fbpx

Navigating fashion’s digital transformation – Glossy

GetResponse Pro

The events of the past seven months have reshaped fashion brand calendars in more ways than one. Seasonality has gone out the window, entire product categories have gone on hiatus, trade shows have taken a virtual turn and marketing strategies are more dependent on digital channels than ever before. With the future of brick-and-mortar in flux, brands are changing steps to align every aspect of their business with the digital-first habits of the post-Covid consumer and provide them an experience that matches—or better, exceeds—that of the physical retail environment.

Glossy’s Fashion Summit Deep Dive is a collection of videos, presenter slides and key takeaways from top executives from direct-to-consumer, mass and luxury fashion brands that will provide valuable tips and insights to help your brand stay on top of the digital acceleration, with strategies to enact in everything from consumer engagement and acquisition, to retail partnerships, to sales and supply chain. Below you’ll find key takeaways, quotes and stats, as well as videos from our recent Fashion Summit event.

01

A digital restyling

Industry analysts have long seen it coming, but nobody could have predicted it would come this quickly. Consumers have been rapidly turning to digital platforms for all of their shopping needs, and for the past six months, fashion industry executives have been navigating what this means for every aspect of their company. Brands that didn’t already have a marketing budget pouring into digital channels or a blueprint for an online store had to do an about-face in March, and many of them are committed to this new reality for the long haul.

In fact, consumers are becoming even more accustomed to the seamless and intuitive experience, and hyper-convenience that goes hand-in-hand with making an Amazon Prime purchase. And they’re increasingly expecting this level of service from fashion brands. And it’s not just the youngest consumers, either. Brands are acquiring new customers across demographics and even across new geographies. 

Of course, once brands have these customers on board, it’s key in this tumultuous landscape that they’re turned into loyal fans, and brands like Madewell are fostering online communities on social media and within loyalty programs, while capitalizing on the data that these connections ultimately produce. “[We’re] using return data and exchange data to inform future decisions, but we’re also just generally engaging customers on different topics, doing surveys, and asking them what they want and how they’re reacting to our brand and new functionalities, new programs and new initiatives,” said Derek Yarbrough, CMO at Madewell. “We’re thinking of it really broadly as a comprehensive web of continuous feedback from customers, both qualitative and quantitative. And we’re using those decisions, using that feedback to inform decisions.”

“We’re using return data and exchange data to inform future decisions, but …we’re thinking of it really broadly as a comprehensive web of continuous feedback from customers, both qualitative and quantitative. And we’re using that feedback to inform decisions.”

Derek Yarbrough, CMO at Madewell

It goes without saying that brands are no longer sticking with the playbook if it isn’t working, and they’re experimenting with new methods that help bring their business back in balance. All the while, brands like Birdies are prioritizing profitability to stay ahead, and they aren’t underestimating the value of wholesale partners along the way. 

Ultimately, while this year’s unexpected digital shift has resulted in countless challenges, it’s also opened the doors for a retail refresh — and brands like Ganni demonstrate why that’s a good thing. From more sustainable practices and processes to expansions into new territory, brands are setting new standards for success in every direction. For other brands, the events of this year have cast a new light on their mission. “The pandemic really reinforced the culture that we were trying to build,” said Sarah Ahmed, CEO of Warp+Weft, “And that was to really listen, learn, observe and do things in a more mindful, thoughtful way, and to make things slowly and make things [that are] more mindful.”

Here’s what you need to know.

Brands are exploring alternative business models

The apocalyptic circumstances brought on by so many factors of 2020 have forced brands to do whatever is necessary to survive and thrive. That’s bringing about a reconsideration of the norms, routines and processes that have governed the fashion industry for decades. Brands are recognizing that nothing is sacred, and they’re throwing out what doesn’t work for them, whether that’s untethering themselves from the strictures of partners’ timetables in favor of a direct-to-consumer model, or dispensing with seasonal fashion shows or seasonal collections. “A luxury calendar isn’t really realistic anymore,” said Louise du Toit, evp, North America at Ganni, which does about 20 drops a year with its wholesale partners. “And to be fair, [drops] are exactly what our customers have asked us for and what she’s demanding these days.” Brands are also exploring creative approaches outside of a traditional transaction, like subscription models, that help ensure customers keep coming back.

