Shift in Market Demand: As people spend more time at home due to COVID-19, consumer demand has shifted from workwear and going-out attire to cosy loungewear and minimal, classic pieces. Although core apparel categories contributed to the majority of newness in the UK, sell-outs for non-apparel and summer essentials saw the biggest jump YoY.
However, styles remained varied between markets. The UK, which is still in lockdown at the time of writing, saw increasing demand for minimal styles. Meanwhile, countries which have been lifted from lockdown or their bans on public gatherings, such as China and Hong Kong respectively, have slowly begun to see an appetite for trendy pieces.
Smart Discounting: As online shoppers reportedly held back on discretionary purchases, Net-a-Porter, Selfridges & Co. and Moda Operandi opted to introduce new discounts to entice cash-strapped consumers. This resulted in a nearly 40% increase in sell-out in March compared to February. Although discount offered was only up to 25% off, it resulted in above average sell-outs for the retailers.
Price Adjustment: To capitalise on the new demand, some retailers opted to adjust their prices. However, due to the slowdown in luxury consumption, the price increment strategy did not work for all. The majority of sell-outs for retailers including Farfetch, MatchesFashion, Selfridges & Co. and Net-a-Porter, occurred in the lower price band.
Next Steps for Brands
Reinvent Existing Stock: To maintain an aura of newness, retailers should identify which seasonal products can be phased and moved to the next season. Classic pieces and non-apparels, such as accessories can be maximised by promoting them in style edits for consumers who are always hungry for newness. By proactively reviewing current inventory, brands can have a better plan for phasing future collections and clearing unsold stocks without resorting to deep discounts.
Know Your Audience: While the daily average spend in April has declined for Moda Operandi, the retailer managed to weather the storm as it understands its customers. From adjusting its price offerings to engaging with customers through its ‘Shop for a Cause’ initiative, to introducing trunk shows, it has proven its success by capitalising on data.
Look to the East: Merely relying on past data is not sufficient to manoeuvre from the current fashion retail crisis. As China accounted for 35% of global luxury goods, brands should monitor the market and look out for emerging trends. Although the nation’s road to recovery remained slow, the growing demand on trend-led and seasonal items is an indicator of improving consumer confidence.
As the new wave of e-commerce in China has attracted new customer segments, brands should start investing more on the online channel to create a personalised digital experiences for luxury consumers.