The fashion trade is changing and for some time now there has been no way around digitization, whether with e-commerce or hybrid in stationary retail. Klaus Harnack from the consulting company Hachmeister + Partner explains how retail can prepare for these changes in order to continue to pick up customers.
As a keynote speaker at the BTE congress “Fashion-Emotion 4.0”, he put forward eight theses on digitization in the fashion industry. The fashion retailers Lodenfrey, Jaacks Fashion and Frey show what it looks like in practice and what difficulties the fashion trade is currently encountering.
1. The fashion trade is no longer just a fashion trade
In response to the growing online trade with big players like Amazon and Alibaba, the big fashion retailers that only offer clothing have to deal with “new, exciting ranges,” said Harnack at his presentation. Therefore, successful fashion retailers would rely on the lifestyle component and integrate it into the physical store and online shop. These include, for example, a beauty segment, a literature corner and sportswear activities. “It’s about creating that tension,” says the expert. “5000 square meters of ‘clothes’ is simply boring.”
How fashion providers implement this approach:
2. Business model must be digitized
The increase in efficiency through digitization is the opportunity for fashion retailers to grow.
The pressure to achieve positive results is currently so high that it is only possible to grow by increasing efficiency through digitization. One of the problems in the fashion industry is that there is no collaborative planning between retail and industry. In addition, the period from product idea to delivery is too long. It has to be implemented more quickly, otherwise people will “still be envious of the Zaras of this world for years to come,” said Harnack. Areas must be played on together.
The digitization of the never-out-of-stock area could be a first step. Due to the predictability of this area, systems based on artificial intelligence can be used, which relieve the purchasing department. According to Harnack, the aim is to halve the sales costs and pass on the savings to retailers and the product.
Cohesion between industry and retailers is also important to Ralf Mager, but the Lodenfrey CDO still sees problems in meeting delivery dates.
3. Retailers are “reach extenders” for the brands
Although there are brands like Nike that can get by without fashion retailers and play D2C “sometimes ruthlessly against retailers”, Harnack is certain that 95 percent of the brands that “top dogs and department stores” need as a connection to their customers. However, this link between brand and customer must also be guaranteed by customer knowledge and suitable tools such as social media and your own app. “In the end, CRM and customer data will be more important than merchandise management data,” the expert continues.
4. The middle between e-commerce and brick-and-mortar retail
Of course, having your own online shop also plays an important role in the area of digitization. However, many retailers “stumbled into the e-commerce sector from the stationary business”, observed Harnack. In order to drive traffic to the online shop, various and often expensive campaigns such as SEO measures and discounts were carried out. According to the expert, the middle between stationary trade and e-commerce – social media, CRM and customer apps – was neglected.
Jaacks Fashion opted for the full package: social media marketing, newsletter and app with digital customer card and bonus check system. Currently, 75 percent of customers also use the app, explains Ralf Jaacks. Another feature that bridges the gap between physical and digital is push notification for app users. The message appears on the devices after the physical purchase, giving customers the feeling that retailers continue to care about them after the store, according to the Jaacks owner. The fashion retailer from Timmendorfer Strand integrates a questionnaire that aims to improve customer advice.
5. Sales employees are the center of omnichannel
In order to take a different path to the big online retailers, fashion retailers should focus more on employees in their omni-channel approach, according to Harnack. The sales staff become stylists who can advise customers individually – with access to customer profiles including purchase history, preferences and social media accounts as well as AI-based recommendations. In addition, the staff can use their smartphone to query stock levels and process payments, which saves on the cash register system.
For Lodenfrey digital boss Mager, it is important for a digital approach in brick-and-mortar retail that the sales staff take the advice into their own hands. It should interact with the customers using the digital possibilities of the store such as touchpoints before the customers interact too much with their own devices, which could otherwise distract them.
6. Digital brand spaces are the future of multi-brand retail
However, this competence of the sales staff must exist in the special brand areas within a fashion retailer. It is important for customers that they feel just as well advised in this area as they do in the brand’s own flagship. Therefore, employees must be familiar with the brand’s digital storytelling in order to pass it on to customers.
But when it comes to the range, the expectations of the fashion retailer’s sales area are just as high as for the brand’s own flagship. According to Harnack, these flagship areas should therefore serve as the center of the stores, which are surrounded by an individually curated area.
In a pilot project, Frey analyzes the surface performance. With the help of Ariadne Maps technology, the retailer can, for example, measure even the smallest sub-areas. By analyzing the length of stay and frequency of customers, the company can better align its sales area, explains Frey’s marketing director Sebastian Sprödhuber.
7. Professionalism and quality of data
The foundation of the digital orientation is the professionalism and quality of data in the article master and image data, in customer data and supplier data. This can improve cooperation with industry. In addition, detailed trend analysis is important to understand exactly where the trend is going for an individual piece and to make better purchasing decisions, according to Harnack.
8. Cross-channel observation
Thanks to the omnichannel approach, it is no longer enough to just look at stationary retail, says Harnack. It’s also important what gets clicked on social media and does well in e-commerce. These three areas must therefore be monitored in parallel and tracked with specific key performance indicators in order to better control the range.
Mager is convinced that fashion retailers must be flexible in their structures. At Lodenfrey, the e-commerce business was gradually built up as a separate area alongside the parent company. It was only through Corona that the company came to understand the e-commerce business and the connection to stationary retail, which brought structures such as marketing and logistics together. According to Magner, the industry should not think in terms of channels, but like its customers.