BOTTOM LINE

The retail playbook in the last six months has been all about adapting wherever necessary to stay ahead of the upheaval and retain customers. However, Cai noted that it’s important for brands to avoid chasing trends and assess what will ultimately work for their unique positioning. For example, “It really doesn’t make sense in most retail cases to have a membership unless you have a large product category or product assortment or a high-frequency-of-purchase type of product,” he said. “But it’s ultimately dependent on the category.”

  • Don’t be shy – jump on the opportunities the pandemic has introduced. Jeremy Cai, founder and CEO at Italic, said that although the pandemic hurt Italic just as it did many brands, the company also came out stronger. Italic used the pandemic to pivot to a new membership-based model, and while the company’s sales were previously dominated by fashion, home goods now make up the lion’s share of transactions. “All in all, it’s the best time in the world to stress-test a value proposition and see if people would like it,” Cai said. “Thankfully for us, we saw enough traction to gain full conviction into basically going all in.”
  • Don’t be held prisoner by seasonality. The disruption of the pandemic is giving brands permission to break with the conventions of seasonality. That suits some brands just fine and plays into a larger trend of dispensing of the scheduling pressures of rigidly seasonal collections. Other brands are thinking pragmatically and adjusting plans to fit the times. “We made some tough calls this year on production, because frankly what we had planned for fall was not what our core customer needs right now,” said Barboni Hallik, founder and CEO of Another Tomorrow. “So we said, ‘You know what, it doesn’t make sense to put all that product out there, so why don’t we shift that to fall of ’21, and let’s figure out what she does need.’” Du Toit at Ganni added that doing mini drops throughout the year instead of more traditional seasonal collections works well for the company’s wholesale partners, because “they thrive on newness,” and it doesn’t require more inventory.
  • Brands need to work with what they have. Jeff Rudes, CEO and creative director of L’Agence, said Zoom has been an essential tool to help connect wholesalers and consumers with new products daily while travel and in-person retail remains slow. “We’ve got an amazing specialist that was with me from the early days with J Brand — Oscar. And the whole market knows Oscar,” Rudes said. “He’s doing these events, and we have stores selling $15,000-$20,000 in three hours at our events, and they love it.”

02

Profitability is more important than ever

This year’s brutal business landscape has prompted many brands to reconsider the assumptions that have underpinned their operations. Companies are now prioritizing profitability and steering themselves away from the addiction to venture capital that has been a dominant feature of the industry for the past decade and more. 

Centering profitability doesn’t mean sacrificing growth. It’s about being conscientious and realistic about the state of the brand and paying attention to the margins. In recent years, too many brands have adopted a growth-first mentality, spending other people’s money with abandon and kicking the profitability can ever further into the future. 

Bianca Gates, CEO and co-founder of DTC footwear brand Birdies, said a slow-and-steady approach allowed her brand to withstand the onset of the pandemic. “As a young brand, being able to pivot fast matters so much, particularly now,” she said. “If we had focused more on top-line growth pre-pandemic, we would have been sunk — with too many store openings [at once] and, possibly, with way too much inventory than we could sell. That could have sunk the business.”

  • VC isn’t right for every brand. Brands can grow without huge injections of capital, and the burden of expectations that comes with VC cash can be stifling for founders. At a certain point in the brand’s evolution it may become clear that the brand needs to grow, and that’s the right time to seek investment. It shouldn’t just be viewed as a panacea or a necessity. Timing is one thing, but screening for appropriate investors is another key; brands shouldn’t just accept money from anyone. 

Gates said that Birdies only embraced fundraising when the brand had grown to the point where it felt right. Even more importantly, its investors were aligned with its focus on profitability. “For us, having the right investors, the right partners is crucial and critical to a company’s success and growth,” Gates said. “You have to have partners that believe in what you believe in, and for us, profitability was incredibly important for us from day one. And our investors leaned into that philosophy.”

“If you have the appetite and you really believe that you’ve captured that lightning in a bottle — with price point, with margin, with consumer interest — then there’s an opportunity to go to a venture capitalist and say, ‘Listen, I think there’s something big here,’” she said.

