How fashion retailers can survive the lockdowns and create omni-channel experiences for future growth
Feb 12, 2021
In this exclusive interview with FashionUnited, Koen Vanpraet, CEO of payments provider PXP Financial, offers some some practical advice for fashion retailers looking to move past lockdowns and pandemic-related challenges. Blending digital and in-store experiences and offering a broad choice payment wise can turn the tables for clothing brands in the short and medium term.
How has COVID-19 impacted the fashion retail industry?
While every sector has been affected by COVID-19 in some way, the retail industry has experienced one of the most dramatic shifts of all. Of these, the clothing and apparel sector was hit the hardest. With lockdown in place, many physical stores were forced to close their doors, and in an industry where more than 80 percent of transactions took place in physical spaces this was bound to leave its mark.
Back in March 2020, when the first lockdown began, the UK government released its retail sales report which measured the volume of retail sales for that month. The report found that clothing stores saw a fall in sales of 34.8 percent when compared to February, which then fell further by a record 50.2 percent in April 2020, when lockdown was at its peak.
However, alongside this drop in brick-and-mortar retail there has been an explosion in ecommerce. For certain brands, sales have actually increased. For example, H&M reported that online sales jumped 36 percent between March and May. Unfortunately, this was not enough to counter-act the loss from physical stores, as brands such as Primark reported an annual loss in profit when compared to previous years.
How has COVID-19 has impacted consumer behaviour around fashion?
Many of the consumer behaviour trends we’ve observed – decreasing in-store footfall, the growing preference for ecommerce, and the rapid move away from cash payments – were well documented before the first lockdown. COVID-19 has simply accelerated these factors, due to the increased necessity of online shopping and public health messaging advising against handling cash.
Alongside this, the pressures of the first lockdown forced unexpected shifts in consumer behaviour. A mid-2020 Mintel report found that consumers under lockdown were diverting funds that would normally have been used for a holiday or a night out into home improvement or entertainment purchases. Fashion falls under this category as well, although not to the same extent.
With physical stores closed, ecommerce shopping became the standard for most consumers going forward, but this presented some issues. Consumers could no longer try before they buy, which meant many were hesitant to commit to a purchase, especially with fashion not being seen as an essential item.
How has the retail space used technology to tackle the challenges of COVID-19?
The biggest challenge for many retailers was the shift to a primarily ecommerce platform, particularly during the initial lockdown period. Thankfully, for the second lockdown many of these retailers are already set-up with an existing online shop so are in a better position to capitalize on the widespread shift to buying online. Unfortunately, those with an underdeveloped or still without an ecommerce platform are having a hard time.
For these retailers, taking the first leap into ecommerce can be made much simpler when they use a modular and configurable online system. These systems help retailers to build an online selling platform that can securely take payments. With single propositions offering everything from real-time reporting and managed security services to checkout customisation, merchants can start selling their products online in the blink of the eye.
Crucially, for businesses concerned with digital transformation, these selling platforms are simple and easy to use, with no need to multiply back-end costs, complexity, or admin. Many retailers have been able to jump into ecommerce with a minimum amount of expense, time and complication, and instantly begin accepting many new payment options as well.
For the fashion industry struggling under COVID-19, online selling and payment platforms have the flexibility to offer outstanding support. Setting up an ecommerce platform that can offer multiple forms of payment is convenient for customers, and it won’t feel like a temporary or wasted effort when lockdown eases up as ecommerce has the ability to support, not replace, the retail store.
How can this technology continue to help retailers in 2021?
These online selling platforms have been crucial for the retail sector so far and will continue to be a massive support in the new year. The advantage of an ecommerce store is that it does not need to replace the brick-and-mortar store.
Merchants can offer an omnichannel experience to customers that supports their new behaviours in a coronavirus world. Buy online, pick up in-store (BOPIS), try in-store, and purchase online and other offline/online hybrid shopping experiences can become more widespread. This can help to cut down significantly on queue times, which can be a major issue in big clothing stores, and offers a more hygienic option for payment, which is on many consumers minds right now.