After a tough year of trading, everyone in fashion and apparel is hoping for a return to sales and revenue growth in 2021. So while the recent news about the amazing progress in COVID-19 vaccines offers genuine hope that an end to the pandemic is on the horizon, we shouldn’t let this justifiable optimism cloud the fact that a recovery in brick-and-mortar retail may take time to play out. Vaccines will take many months to roll out fully. And then you have to consider how long it will take for shoppers to feel comfortable coming together in busy retail spaces again after that.
Embrace change and adapt quickly
So the pandemic is set to continue dominating both the business and the consumer landscape in the short term. Retailers need to be prepared for e-commerce levels to remain elevated and store footfall suppressed throughout the holidays and well into next year.
In fact, it’s possible some aspects of consumer behavior may never return to the pre-COVID-19 world. Many people are now recalibrating their priorities and recentering their social and working lives around the home environment — a shift Accenture has called the start of “the decade of the home.” The long-term implications for fashion and apparel are still only really sinking in.
The result is that there are both short-term and long-term challenges ahead for this industry. But there are also significant opportunities for fashion and apparel brands that can embrace change, show operational flexibility and ensure their supply chains can adapt quickly to new circumstances.
Four priorities for fashion in 2021
There are four immediate priorities for the year ahead.
#1 Supply chains. Retail supply chains need to be ready for sustained increases in digital demand. That means continuing to invest in streamlined and connected digital capabilities across the whole value chain, right through to fulfillment operations. It also means rethinking traditional “linear” approaches to the supply chain, evolving it into a more flexible supplier network that will increase the organization’s resilience to future disruption.
The good news is that many retailers (and their suppliers) have already demonstrated they can do this. The whole sector has shown exceptional organizational flexibility in managing the disruption created by the pandemic to date. This now needs to be embedded and sustained over the longer term.
#2 Digital experiences. Retailers must ensure their digital experience is truly differentiating. It’s an obvious point, but when the whole world is shopping online, you need to do everything you can to stand out from the crowd.
For fashion retail in particular, there’s a real need to get away from the decades-old catalogue-like “grid” display that epitomizes so much of the online shopping experience. It’s functional, but it cuts out a great deal of what the apparel retail experience is actually about. That’s even more true for high-end brands, who traditionally rely on the luxury in-store experience they offer.
Now, thanks to advances in immersive technologies — 3D content, augmented reality, etc. — there are many ways brands can address this by translating the best parts of the in-store experience into a digital context. That includes, for example, providing an interactive three-dimensional digital representation of a flagship store, complete with high-definition imagery of a curated product assortment.
#3 Data-driven decisions. Retailers must be willing and able to use data to guide decision making. When the economic outlook is uncertain, it’s even more important to be able to sense changes quickly (whether that’s in supply disruption, demand volatility, consumer sentiment or anything else) and then respond effectively.
To do this at the speed and scale required, a retail business needs capabilities like linked data in the cloud, hyper-localized demand analytics and smart forecasting based on machine learning. All parts of the organization need to be getting up-to-date, accurate and insightful information on the current state of supply and demand.
This is all the more important for the highest-value customer segments. Put simply, you need to know, on a very granular level, who your most valuable customers are, where they live and what they want to buy — and how all these parameters are changing day by day.
#4 Social and environmental expectations. We know that a broad array of sustainability, environmental and social issues are driving more and more consumer purchasing decisions. We also know that employees, and indeed investors, are also paying much more attention to a fashion brand’s environmental, social and governance credentials.
It means ESG now impacts virtually every aspect of a retail business. So clearly defining the brand purpose through an ESG lens — and then living true to that purpose across all retail operations — matters more than ever. And with many retail brands having to fundamentally reexamine their costs to maintain profitability right now, this could be an ideal time to bring ESG into the heart of business decision making.
That could mean reassessing and widening the supply base while prioritizing factors like sustainability, diversity and inclusion. It might mean combining a cost takeout with a carbon takeout — reducing or eliminating split shipments could, for example, bring significant benefits to both the carbon footprint and the bottom line.
Flexible and adaptive retail
Adaptiveness will, above all, be the key for this industry in the year ahead. There is still so much that is uncertain about the future path of the pandemic and its long-term impact on shopping trends. Further changes and surprises are inevitable. Competitive advantage will therefore come from having the analytical abilities to understand those changes as soon as they happen — if not before — and from having the operational agility to respond just as quickly.
Jill Standish is senior managing director and global head of Accenture’s Retail Industry Group.