“As a young brand, being able to pivot fast matters so much, particularly now. If we had focused more on top-line growth pre-pandemic, we could have sunk the business.”

Bianca Gates, CEO and co-founder of Birdies

  • Your consumer will tell you when the price is right. Fine-tune your products and services by creating feedback loops to involve your customers in the process. Don’t use price cuts subsidized by VC cash in the pursuit of breakneck top-line growth. Instead, lean into your relationship with your customers. Find out where your product fits in the market and figure out all your costs — customer acquisition, manufacturing, shipping — to arrive at the optimum price point.

“All of a sudden, there you have a number, a price point for your product,” Gates said. “And at that point, you go to market, and you start to test to see: Is this the right philosophy? Is this the right price point? And the customers pretty early on will tell you if you’re right or if you’re wrong.” Test, tweak and repeat until you arrive at exactly the right price for your customers. 

Gates said brands can grow quickly while also aiming to be profitable as soon as possible. There’s nothing wrong with seeking VC investment, but Gates cautioned founders to be patient and scale when the time is right. “You have to be obsessed with what the customer is telling you,” Gates said. “The customer will tell you how fast you can grow. If they are not buying your product with a profitable, strong margin, then you’re doing something wrong.” 

BOTTOM LINE

Compared to some industries, the fashion business does not inherently need to rely on VC money, and no amount of investment will turn a second-rate offering into a profitable enterprise. Fashion brands can afford to take time getting the margins right, tweaking the product and firing up a loyal and invested customer base, confident that profits will follow.

  • Profitability versus growth is a false choice. Fashion is not a winner-takes-all industry, unlike, for example, technology. There’s room for lots of brands to compete at different price points and to appeal to different consumer profiles and tastes. There’s no need for fashion brands to embark on VC-fueled benders in pursuit of market share, and sometimes the best results are gained from taking it slow and getting the margins right.  

“I think you can grow fast when you nail the price point and the product with the consumer,” Gates said. “Being venture capital backed and having an investment certainly helps you scale faster when you hit that lightning in a bottle. But I don’t think that anybody should [choose between] profitability or raising money from venture capitalists.”

03

Fashion shoppers are leaning into e-commerce, and that means more than sales.

With the future of physical retail still up in the air for many, e-commerce has become the new normal for brands, and for their customers. Stay-at-home orders meant that shoppers had to lose any inhibitions around online ordering, and they’ve had more opportunities to explore the various digital channels, from social commerce to marketplaces, for their online shopping journey. This acceleration toward digital has also meant that consumers’ expectations are now higher, and they want both convenience and a seamless experience. Brands that didn’t have their online presence buttoned up had to pivot, and they’re seeing returns not only in terms of moving more product, but also in deeper customer insights. “It was all about speed and agility, and: How can we move budget dollars over to our digital side to continue to grow that business?” said Jason McNary, CEO at UNOde50. “What’s working for us today is keeping our girl close — what’s working is engagement, social conversion and a big focus on customer acquisition.”

  • The digital shopper is no longer siloed to Gen Z. The circumstances of the pandemic have pushed everyone online, meaning the digital shift has affected consumers across generations. The behaviors of Gen Z — whether that’s making content on TikTok or discovering brands through the Animal Crossing game — are influencing their older peers, and brands are seeing the effects. That dialogue across those diverse groups of consumers can be powerful. “There is really this intergenerational dialogue happening, especially where kids might be at home right now with parents, where they’re really starting to talk about sustainability across many more pillars of life,” said Barboni Hallik.

Deena Bahri, CMO at StockX, said that while the brand’s Gen-Z customer “is definitely showing up,” it’s also seeing “an incredible rise in the 45-plus segments.” All in all, it points to a digital shift, she said. “I might have been more prone to go to a department store or to a local boutique, as well as shopping online, [before Covid]. But since retail shut down, people like me are basically shifting their dollars all to online.” Bahri said StockX’s streetwear and sneaker customers are primarily concerned with authenticity and transparency into the price rather than shopping “in a boutique of a certain reputation.”

