Hello and welcome to another edition of This Week in Retail. As we leave the cold darkness of winter behind, we look forward to transitioning into the flowery light of spring. Luxury fashion retailers too have leapt into the new season at full bloom, powered by the nectar of digital transformation, community and social impact, as well as an embracement of sustainability opportunities. This week, we investigate the strategic decisions leading to these transitions, alongside just how possible it is for other retailers to emulate them.
The start of this year, and indeed the entirety of the year before it, have both provided an unprecedented level of difficulty and instability for retailers across the price point spectrum – and none more so than in the world of fashion. Lower consumer drive to purchase clothes, footfall into stores declining and a clouded ability to forecast and stock demand correctly, have made it no easy feat to survive, let alone succeed, in this environment. Despite this, luxury fashion retailers are finding success in adapting to the new, ever-changing landscape. Burberry, for example, has always been amongst the first to pioneer digital innovation, and this forward-thinking approach has left it well equipped to handle the past year – but what about now?
Having reaching profitability and recently showcased an exemplary share price rise of seven percent, Burberry showcases a familiar story across luxury. China and South Korea continue to be the spearhead of the brand’s success, alongside the likes of Gucci, Prada and Ferregamo which continue to focus on East Asia as concurrent with previous years. Always seen as a bastion of reliable growth, China looks set to continue to be a focal point. The lack of store closures relative to Europe has enabled luxury to succeed where others may have not – particularly due to the dominance of the young, middle class Chinese demographic in luxury sales. Although not all luxury houses agree, most would now subscribe to the fact that maintaining and innovating a strong digital presence is key for success. This has been an area where, on the other side of the spectrum, fast fashion retailer Next has sought to innovate and become the “Ocado” of fashion through an extensive digital catalogue of smaller brands.
Alongside its efforts in digital innovation, Burberry has led the pack this past year when it comes to social impact. As a Mancunian, I can fully get behind Burberry’s intelligent, influencer led approach to change, with Marcus Rashford and the positive impact of his initiative and other wonderful initiatives across the globe making a powerful difference to the most vulnerable in our communities. Many luxury retailers have been rolling out initiatives to make a social difference, but the impact seen through embracing sustainability has been even greater.
Sustainability’s rise to the forefront of both boards’ and consumers’ minds has been well documented. It is not just seen as a necessity, but an avenue of opportunity which has been cherished at the top of board discussions. This includes multiple areas, including being open to resale initiatives – as highlighted by Kering’s acquisition of Vestaire Collective. In terms of achieving product circularity, Farfetch has reduced costs and boosted sales in a two year circular model pilot through offerings such as repair services, store credit, and tools comparing the environmental impact of brands. This highlights not just the environmental and financial benefits of circularity – which most fashion brands have ambitious goals for – but also an increased engagement and dialogue with consumers on the topic.
This past year has taught us, from my perspective at least, that retail is no longer about simply buying and selling. It is not just the consumer experience, it is not just brand values consumers subscribe to, nor even the product itself. There is a real, human undercurrent to every aspect of retail, and firms are waking up to this. This must come across in a genuine manner, as opposed to a PR stunt, through action and impact. Luxury has been in a fortunate position to capitalise on this shift in societal importance – but can other retailers without the same brand strength and capital do the same? As lockdown draws to a close, and stores start to open, stay tuned to see who makes a difference this spring and summer.