Fashion forwards
With today being the day that non-essential stores re-open in England, many stakeholders will be closely monitoring the impact on the fashion sector, given the high proportion of both sales and floorspace that it accounts for across high streets and commercial assets, nationally as well as globally.
Inditex, the owner of Zara and Massimo Dutti, recently announced sales were down 44% for the first quarter of its financial year to 30th April, with a net loss of €409m. It has indicated it will close as many as 1,200 stores globally – yet the reorganisation is also set to include the opening of c.450 new stores. Whilst the brand forecasts online sales will account for c.25% of sales by 2022, compared to 14% in 2019, there will be enhanced focus on the role of the physical estate, with €1.7bn invested in stores vs. €1bn online, to allow better integration with websites and real-time tracking of products. The company sends a clear statement that stronger, higher-quality stores are pivotal to delivering the brand's long-term strategic goals.
So what near and longer-term trends might we see, as fashion retailers begin to re-open stores to customers?
Renewed window shopping
With social distancing limiting customer numbers, queues alongside windows will be commonplace. Stores will benefit from more regular changes of displays, with the potential to fuse dynamic digital screens with more frequent changes to static merchandising, outfit building, and storytelling.
Could this be taken to the next level of customer engagement, in the way Disney has long managed to keep customers entertained whilst waiting hours for rides at theme parks?
The rise of the machine
The need to drive a contactless experience will accelerate the speed with which brands are adopting in-store automation – from contactless payments, to virtual mirrors, smart changing rooms, self-check-out, footfall counting, and RFID garment tracking – these features will enhance in-store efficiency, but also provide crucial metrics to better evaluate the role and commercial contribution of physical space.
At a time when many brands are demanding a switch to turnover-based rents, does this finally present the opportunity for landlords and occupiers to collectively agree more appropriate measures of real estate value?
Empower the employee
As in-store technology increasingly takes care of functional activities, and the overall requirements for retail floor space reduce, there is opportunity to redeploy employees as brand ambassadors – both in-store and on-line. Many loyal customers would love to spend more time speaking with inspiring and knowledgeable staff – but typically, such interactions are limited to one minute at the till or changing room. Local staff have the potential to engage with local customers through online consultations, pre- and post-store visit. They could provide virtual tours of the stores, showcasing the local product and new arrivals, creating a humanised digital retail experience. Where once an online interaction with a `stranger' was a fear, the rise of Zoom, FaceTime and WhatsApp video has made people infinitely more comfortable with online video interaction.
Click to connect, not just collect
With many focusing on the rise of aggregate online sales as evidence of the death of the store, it is easy to overlook the fact that in many instances, click and collect sales are rising at a faster rate than online only. In lockdown this has been accelerated by a desire for immediacy, a chance to leave the house, and more flexible time commitments resulting from home-working. This has many benefits for brand, customer, and landlord – reducing fulfilment costs, increasing engagement, and driving footfall. With more localised operations, the store can become a hybrid local stockroom and showroom, with an enhanced focus on local preferences tailored specifically to the catchment and customer base.
Whilst there will be many painful structural adjustments to come, the longer-term outlook presents an opportunity for an inspired understanding and purpose of physical space - fashions will keep moving forwards.
Alex Avery