  • Customers’ standards for service and convenience are on the rise. This leveling up of expectations has prompted pretty much everyone to soup up their e-commerce operations” They’re reworking the customer journey for a more seamless experience, designing the shipping and delivery operation to achieve maximum satisfaction, and rolling out new offerings like virtual stylists and virtual try-ons. While timely and effective communications were always good practice, those habits are doubly important in this current landscape. Brands need to be transparent and realistic about setting customer expectations and remember that customers appreciate being informed, even if it’s not always news they want to hear. “We’re already hearing that there are going to be shipping delays,” said Joe McCarthy, director of performance marketing at Klaviyo, in regard to the coming holiday season. “Where you were able to offer guaranteed delivery last year, right up until just before the holidays, you’re not going to be able to do that this year. It’s going to be a little bit different, and it’s best to communicate when you think your cutoff will be early. Use your website, campaigns and your automations to push those messages out.”

BOTTOM LINE

With the holidays around the corner, brands should remember that e-commerce is at the heart of the “new normal” and take advantage of this from every angle possible. That means considering new audiences, getting the most out of online retail partnerships, making sure your brand presence is fully optimized at every touchpoint and reaching across every channel at your disposal.

  • Brands are tapping marketplaces as so much more than just a sales channel. Jason McNary, CEO at UNOde50, said the company’s partnerships with Zappos and Amazon are helping it with four main pillars: driving sales, customer acquisition and brand awareness, and helping its team assess their competition in the market. Every marketplace strategy is dependent on the marketplace itself, but UNOde50 goes all in. “All of them are very important to us, from the lowest volume to the highest volume. We treat them all the same,” McNary said. “We really want to learn from them and make the business work for both parties.”

04

First-party data and direct customer relationships are key.

With communication channels like Instagram and SMS bringing brands and consumers closer, crafting relationships with customers has never been more accessible, and critical. For many brands, relying on retail partners for data is no longer an option as brands pivot to direct-to-consumer models or pare down their wholesale connections. Yarbrough said Madewell’s motto is to always think of the customer first. “We’re really looking at every aspect of our business and how we can harness customer data, and solicit customer data and feedback to inform business decisions,” he said. Madewell Insider, Madewell’s loyalty program, is one way the company does this. Brands can get their hands on valuable data through means like online quantitative surveys, social media DMs, email and even simply by picking up the phone.  

  • Brands are recognizing that customers want more control.  Yarbrough said Madewell’s membership program, which recently introduced a rewards scheme, is a great portal for gathering data on how the company’s best customers shop to inform how to better engage them along the way. Madewell also takes this opportunity to strengthen its relationship with its customers by tailoring its online loyalty experience based on customers’ individual preferences. “What we’re seeing as a broader trend, in retail especially, is that customers really want to be in the driver’s seat, and they want to have some control of their experience,” he said. “We’re about giving customers options and letting them choose … when they want to use those perks.” 
  • Know your customers. Jeremy Cai said Italic consistently uses performance marketing, qualitative interviews and quantitative surveying to take the temperature of the brand’s customers. These habits have helped the brand identify two types of core members. The company expected the well-educated, city-dwelling millennials who are the bread-and-butter customers for many direct-to-consumer brands. More surprisingly, it found that suburban consumers — parents ranging 35-60 years old — were also fans of the Italic model. “To them, the value proposition really is like, ‘Hey, I want nice things, but I don’t really care about having a label or logo on it,’” Cai said. “To Italic, you’re able to access the same level of quality, but if you don’t really care about having the trendiest design, for example, then our price point hits really strong for you.”

To learn more about its customers, Madewell segments its Insider shoppers not only by spending brackets, but also by whether they’re single-channel or omni-channel shoppers, and what kinds of products they buy. “That kind of data is incredibly valuable, in terms of helping optimize the program going forward,” he said.

BOTTOM LINE

If they’re not doing it already, it’s imperative that brands find ways to have open dialogue with their customers, not only from a quantitative standpoint, but also from a deeper, qualitative one. Even for brands without a direct-to-consumer model, insights from retail partners only go so far. And there’s no better time to develop tools and strategies that help get to the bottom of exactly what a consumer wants.

