Fashion Business Principles of Retailing PDF

a 4.1 FASHION BUSINESS Principles of Retailing Semester III, B.Voc Fashion Design Module 4.1.3  2 Current Business Scenario...

a 4.1 FASHION BUSINESS Principles of Retailing Semester III, B.Voc Fashion Design Module 4.1.3  2 Current Business Scenario COVID-19 has changed the world over the last two years. Years 2020 and 2021 will be remembered for their far-reaching effects on social, economic, cultural, and psychological life. This feature analyses impact of these changes on global fashion and re-imagines its new face in 2022 and beyond, including how technology will continue influencing fashion. According to IMF’s October 2021 forecast, global economy is projected to grow 5.9 per cent in 2021and 4.9 per cent in 2022 in contrast to 2020 growth. The expanding economic growths signal positive outlook going forward. The positivity weighs even more in the light of past two years of COVID-19 pandemic that disrupted the lives of millions of people across the world sabotaging their livelihoods, while interrupting international trade, travel, economies and consumption patterns. Fashion, being discretionary consumption, was hit even harder. How fashion was disrupted Starting from China in 2020, COVID-19 virus spread slowly but steadily throughout rest of the year and in 2021 it released new variants generating fatal waves after waves. Its existence led to continued series of lockdowns, travel restrictions, social distancing and other COVID-appropriate behaviours in various parts of the world. The circumstances left retail industry, fashion segment in particular, in complete disarray impacting sales, profits, inventories, jobs and the entire ecosystem. Global fashion industry, valued at $3 trillion, constitutes 2 per cent of the word’s GDP and when such an industry is impacted the results are far-reaching. The disruption in global fashion started when people were asked to stay at home as precautionary measure to contain the spread of the virus. To rule out any possibility of their coming out, markets, shopping malls and retail stores were also shut down. This disallowed outside shopping for months forcing the consumers to switch to online shopping. To further worsen the things, the authorities’ world over, allowed online purchase of only essential items, restricting sale of non-essential items, that also included fashion, for a later time. Consequently, fashion sales declined and inventories held up throughout the supply chain. Orders were either cancelled or reduced or diverted to arrest additional losses. Simultaneously, constrained global freights and transportation jeopardised supply chain logistics worldwide. The goods transportation to their destination markets faced challenges and those which could make their way out could move only with increased cost, eating up profit margins. Overcoming all these challenges, when fragmented fashion supplies opened up after sizeable gap the demand for fashion items had taken a 360 degree turn with ‘need’ replacing ‘aspiration’. Luxury and aspiration fashion was not needed anymore and the fashion demand, otherwise widely diverse, narrowed to only essential wearables. Work from home cut down sales of formal  3 wear; no outing dented active wear category; social distancing too restricted fashion, requiring very few options that already existed in the wardrobes; home confinement needed only lounge and comfort wear as new buys; curtailed festivities, celebrations and public gathering suppressed beauty, fashion accessories and occasion wear demand for a long time; and, school uniform sales also touched the bottom due to online schooling that compensated for school shut downs. Not only the consumption side suffered immensely but supply side had its own sufferings too. Global fashion hubs in Europe, Asia and America had to either suspend or delay forward-looking and business-building activities of fashion shows, trend forecasts, new expansions, brand launches and other growth plans. Big fashion players suddenly started looking at other aspects of their existence – charities, donations, human welfare, medical supplies, sustainability, social responsibility and human well-being knowingly and global well-being unknowingly. What changed in 2021 2021 began with good news of availability of various vaccines to fight COVID-19, speeding large scale vaccination programmes in many countries. The development brought back some relief and markets throughout the world began opening up, reviving hindered businesses. Although new variants of the virus continued raising their heads in many countries, the overall fashion sentiments gained life. The fashion players innovated, adapted to new realities, incorporated new strategies and began building upon new learning enforced by unprecedented times. Whether it was product development, tracking consumer and shopping behaviour, re- working supply chain, switching to new operational models to keep businesses running, adopting new technologies, reworking marketing and distribution approach in order to meet uncertainties of unknown future, everything progressed with purposeful agility. Among plethora of developments, fashion revived with short-term as well as long-term changes as the year 2021 approaches its end. The fashion industry recovery will be shaped as performance in the first half of 2021 pointed to a possible return to profitability by 2022. However, the recovery is expected to have a flip side too. A combination of material shortages, transportation bottlenecks and rising shipping costs will inflate input costs at estimated average of 3 per cent, forcing increased prices for consumers. This will call for businesses to re-look at their supply models and focus on making these as flexible and resilient as possible to navigate the years ahead. Luxury fashion & consumerism Despite luxury retail hit hard in 2020 due to lockdowns and travel restrictions impacting wealthiest of consumers, it revived back in 2021 to some extent. As the year progressed, markets around the world kept opening up and by the end of third quarter, many luxury brands reported a good turnaround.  4 Noting that the COVID-19 pandemic and recovery has fast-forwarded structural changes in the luxury market that will set the pace for the coming decades of its evolution, luxury brands will continue to redefine themselves, expanding their mission beyond creativity and excellence, becoming enablers of social and cultural change. The rapid growth in the luxury market is evidence of the next-gen consumers’ values shift wherein traditional luxury exclusivity is giving way to inclusivity. Under this trend, the consumers are adopting luxury brands as a ‘badge of values’ as opposed to earlier ‘badge of wealth’. If this trend builds then it will require transformational change for brands in the first-hand luxury market; this is how luxury’s future can be summed up. International tourism and with it, the luxury brands are expected to fully revive back by 2023. Therefore, in the meantime, to compensate for the loss of international shoppers, involved brands must engage with domestic and local consumers and add domestic market share to their existing markets. Artificial Intelligence AI will become future state of all fashion things. The fashion industry is geared up to use AI in various areas of its functioning ranging from manufacturing, marketing and selling products to understanding consumer behaviour, creating awareness, product development and tracking demand. In the coming years, the technology will maximise users’ shopping experience, improve sales systems and enhance the sales process through intelligent automation. Chatbots and touchscreens are being used in stores to improve customer experience and customised product suggestions. It is becoming a common sight to find some form of AI chat technology on fashion websites that’s being used to enhance the customer experience. A great successful fashion requires right combination of designs and patterns to design a costume, making it attractive among customers. AI in retail is set to be worth $19 billion by 2027 and pandemic has been the opportune time for the companies to speed up its adoption. Virtual & Augmented Reality The boom in online shopping during the pandemic times has enabled retailers to leverage their online operations and integrate it well with their in-store offering. Omnichannel has gained more importance and as a result of this the focus has now shifted to improving combined shopping experience across both the channels. This is where the use of AR and VR is becoming very popular. One widespread use of VR is enabling fashion customers to virtually try on outfits offering greater fit- accuracy before the purchase. The technology uses customised measurement  5 functionality, fulfilling virtual shoppers’ genuine need of trial-before-buy. The outcome is customers’ engagement and their long-time retention and when backed with awareness creation on ever-expanding social media the technology assumes a prominent status in fashion retail. The market is and will continue to witness the emergence of many tech-service providers in coming years that will elevate fashion brands’ online and in-store experience which may feature digital styling getting personal too in future. The technology is also being used in clothing as Louis Vuitton designed ‘skins’ for League of Legends characters and Drest sold digitised versions of Fartech inventory. Ralph Lauren collaborated with Bitmoji to enable customers to create their own Bitmoji look with the new mix-and-match wardrobe from Polo Ralph Lauren. Such collaborations demonstrate the irresistible power of the e-wardrobe. Mobile commerce An estimated 6.4 billion people use smartphones the world over. Between 2016 and 2021, this number has grown by ~74 per cent and is expected to reach 7.5 billion by 2026. The World Advertising Research Centre further projects over 72 per cent of all internet users will be accessing web pages via smartphone. These figures vouch for the growing mobile market which is being driven by advancing technology every day. The mobile commerce market is going to witness a huge growth, largely because of using smart phones for online shopping as well as for making payments for retail purchases. In fact, another study says that 2 out of 3 millennials prefer to shop online than in-store. Another large usage of mobile is social media that facilitates brands’ presence on their customers’ favourite channels with a fully integrated digital commerce offering. This provides them greater visibility and opportunities to make a sale. Markets report that fashion apps like Vinted and Depop are replacing traditional avenues like eBay and Gumtree in selling second-hand fashion. In coming times, therefore, mobile commerce will continue innovating and making its presence felt in the fashion industry.  6 Sustainability Today’s fashion consumer is more inclined towards sustainable fashion and the inclination has only grown post-COVID. This has made fashion creators including designers, product developers, buyers and merchandisers opt for eco-friendly and sustainable fashion alternatives. Although non-sustainable fashion will still continue to dominate the overall fashion offerings in the years to come, brands will be more wary of continuing with such undesirable products for long. They will have to own the responsibility of saving planet sooner or later. Reuse and recycling of garments and accessories is going to be more common going forward. Since not even 10 per cent of textile market is composed of recycled material at present, the industry-wide investments will be required to scale up closed-loop recycling technologies and processes. So, a significant development can be expected in this area. In fact, many businesses have already ramped up investment in closed-loop recycling solutions to reduce environmental impact. Learning from COVID times marred with lockdowns, the designers are moving away from creating multiple seasonal lines throughout the year to designing timeless pieces that can stay with consumers for years. This means a reduced pressure on fashion manufacturing, processing and transportation. As rapid production runs create excessive textile waste, lots of apparel end in landfill and harm both factory workers and the environment. This is the reason why more fashion consumers and brands are turning to the concept of ‘slow fashion’ characterised by shortened and economical manufacturing process. As a result, more brands are opting for sustainable production and more consumers are choosing conscious brands over fast fashion.