The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
At VOICES 2021, BoF’s annual event in Oxfordshire where global changemakers gather to discuss the future of the fashion industry, Shopify president Harley Finkelstein shared three of the most impactful themes to emerge during BoF and Shopify’s series of global Executive Retail Forums in New York, London and online. Watch the video above.
Held throughout 2021, business leaders from companies as varied as MatchesFashion, Ralph Lauren, Tom Ford, Browns, Bloomingdales, t.a., Allbirds, Neiman Marcus, Christopher Kane, Saks Fifth Avenue, Nordstrom, Alighieri and Machine A were invited to connect under the Chatham House Rule to share insights and learnings with each other, as well as the opportunities and challenges they discern in the market.
Shopify is well placed to inform the fashion industry on retail trends that support businesses to navigate this time of disruption — its partnership base now represents 10 percent of the total global e-commerce market share.
“[Shopify] merchants saw $6.3 billion in sales during 2021′s Black Friday and Cyber Monday weekend. That’s 23 percent year-on-year growth,” said Finkelstein, in conversation with BoF’s Imran Amed at VOICES. “This is a proxy for independent retail. We’re trying to arm the rebels, the independents, the entrepreneurs. This weekend, they were the winners”.
Below, BoF shares further insights within the most prevalent themes raised by Finkelstein, drawn from the series of global forums that took place in London, New York and online.
Insight 1: Mobile Browsing Shifts to In-App Commerce, New York
BoF and McKinsey & Co.’s State of Fashion Report 2022 found 37 percent of fashion executives cite social commerce as one of the top three themes that will impact their business in 2022. Indeed, in its Future of Commerce 2021 report, Shopify found 54 percent of younger consumers who purchase from independent retailers discover brands via social media and, critically, 28 percent of younger consumers are now going on to transact within those social media channels.
The rapidly scaling significance of in-app commerce was discussed by retail leaders at every Retail Forum. One executive in New York called the shift “[retail’s] second, large paradigm shift, from mobile browser into native apps. Consumers are spending more and more time online, but in fewer and fewer apps, meaning social networks and marketplaces are taking a larger share of the e-commerce spend.”
It’s not necessarily about the ROI as it used to be. Now, it’s brand sentiment.
Online, short videos are proving the main driving force behind data consumption, accounting for more than three-quarters of data consumed in 2020. As a result, businesses need to continually invest in new content — but the focal points for return on investment is shifting.
“It’s not necessarily about the ROI as it used to be. Now, it’s brand sentiment,” said one attendee. “It’s engagement, awareness, consideration — those kinds of purpose and equity scores that we’ve worked with the research company to do. It’s not about clicking right into the buying — it’s more about how this content is creating engagement. Is it the right audience that we want in the future?”
Another attendee discussed how their acquisition strategies have had to pivot in order to effectively leverage emerging social and gaming spheres. “The big thing for us is shifting to a social-first photography. We now know [to] shoot social first. [...] We make sure that what we’re doing is adaptable. This is the environment that we’re putting it in.”
Insight 2: Supply Chain Disruption Requires Collaboration and Innovation, Online
The State of Fashion 2022 reports that around half of global businesses suffered supply chain disruptions in 2021, with one in eight severely affected. Similarly, 49 percent of fashion executives signalled supply chain disruptions as the top theme to impact their businesses in 2022.
In his VOICES interview, Finkelstein highlighted that transparency with consumers can effectively prepare customers for delays, using Black Friday sales as an example. Adding that although supply chain shocks are widely felt, some businesses are better able to weather them.
“While supply chain complexity is putting pressure on every single business, the missing part of the story is that a lot of direct-to-consumer brands have much stronger margins than larger brands. Last year, we saw Black Friday shopping start 19 days ahead of [the event]. This year, it started about 28 days ahead. In prioritising [consumer trust], brands ensured that consumers knew what to expect.”
The increasing complexity and cost of supply chain and distribution management was a topic that dominated the first Retail Forum. With new and extensive logistical challenges come new economic challenges. “Containers are now seven times more expensive,” shared one attendee. “But designers have already cost out their goods [before the increase in cost]. Not only are we sticking to the price point that we sold nine months ago, [...] we’re still facing the pressure of chargebacks or accountability of shipping late, global prices.”
In discussing ways in which the attendees are adapting to the operational challenges, the focus was on technological but sustainable solutions. “I’m most interested in blockchain technology — the only way that we are going to have a sustainable world,” said one participant. “Forget about sustainable fabrics — to be on the blockchain, people know where your product is from.”
The new supply chain perspective is about making less, but meaning more.
“We are all trying to speak to the consumer and manage our supply chain at the same time,” said another executive, acknowledging the shared complexities experienced by all retail players. “For me, the new supply chain perspective is about making less, but meaning more. The future is about reducing the supply chain, rethinking cycle counting, but amplifying other aspects […] working to include and [collaborate] with your supply chain partners more effectively.”
Throughout the forum, the need and willingness to collaborate to support each other was a consistent theme. “Shipping, supply chains, [...] these are the areas where brands can form alliances,” said another attendee. “Those are [topics] where brands can come together and actually force change.”
Insight 3: Flexibility and Consumer Choice Is Fundamental to Success, London
Providing the customer with choice is now a critical consideration for success and requires retailers to look across the entirety of the value chain to increase flexibility and find opportunity for efficiencies from point of access to sales channels and operations.
“Brick-and-mortar locations are becoming fulfilment centres and online stores are also becoming sort of catalogues. Retail is blending, which is a good thing,” said Shopify’s Finkelstein at VOICES. “Our most recent integrations and partnerships are [indicative] of this idea of retail being everywhere. From TikTok through to Instagram and, more recently, Spotify — the best brands really understand that there’s no silo between digital and physical. That’s all just retail.”
The Retail Forum in London centred around the theme of operational and channel flexibility, and executives began by discussing the long-term necessity of bridging online and offline commerce capabilities. Many cited the need to recalibrate physical stores to operate as fulfilment centres, with one participant asking: “How can we spin out more distribution centres for what might be the next pandemic or crisis?”
The best brands really understand that there’s no silo between digital and physical. That’s all just retail.
Another attendee highlighted the physical store’s ability to provide powerful data capture on consumers’ paths to purchase and shopping habits, with a connected app tracking intent and fostering more meaningful interactions within brick-and-mortar stores.
Many businesses had turned to online communication tools and apps to connect associates directly with the end-consumer, requiring retail associates to upskill. “The way the customers felt that service and brand came through was massively enabled by technology and that carried us through the pandemic so successfully,” said one attendee. “That continuity across channels has been maintained.”
But a number of attendees cited the main challenge lying in the “animosity between stores and e-comm,” leading them to ideate new ways of incentivising the retail staff with a commission structure.
Indeed, despite the continuing disruption faced by the global industry and the complexity of the innovation, independent business must adopt to survive. The tone of the forums was consistently upbeat, and action-orientated.
As Finkelstein concluded at VOICES, “[Shopify] is as bullish as ever for the future of retail, commerce and brands. We’ve seen what consumers want — and we think the rebels are winning.”
This is a sponsored feature paid for by Shopify as part of a BoF partnership.