  • Gathering customer insights sometimes takes a hybrid approach between data and real relationships. Barboni Hallik of Another Tomorrow said her brand’s team gains valuable insight into not only how their customer navigates the website and digests the brand information, but also to who they are as people by having more qualitative dialogue with them. “There is a huge need to just actually talk to your customer,” she said. “Because we live in this world of data, and we try to gather so much data, when oftentimes really it’s having a conversation with a handful of people that gives you really deep insight around what people care about and supplementing that with the patterns that you’re seeing.” This can mean following up with a customer via email and asking them their thoughts or even having phone calls. “It’s an interesting way to talk more and deeper about the brand,” she said. “You really get to hear about what people are struggling with, what they’re interested in and how their lives are evolving.”

05

Now is the time for a reset

If there’s something brands wanted to do differently, now is the time. The existential crisis the pandemic has inflicted on the fashion industry means nothing is off the table. Everyone understands that survival comes first, and that’s giving brands permission to try almost anything. Brands are expanding into new product categories, repositioning in terms of their target consumer and exploring new ways of interacting with their communities. 

Not all of these experiments will work, but the trick is to keep the cost and commitment low, and leave wiggle room to change things up again. And as brands embark on these explorations, some are finding that their new ways are eclipsing the old order that was put in suspended animation back in March. 

“I don’t see us ever going back to the way it was,” said Louise du Toit of Ganni. “I don’t even waste my time thinking about what that looks like. It’s not realistic anymore. I don’t want to waste time and resources trying to get back to something that doesn’t exist.”

  • Stand out from the pack. There’s no magic bullet for achieving this, but Jeremy Cai said that his members-only store, Italic, has stood out among competitors by continuing to broaden its range, expand into new categories to attract new members. 

“We’re venturing into pets, outdoors and fitness, which are things that you wouldn’t classically consider to be luxury goods or quality goods,” Cai said. “But I think we can do so with a quality level at a price point that would potentially be interesting to customers that are pretty discerning in those categories. As those categories continue to grow, the membership itself becomes a lot more valuable to our existing members and also to new ones who might sign up.”

  • Brands are testing imaginative new concepts and collaborations before committing big. The pandemic has facilitated — and, arguably, necessitated — the birth of countless collaborations, sometimes reaching across different product categories and unexpected industry crossovers. The current unpredictable environment is encouraging brands to take risks and try out new ideas.

Ganni partnered with Levi’s on a collection of clothes made from upcycled denim, available solely through the brand’s Ganni Repeat rental store. It’s an experiment that du Toit said she hopes can be applied to the American market. “I want to find a way to make it work,” du Toit said. “And if this does work, then for sure we will have a bigger offering of rental in the market. It’s something that we’re doing across Denmark and Europe already. It’s just the right partnerships across the U.S. that we need to sort.”

  • Rethinking the digital space. Brands are not just tearing up the physical rulebook — they’re also working with digital creatives to power up their online presence, and pushing the boundaries and definitions of what those platforms can achieve.

BOTTOM LINE

The post-pandemic fashion industry is likely to be very different from what came before, so brands shouldn’t cling to hopes of a return to “normal.” The pandemic has created permission structures that free brands to collaborate, innovate and experiment like never before, and the future of many brands will depend on how successful they are at exploiting this opportunity.

When the devastating implications of the pandemic became clear, Ganni understood that it urgently needed an engaging, stimulating alternative to its offline spaces and events. Ganni’s leadership asked web developers to come up with something more than just a mere “website.” Du Toit said the goal was to deliver “something that buyers can access, so that they have something really special and new. And they should feel like they’re discovering something, and there [should be] personality and assets.”

The result is a portal that offers a range of features to interact and engage with products and the stories behind them. “It’s a space where buyers can log on, and they can explore and see many different views and assets and videos, and notes from [the designer], and imagery from how the collections were built and where the inspiration came from, all together on this site,” said Du Toit.

06

Overheard

“We try to educate through content that is enjoyable and accessible, and can be accessed to the customer’s desired depth, so you’re not just hitting people over the head with it. But if you want to open up that product detail page, there’s a lot of information there.”

