It has been a year since the pandemic rocked a fashion industry that was already feeling the pressure of trying to keep pace with consumer shifts toward digital, ethical sourcing and eco-friendly products.
2021 will continue to be an uncertain year, with business growth slow to pick up for the industry. The stage is set, however, for strategic players to carve out a new growth agenda and reinvent their brand. Those that can keep their fingers tightly on the pulse of the customer and capitalize on the key trends and latest innovations will assume the top dog position.
Here are some of the overarching themes of the changing consumer sentiment that will shape the fashion industry’s journey ahead.
Fashion Resale
Selling a product once is great but being able to sell it twice — that is no mean feat. The fashion resale market is one of the fastest growing consumer-driven sectors today.
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The resale market is set to hit $36 billion by 2024, growing at 39% CAGR (versus overall retail at approximately 2% pre-pandemic). Fashion companies like Levi, Patagonia and Eileen Fisher are moving toward resale in a big way by tying up with companies like Trove who collect and operate the resale business for them. Nike has just launched its in-house pre-owned program. Given the explosion of resale/ secondhand clothing, other resale marketplaces like ThredUP and The Real Real and peer-to-peer resellers like Poshmark are growing by leaps and bounds as well.
Gen Z and millennial shoppers are driving the fashion resale growth, with the market projected to grow to almost twice the size of fast fashion by 2029. Sustainable shopping can be heavy on the pocket but with second-hand fashion, young cost-conscious shoppers are able to tick both price and sustainability criteria. Accessibility is another reason for the boom in the market, with resale platforms like Vinted, Bagista and eBay offering customers quick sales options and access to vintage, pre-loved designer products.
Some major retailers have sniffed out the exciting opportunity here to capture the young consumer market, with retail giants like Selfridges recently launching their permanent resale platform, Resellfridges, as part of their sustainability initiative, Project Earth.
Fashion resale is quickly becoming a bright spot in an otherwise gloomy COVID retail slump.
Social Commerce
Influencer marketing is huge these days, and understandably so with social media becoming an addictive lifestyle choice for most people around the world. Retailers must invest in innovative engagement strategies and channels to connect with their customers and leverage the power of influencers to amplify their brands. Facebook, Instagram, TikTok and Amazon are all surfing the social commerce wave to try and leapfrog their competitors.
Social commerce has been far more prominent in China than in the U.S. To put that into perspective, social commerce sales in China totaled $186.04 billion (RMB1.285 trillion) in 2019 — nearly 10 times the sales in the U.S., which reached $19.42 billion in 2019. Social Commerce makes up 11.6% ($315B) of overall ecommerce in China. The social commerce explosion is one of the biggest next-gen consumer trends that is here to stay.
Livestream Commerce
Live shopping platforms in China, where social commerce has taken off, are on pace to pull in $125 billion in sales in 2020, up from $63 billion last year, according to Coresight Research. The U.S. live-shopping market is far behind at an estimated $5 billion. With the right strategies in place, livestream ecommerce can soar to reach $25 billion in sales in the U.S. by 2023.
Retailers have only just bit into a small slice of the sizeable pie till now. The untapped potential for growth via livestream commerce is immense. The QVC of the future for Gen Z is going to be TikTok, Instagram and the myriad social media channels they are glued to. Retailers looking to reenergize their business need to strategize, innovate and invest in such new technologies to remain relevant in the future.
The New Look of Fashion Retail
These cool and exciting new trends are indicative of the shift in consumer mindset and the dawn of a new world propped up on all-pervasive digital technologies. By investing in the right platforms and digital solutions and providing a rich in-store experience as part of a consistent omnichannel journey — fun-filled with ‘Instagrammable’ shopping moments — fashion retailers can truly enhance their customer lifetime value. It is time for the fashion industry to revive itself from pandemic fatigue and inject a new lease on life to the business, and turn the page to a new chapter in its growth story.
Balaji Santhanam is Associate Partner – Consumer Products, Retail and Logistics, Infosys Consulting. Santhanam joined Infosys Consulting in 2021. He is a fashion and retail enthusiast with an extensive background in consulting driving large transformation programs. Santhanam has a stellar record, being a trusted advisor for customers in the fashion and lifestyle space for the last 15+ years. He is an entrepreneurial leader with demonstrated supply chain expertise and a proven track record of excellence in consumer insights to steer successful retail strategies. Santhanam is a regular speaker at retail events like NRF and SAP Retail Forum. He is an alum of Wayne State University where he completed his mechanical engineering degree and completed a few certification courses on entrepreneurship from The Wharton School.