How Fashion Retailers are Redesigning Their Digital Future

1. Hard lessons learned from the reaction to COVID

The most significant challenge for retail in 2020 was the lockdown-enforced store closures. This, in turn, triggered a second major event – the massive shift to e-commerce.

However, it brought capacity issues. The steady move to e-commerce over the last 10 years allowed for incremental expansion in terms of fulfillment. When the pandemic hit, retailers faced up to the realization their operations and logistics systems were not designed to deal with this volume.

Especially when social distancing, and the need to ensure the safety of staff in stores and warehouses, was paramount.

Then when the lockdowns were eased, other challenges became apparent. Although people want to shop in-store, they are nervous about it. Limits on store numbers and, in many cases, a prohibition on trying on clothes has meant that stores have had to rethink themselves.

How do you attract customers to a fashion store if they are unable to try anything on? Questions like this have led to fashion brands re-examining their infrastructure and digitizing themselves both front and back of the store.

H&M is just one example. Last year, its CEO, Helena Helmersson, said the company would take “forceful measures” that would “lead to a fast shift towards digital” after it shut 75% of its stores worldwide.

“All this will also speed up the transformation already taking place in our sector. We believe that the major changes in consumer behavior we are now seeing will further increase the digitalization of society as well as the focus on sustainability – areas that remain very important to us.” Helena Helmersson, CEO H&M

Fashion retail trends in 2020 include:

• Contactless shopping
• Self-Scanning, dark stores
• Redesigning stores into places to come, buy, and leave, rather than browse
• Safety measures to ensure social distancing

The above trends and solutions have also outlined a path to greater online-offline integration. While smartphones – both belonging to consumers and staff – have become the best and most efficient way to achieve it.

It is unlikely these new ways of shopping will disappear. A US survey found that over half of US consumers do not expect their routines to return until the latter half of 2021. It also found that three out of four consumers changed their shopping behavior during the pandemic. And they intend to keep these habits after the crisis ends.

2. Challenges in fashion retail - operations and IT

Together, the switch to e-commerce and store restrictions have driven significant change in retail operations.

Principally this has involved minimizing inefficiencies while ensuring inventory data accuracy and transparency across a range of channels. Stores have also needed to build contactless solutions in-store to enable social distancing and safe shopping.

According to McKinsey’s State of Fashion 2021 report, keeping track of inventory has become even more important. Speaking about supply chain disruption, KPMG said that although this had mostly affected the grocery sector, it could still be a problem for non-food.

“Most non-food retailers are not yet feeling the full impact of supply disruptions… But, as the situation evolves, we expect to see significant variations in the magnitude and timing of supply chain disruptions.”KPMG – Realities of Retailing in a Post-COVID World

If a store does not have a product, the customer will simply go elsewhere. Something that has compounded this is the disruption to supply lines from the manufacturing bases in the Far East.

So it is all the more important to keep track of products across the supply chain. If a product is unavailable in the online fulfillment center but is held in a store, then the system should be able to account for it. If it is in a store, then an assistant should be able to fulfill the order, even though it was sold through the e-commerce site.

Retail IT

The pandemic has forced organizations across nearly every industry to reexamine how they deliver products and services. This has had several repercussions for IT.

IT’s continuing challenge will be to back up the shift to digital both front and back of the store. At the front-end – as consumers use their smartphones to interact with the stores – they will need to ensure in-store wireless technology is more reliable than ever.

Then there is the need to integrate different systems. IT needs to ensure accurate data is available throughout the organization. The pandemic came on so quickly that stores were unable to upgrade legacy systems, so any innovations need to work within the existing infrastructure.

Retail Operations

If product supply is disrupted and people are making more purchases online, then it is important to know what is in your stores. The only people who can tell you are the store’s staff.

It is worth remembering that the average fashion retail store assistant’s role has now changed. It is now about tracking inventory and supporting fulfillment, as well as helping customers. Stores need to give them the tools to do this. Their efficiency is central to capturing real-time data.

3. Keeping staff and customers safe

Long-term, customers have become used to shopping online for products they would previously have bought in-store. Brick and mortar stores need to bring in new digital experiences and convenience to ensure these shoppers have a reason to return to the stores.

The emphasis has shifted from dwell to sell. Many shoppers want to get in, buy, and get out. Rather than leisurely browsing, people will minimize their interactions and limit possible infection exposure. Here many stores are enabling customers to use the smartphones in their pockets to retrieve product information or make purchases through self-scanning.

From a staff perspective, stores have had to ensure staff are working in a safe environment. This includes everything from social distancing to avoiding using the same barcode scanners (or at least cleaning them if you have to share).

One way around this is to use smartphones rather than dedicated barcode scanners as they are cost-effective and, with the right software, can match dedicated device performance.

4. Contactless shopping is a must-have for fashion brands

Between 2015-2019, there was a big push to digitize stores. Stores frequently heralded innovations such as augmented reality and contactless apps like Self-Scanning. In fashion particularly, there was a push towards omnichannel retailing and linking offline and online.

These innovations were often seen as a “nice to have” accessory to be used in the larger stores. Now they are becoming commonplace.

One of the big learnings from the pandemic has been the importance of contactless technology. Many customers expect some sort of contactless technology in-store. This shift is more common in grocery stores but as consumers become more familiar with it, it will determine whether they visit a store or not.

Retailers that have moved towards contactless experiences have realized that customers, and employees, feel safer with it. “Safe shopping” is now a key selling point for stores.

Showfields – store interaction

Showfields, a retailer in the US, has developed an app that lets the customers interact with the store without touching any of the products. They can use the app to see more product information or look for items in the store without going near them. And if they want to buy, they can pay for it via Self-Scanning and collect them from a safe point in the store when they leave.

Mall Operators – collect purchases

Mall-owner Brookfield Properties used a smartphone tool at centers in Chicago, Dallas, and Los Angeles. Customers can use the phone to scan themselves for measurements. They are then presented with various clothing options from participating brands and stores. If they want to purchase, they can buy via the app and collect them from the store.

5. Making the most of the store - even if it's closed

Temporary store closures have dramatically affected the fashion sector. But rather than let this valuable real estate go to waste, retailers have been using it for fulfilment.

But in the main, many stores have switched to more down-to-earth tactics. Many brands can use their stores to be fulfilment hubs, distribution centers, and places to shop.

Levi’s – dark stores

Levis has been one of many fashion brands to ship from its stores. In April last year, it introduced ship-from-store capability and increased supply chain visibility.

At the time, Levi’s CEO Chip Bergh was reported as saying the brand was doing this in case its distribution center was down as it was not delivering food or medicine.

Nordstrom – handling online increase

US department store Nordstrom handled the increase in online orders by fulfilling them at its Nordstrom Rack stores. It will provide order pickup for Nordstrom.com, NordstromRack.com and HauteLook.com orders.

Perhaps more common is the use of stores for click and collect services. For some retailers, this is seen as a cost-effective and more preferable option to home delivery. Customers are more likely to make impulse purchases when they are collecting products.

Kendra Scott – stores for fulfilment

Last March, US jewellery brand Kendra Scott temporarily revamped its 108 US stores into fulfilment centers to handle extra online orders. It also made them available for buy online pick up in-store (Bopis).

“We had plans to become truly omnichannel and offer to ship from stores, but that was almost a year out. We have had to accelerate that over the last couple of weeks. The landscape has changed for retail forever, and the companies that will be successful are the ones that put customers’ needs first.”Tom Nolan, President Kendra Scott

Again, it is crucial to provide the staff with the necessary tools to handle this new way of using stores. Inventory checking must be seamless when running an online fulfillment center. Something that is usually done with barcode scanners.

One cost-effective way many brands are achieving this is through smartphone scanning.

6. Concluding thoughts - demand for things digital

The pandemic still has some way to go. But vaccination programs are running and some countries are beginning to reopen. Eventually, people will return to something approaching normality.

Fashion – like many other retail sub-verticals – has evolved. As have people’s buying habits and expectations. These changes will lead to greater integration of offline with online and the need to digitize the in-store experience.

People will want to do more than browse – they will want to interact with the store. The challenge for retailers is to do this in a fast and cost-effective way.

A single-device strategy

In our view, the best and easiest way to blend online and in-store is via smartphone applications. These can be used from a staffing point of view to scan and keep control of inventory while consumers will expect to shop via their phones using applications like augmented reality.

Moreover, in addition to making excellent barcode scanners, they can be adapted for many other use cases. Even if it’s just to call another store.

We are about to enter a post-COVID world. Post-COVID shopping, if the predictions are right, will be more contactless, more interactive, and more mobile. Retail needs to be ready.