Vanessa Barboni Hallik, founder and CEO, Another Tomorrow

Many consumers today are inquisitive and want to know, in great detail, how brands work, what their values are and what the stories are behind the products. Many brands are catering to that demand by ramping up the volume of content, storytelling and information they make available, and in a variety of formats. However, it’s important to strike a balance. The content has to be stored and served to the consumer in a way that neither obfuscates the customer’s purchasing journey nor buries the information. And technology provides increasingly elegant solutions.

“Saying that we’re sustainable is just false. You know, we’re a fashion brand. We have 20 drops and newness on a regular basis, so it doesn’t make sense to say that we’re sustainable. And I would feel false saying that. We are working on being as responsible as we can be.”

Louise du Toit, evp, North America, Ganni

Every brand wants to claim to be sustainable, but how many can truly live up to that standard? As du Toit pointed out, so many of the norms and routines of the fashion industry run contrary to the demands of genuine sustainability, and being realistic about that is a good starting point. Consumers crave transparency, and by being open and honest, brands can also identify the areas where they can actually make progress and hold themselves accountable to those goals. For Ganni, this also means working “across the aisle with wholesale partners” toward reducing the need to use plastics in the shipping process, for example.

“No one’s perfect, and I don’t want to sit here claiming that we figured out the formula, but I can say that we do have an environment which is more conducive to openness, and that’s a start. Because we want to build the future. When you’re building, you’re going to make a few mistakes and you’re going to learn. And I think we’re just in the learning phase of wanting a better environment to work in.”

Sarah Ahmed, CEO, Warp + Weft

Conversations around inclusivity and diversity reached a crescendo this summer, spurred by protests in response to the death of George Floyd. The fashion industry is still a tough business, and it can be especially alienating for people of color. At Warp + Weft, Ahmed encourages an atmosphere of “radical candor,” where colleagues feel empowered to speak up and make themselves heard. The more emotional intelligence a team possesses, the greater the team’s capacity to learn from each other and grow together through the challenges.

07

Glossy 101

WTF are B Corps?

B Corps are companies that have been certified by a non-profit organization called B Lab, which evaluates companies based on the social and environmental value they create for the community, their employees and their customers. Companies are judged according to whether they adhere to high standards of public transparency and ultimately, according to bcorporation.net, contribute to “accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.” Another Tomorrow is one such company with a B Corps certification, which can serve as a marketing tool for conscious consumers. Vanessa Barboni Hallik, founder and CEO of Another Tomorrow, said knowledge and awareness of this certification is still evolving, but she expects it to only become more relevant “in a world where people are trying to validate claims and understand who is serious and putting in the work.” “There’s a younger generation of consumers who sees that as kind of like the modern day ‘Good Housekeeping Seal of Approval,’ so to speak,” she said. “And I think it serves as an important sort of architecture for accountability for the industry. But I hope we’ll see more, more brands come on board.”

WTF is the drop model?

“Drops” in the fashion world are usually mini collections or products that are released in limited quantities, usually with some marketing and hype build-up so that the shopper feels like they’re getting something ultra-exclusive. This model of releasing product differs from the seasonal collections that are more traditional to fashion brands and is a popular strategy for streetwear brands. However, the drop model is spreading to other nodes of the industry, according to Deena Bahri, CMO of StockX. “I wouldn’t call it a trend — I would call it a way of being,” Bahri said. “It creates a lot of flexibility on the supply chain side, and it creates a lot of excitement on the consumer and the marketing side. So it gives you a reason and excuse to talk to the customer more frequently. And I think the customer wants that novelty and wants that rhythm.”

WTF are QR codes?

These scannable, barcode-style squares have been around for years and are huge in Chinese commerce, but they’ve remained somewhat obscure in the West until recently. Now that platforms like Instagram are integrating them more functionally, consumers are getting used to using them. And brands are jumping on the potential to use QR codes as lightweight portals to brand information, stories, experiences and ultimately more transparency. Vanessa Barboni Hallik, founder and CEO of Another Tomorrow, uses them to inform customers about their sustainable practices. “You scan the QR code on our care content label, and in most cases, you have transparency back to the farm, every step of how it’s made and how it relates back to our values,” she said. 

08

Event video: Establishing a business model that drives customer loyalty

09

Event video: Prioritizing profitability from day one

10

Event video: Remaining true to the brand amid evolution

Navigating fashion's digital transformation – Glossy

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *