Retail Strategy: The Sustainability Agenda
The global apparel market shows no signs of decline as it is projected to flourish from $1.3 trillion in 2015 to $1.5 trillion in 2020.
This, however, leads to stiff competition as more retailers fight for a share of profits. Success stories of fashion brands dominating the industry in the past no longer align with the current retail landscape. Many retailers are struggling to find success amidst an oversaturated market and aggressive competitors.
This leaves retailers no choice but to revise their strategies to adapt to shifts, which makes getting the right business plan all the more crucial – especially in changes that influence social movements and consumer demands.
Retail Strategy: Sustainability
McKinsey’s and The Business of Fashion’s State of Fashion 2020 report cited sustainability as a crucial theme for retail. Nordstrom’s latest venture in the resale market can also be seen as a contribution to the sustainability agenda, as the increasing lucrative industry is estimated to surpass fast fashion in a decade. What was once a niche industry has proliferated into a full-fledged effort to reduce fashion’s environmental impact. Studies have also shown consumers’ inclination toward sustainability when shopping.
More and more brands are reacting swiftly to this consumer change, and increasingly, making it their top retail strategy. Reformation is a model example of this strategy.
Since its inception in 2009, sustainability has been the defining attribute for Reformation by supplying fast fashion demands with an eco-friendly approach. The LA startup has successfully garnered significant success over the years as sales have increased by 60% year-on-year.
“Our goal is to bring sustainable fashion to everyone, and every year we work toward that goal,” said Yael Aflalo, the founder of Reformation. In July of 2019, Reformation sold a majority stake to private equity firm, Permira Funds. Reformation’s partnership with Selfridges, Nordstrom and Shopbop, also allowed it to penetrate a wider audience and expand its customer base.
Given its increased resources, what were the retail strategies executed by Reformation that achieved its goal to deliver sustainability to the mass market? This article dives deeper into how Reformation centred the theme of sustainability at the core of its retail strategy.
We’ll be looking at three key components:
- A Strong Brand DNA
- Newness with Capsule Collections
- A Compelling Marketing Tone
A Strong Brand DNA
Think of a brand DNA as the heart of every fashion business. Every output of a brand should reflect its DNA, from its messaging to apparel and marketing collaterals. Retailers need to think of questions like “What is the nuanced factor of my brand?” and “How do I want the world to perceive my brand?” in order to pave a clear path.
The target audience should always be at the forefront when mapping out a brand DNA. Build valuable connections with the target audience by personifying key values. This impacts their decision making and ensures brand loyalty, something highly sought after in the industry.
For fashion brand Reformation, sustainability has been anchored firmly as its brand DNA. From Reformation’s core value to the website, key themes of sustainability are evident across all aspects. Reformation’s active transparency to demonstrate its effort to reduce pollution by using environmentally-healthy materials has bolstered the brand to be a paramount player in the sustainable fashion industry.
Newness with Capsule Collections
Reformation adopts a pragmatic merchandising strategy of introducing newness by releasing capsule collections as a stepping stone for expansion. Doing so allows Reformation to survey market demands and track actual performance before expansion. This also helps to enhance assortment planning, tailor assortment mix that accurately meets demand and minimises inventory complications.
Over the past two years, Reformation expanded into two key categories: footwear and plus-sizes.
Expanding into Footwear
Consumers’ only access to Reformation’s footwear came from its limited capsule collection with Bulgarian premium shoe brand, By Far. Although the collection only offered 6 shoes, it was met with great fanfare. According to Yael Afalo, it was “the #1 most requested item from our customers”.
After receiving considerable success, Reformation then launched a permanent footwear line in 2019.
Reformation’s footwear category achieved an overall sellout percentage of 48.24% – which is considerably positive given its premium price point.
Footwear with neutral tones and thin straps were introduced in Reformation’s latest Spring/Summer 2020 collection, sticking close to its ultra-feminine assortments.
Inclusivity: Not Forgetting Plus-Sizes
Plus-size, too, was a highly sought-after segment from customers. To expand its customer reach (and aligned with its goal to bring sustainability to every walk of life), Reformation, again, started small.
It collaborated with Ali Tate Cutler to offer an extended sizing collection in 2018 and expanded the same for its Ref Jeans collection too.
Like footwear, the brand then converted its plus-size collection into a permanent line. The overall sellout of 32.83% of its plus-size items was driven at full price, signifying high consumer interest in its assortments.
While customers have been requesting for extended sizing, it is still important for retailers to test the waters (to determine best-selling styles, colours, silhouettes) before diving deeper into permanent inclusion.
Sustainable apparel typically fetches higher price points due to the higher cost of production. The chart above shows the price band of the top two categories from the brand. The price band for dresses extended to USD 350-400 while USD 150-200 was the highest range for tops.
However, the higher price bands achieved higher sell-out rates. This highlights the willingness of its customers to pay for sustainable products despite premium price points.
Identify a Compelling Marketing Tone
A retailer with a strong DNA and enticing assortment mix may struggle to bring in revenue if it fails to make an impact among audiences. A retail strategy is only complete if retailers pay attention to brand communication and promotions – and tie it in with its brand DNA and assortment strategies.
For Reformation, a direct-to-consumer brand, having a compelling marketing tone is crucial to organically gain loyal customers.
To promote its permanent footwear category, Reformation took a playful approach to sustainability with its casual yet cheeky tone of messaging.
Its wit laden tone of messaging appeals directly to its target demographic: millennials. Above the cheeky tone of voice, the underlying message of its ads leads the audience back to sustainability – not leaving it as an afterthought.
Reformation applied the same approach to its plus-size collection.
The retailer announced its permanent collection with “Let’s do this forever”, followed by its promise to spread its sustainability mission to “women of all shapes and sizes”.
The brand’s distinct tone of voice throughout its many collections proves consistency – a strong execution of its retail strategy.
For Reformation, its retail strategy closely follows the shifts in consumer demands. While sustainability has and will remain its core driver, the brand has demonstrated the ability to adapt to shifts in consumer demands through the right assortment and marketing strategies.
For retailers to determine an effective retail strategy, clear objectives backed by a well-planned go-to-market retail strategy that is aligned with market insights and customer demands is important.
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