Retail (brick-and-mortar stores) has played a dominant role in the fashion sector. Brands have spent millions of dollars globally to build state-of-the-art, aesthetically pleasing stores that capture multiple senses of their customers and offer-of-its-kind products. With the pandemic leading to global lockdowns lasting months, not only did the fashion sector suffer unimaginable losses in profits, sales, customer retention, jobs and lives, but it also saw the sector adopt technology like never before. From selling virtual clothing and accessories to building virtual retail stores with limited edition products, the past couple of years are a fine example of survival of the fittest. Where fittest meant being flexible, agile and innovative.
Global Economy and numbers
Millions of people were impacted by the pandemic crisis, while the same also disrupted national to international businesses, trade, travel, economy, and consumer behaviour. The latter became somewhat unpredictable for a long duration with no end in sight, pushing the brands worldwide to re-strategize their operating models and fashion trends and enable flexibility and agility within all their business dealings. Innovative offerings became the key to survival.
Here are a few observations and figures noted by experts that showcase how the world of fashion re-shaped while learning to live in unprecedented times.
- A survey by McKinsey in partnership with the Business of Fashion found that the top challenge throughout 2021 for fashion brands was dealing with the crisis on hand due to COVID-19. About 45% of the fashion executives and stakeholders agreed to the same in the survey.
- Demand worldwide diminished for fashion clothing, and a focus went to comfort wear and athleisure for nearly two years. Diminished demand has been a direct result of thousands of job losses across sectors reducing their spending power.
- The travel industry, which complements the luxury market industry rather well, contracted to 60-80% in 2020 and is likely to reach pre-pandemic levels only by 2023-2024.
- With travel-based retail facing a significant hit, 66% of fashion executives expect such sales travel to recover to pre-pandemic levels in the next 2-3 years only.
- A global shift in consumer consumption patterns was noted from ‘things to experiences’.
- Approximately 40% of consumers were noted to delay their purchases or cancel them during lockdowns for fashion items, observed in a survey by a leading Indian firm.
- Resilient fashion brands with flexible supply chains’ ability to engage consumers virtually and innovate their product line are historically noted to lead the sales board ( during and after the downturn) compared to non-resilient fashion brands.
- The digital sector boom was unprecedented and unmatchable. With brands making quick shifts to digital platforms, 71% of fashion leaders and executives expected their online business sales to grow by 20% in 2021.
These data points reflect how the crisis brought a seismic shift in the fashion and luxury sector market. In a matter of months, the fashion sector adopted and engaged in digital innovation and change that would have otherwise taken years. With a deep focus on technology, trends and tastes – brands took the initiative to build new sales channels and innovative ways to connect with their consumers.
Consumers appeared to have become more thoughtful about their choices and have been noted to be more mindful of cost and sustainability. This has pushed global giants to start-ups in the fashion sector to rethink their strategies and product offerings. Here is a look into how the pandemic has shaped the world of fashion:
Fashion’s dependency: The role of Digital/ Social Media
Global lockdowns pushed entertainment into the digital media sector, and its adoption worldwide soared. With consumers constantly looking for new content, brands saw this as an opportunity to connect and build their network. Embracing the digital world, brands were deeply dependent on social channels of interaction and engagement like live streaming, customer services with video chat and social shopping. What would otherwise take years to adopt in the digital world, the global lockdown pushed the brands to build disruptive user experiences within months to retain their market share and continue on a path of progress.
Market penetration quickly changed to digital and online penetration, accelerating innovation on the tech front with consumers seeking top-notch UX/UI experiences. Fashion players that adopted these changes and offered unique experiences are likely to become the leaders in the market segment and increase sales shares considerably post the downturn (post-pandemic era) compared to other players in detail.
A small survey within the Indian tier 1 cities of nearly 500 people reflected that 29% of those surveyed consumed fashion and styling content during lockdowns via social media. This reflects how social media has been a prime resource and tool for optimizing consumer experiences and finding engaging ways to integrate the human touch.
Social media not only offered entertainment and engagement opportunities but also proved to be a channel for sales for many small brands to global brands. A McKinsey consumer-sentiment survey demonstrated that while consumer intention to purchase declined from offline channels at a higher rate, their choice to shop online did not change significantly. The bulk of their shopping was via digital mediums. A pivot towards social shopping for brands was an essential strategy to remain profitable.
Read More: Luxury Les Faits Series
Fashion’s virtual avatar: The rise of emerging tech in Fashion
Not only did social media act as one of the sales channels, but the rapidly growing emerging tech adoption by the fashion sector offered the Fashion sector a whole new avatar. The majority of consumption happens via digital platforms, and brands saw this as an opportunity to connect with leading tech brands to build one of its experiences for their consumers.
Augmented and virtual reality played a crucial role in this process. The use of AR offered consumers the to try on clothing, shoes, glasses too much more in the comfort of their homes, virtually, while also offering styling tips, guides and playbooks.
