to take advantage of e-tailers' specialist online experience, it looks like they’re succeeding. But at the same time as multi brand e-tail is growing, it looks like there’s a new monobrand battleground being carved out.
Marni e-store, powered by Yoox
Farfetch’s Manolo Blahnik launch this month was the first of many monobrand stores and pitches it directly against Yoox, which has virtually owned the third-party luxury monobrand e-store space in recent years. It operates stores for brands such as Marni, Dolce & Gabbana, Pucci, Moschino, Armani, Valentino (due next) and more so that’s going to be an interesting scenario to watch as Farfetch adds more stores.
And it’s not just a battle that’s taking place in the luxury space. Further down the price scale, we’re seeing more monobrand stores being opened by e-tail giants for the smallest vendors too. Earlier this month, Etsy this month announced its Pattern service that allows small retailers to set up their own custom-branded domains.
Social shopping: This is an area that’s been talked about at length but hasn’t become particularly big (relatively speaking) yet. Features like Pinterest’s buyable pins and Instagram’s buy button have still to make a major commercial impact. But the big name social networks are putting major investment behind social shopping so it will happen.
This month Asos CEO Nick Beighton confirmed that when he said the e-tailer is trialling buy buttons "with several" social media companies and doesn’t see the social networks’ own efforts to boost social shopping as a threat at all. "I don't see threats from those things, I think I see that helping our reach,” he said.
Net Set staff inform buyers of popular products
There’s already anecdotal evidence about just how social media can aid commerce. Net-A-Porter recently said that after it launched The Net Set (the world's first fully shoppable social network), Net Set staff noticed that images of red Aquazzura Wild Thing shoes were being uploaded a lot by its users globally. The Net Set staff let the Net-a-Porter buyers know, they quickly placed another order and the shoes, which had already sold out once, sold out for a second time. It’s one example of an order that just wouldn’t have been placed without the social media link.
From search engine to shop: Expect to see more specialist search engines turning themselves into e-commerce players. Popsugar, the company behind the Shopstyle fashion search engine, said earlier this year it would launch a new English language shopping cart service, Shopstyle Checkout iduring Q2 and this month it announced that it would launch in France too.
The aim is to enable consumers to purchase products from multiple retail partners in a single seamless transaction using one login. It will launch via ShopStyle’s iOS app and will roll out across all the brand’s platform’s as well as 14,000 ShopStyle Collective influencer sites by year-end, Popsugar said.
ShopStyle won’t become an actual retailer itself, and the retail partners it signs up will remain the ‘merchant of record’. Apparently, Topshop and River Island, Target, Neiman Marcus and yoox.com have all signed up and this month the company announced that it would launch in France too.