Most luxury brands and designers hosted online shows and fashion with avatar looks. This includes brands like Chanel and Zegna that showcased their Spring 2021 collections via a digital presentation. Payal Singhal, a leading Indian designer, upgraded her website with several new initiatives like limited edition access to new collections, sales, products, and more. Masaba Gupta built a curated filter offering her customers to try her face masks at home before purchasing them.
Gucci partnered with a leading international gaming brand to build virtual GUCCI products, limited edition, sold within the AR/VR version of the game as rare collectables for gamers, opening itself a whole new channel of sales by building a brand new product line exclusive to gamers.
Read More: Role of Fashion in emerging start-ups
Fashion’s most remarkable fall: The impact on Retail and work culture
Lockdowns globally devastated the retail sector like never before. Unimaginable losses, bankruptcy declarations, job losses and layoffs impacted millions of people associated with the retail sector of the fashion industry. This shift was no doubt ugly and brought in no relief for over a year to the industry. The number of permanent stores closure and the downward spiral is predicted to continue for a short number of years post-pandemic, as there have been noted shifts in consumer spending worldwide. This has forced fashion brands and start-ups to rethink their retail footprints and strategies.
A seamless transition towards digital growth and sales is vital for brands today to improve their ROI, leading them to make tough calls for their retail storefronts. This fundamental change globally did not come alone; retail, in general, also took a hit with the new work-from-home culture. With employees working from home, offices and buildings shut for months and years now, a new normal has begun that is forcing all brands to rethink their retail spaces, how necessary it is and how remote working aids in productivity and growth.
Both these aspects reflect how necessary it is for brands to reflect and form future strategies that aren’t solely dependent on one aspect. An amalgamation of retail and digital storefronts, workspaces and remote work lifestyle and offering adequate skill upgradation for employees is essential.
Fashion’s circular economy challenge: The focus on Sustainability, consumer shifts and trends
The pandemic and continuous lockdowns allowed consumers time to think about their personal choices, shopping habits and investments. Fashion-related shopping took a backseat, and there was a notable shift in consumer habits. Consumers have been noted to move towards lasting products, more sustainable practices and demanding justice. They have been noted to advocate for slow fashion practices, asking the global fashion brands about garment workers safety, health and pay’s and overall concern towards the environment.
Consumer shift during the pandemic involved:
The shift towards organic fabrics, increased advocacy on ethical supply chain practices, demand on lesser environmental impact when producing fashion items, procuring locally and supporting homegrown brands.
How did this consumer shift impact the fashion sector?
With consumers making more responsible fashion choices, brands had no option but to change their production patterns. In the digital age, consumers have increased awareness and knowledge of production processes, with brands having no escape route but shutdowns. This builds a need for transparency in production cycles. Transparency is the buzzword from yarn to fabric production, design, and final distribution. This transparency is also advocated by Fashion Revolution globally with their Fashion Transparency Index, wherein global fashion brands apply and share their information.
Indian designers such as Rahul Misra to Gaurav Gupta have already opted for recycling plastic to lessen wastage and upcycling practices in their design and production processes, embedding sustainable practices within their operations and bringing transparency to their supply chains.
The pandemic also demonstrated how the fashion sector is producing collections that end up in the dumps globally – highly unsustainable fabrics that will last for thousands of years on earth without decomposing. This pushed companies to reduce their need to produce more to sell more – instead, focus on finding ways to increase full-price sell-throughs to minimise inventory levels that can be achieved with a demand-focused approach.
Read More: Sustainable fashion for a better tomorrow
Fashion’s Alliances: The power of collective, collaborations and partnerships
Two are better than one. With the raging pandemic, brands adopted a collaborative and cooperative approach towards gaining new sales channels and engaging with their consumers. A large number of brands came together to offer their consumers brand-new experiences.
Fashion brands partnered with leading tech brands, the gaming industry, start-ups in the fashion and design domain, individual designers and much more to build innovative and engaging campaigns. For example, Snapchat made digital retail fronts for brands like Lakme, Gucci, Loreal and many others that offered customers especially curated filters as try-on for their limited edition collections, a direct link to buy ( call to action) with a special discounted price ( offering incentive).
Luxury brands like GUCCI and Balenciaga partnered in 2021 to offer a limited edition collection to its loyal customer base and named it the ‘Hacker Project’. Balenciaga partnered with Crocs to give the most “practical shoe” a high-street fashion twist.
Such collaborations offered brands several benefits,
- Deeper and free of cost Digital / Online penetration
- New opportunities for growth and sales
- New product lines – built from demand – based approach
- Saving investment costs and sharing risks
- Wider outreach and new consumer connect
The fashion sector has been vulnerable over the past two years and is finally finding its feet in 2022, expected to reach pre-pandemic normalcy ( new standard) by 2023-2024.
If you are aiming to become a fashion professional in the luxury sector, we have a curated course just for you at MBA-ESG, India. MBA in Luxury Management, click here to learn more.