Fashion's new frontiers: what's next for retail?
Google Glass has potential to “get people to warehouses and boxes faster and help customers navigate,” says Jamie Murray Wells
The massive growth in internet use and consumer connectivity is one of the biggest trends - and challenges - facing retailers right now. Insight on embracing change from Google UK, as well as tackling the "massive problem" of online returns, and the emergence of 3D printing as a worrying new front for counterfeiters, were all discussed at a recent industry conference.
If they don't embrace change, established businesses "will disappear from consumer consciousness," explains Jamie Murray Wells, industry head of retail at Google UK, noting that the 16-year-old online search giant is also having to change as it positions for the future.
"We're trying to stay ahead and move our own search proposition into the realm of 'assist and suggest'," he told apparel industry executives at the recent 'Fashion's New Frontiers - What's Next?' conference organised by the Association of Suppliers to the British Clothing Industry (ASBCI), adding: "You have to go mobile as that's where consumers are going."
Perhaps the biggest trend influencing all businesses right now is the growth in internet use, with the number of global IP addresses set to surge "at least 12 times between now and 2020 - when a further 8bn people will be connected to the internet," Murray Wells explains.
On top of this, the most important thing from a retail perspective "is the proliferation of devices" with an average of three to four devices per person. "That massive explosion in the amount of connected devices has meant that retailers have many more opportunities to talk to customers, not just at work, but at home."
With today's consumers "more empowered and a lot more connected than they've ever been before," Murray Wells suggests retailers should look at how brick-and-mortar and online stores can play to their strengths.
A lack of choice in physical stores means shoppers may want to "research and browse on their mobile, visit virtual shopping aisles and virtually try something on, filter through hundreds or thousands of products very quickly if they want to." Online can also provide more information, perhaps helping to find the nearest store or the cheapest online supplier, as well as "making things quick and beating queues."
Another part of the consumer proposition is "finding stuff," and the increasing use of mobile devices "means we can start to put people into context - where are they, when are they, what device are they using? How are retailers responding to that and driving people to stores?" Location technology lets retailers know where customers are thanks to their phone, which could be used to trigger special "countdown" promotions, so the faster the shopper responds the higher the discount.
Conversely, the high street still has a role to play in "instant gratification" and enabling consumers to get their goods quickly, perhaps using click & collect, as well as offering a tailored and "more inspiring" offering - something "online struggles with."
But some online retailers are starting to base product decisions on query trend data from Google "and using it in a sophisticated way to move very fast. This is certainly something to look at regularly."
The "influencers" have also changed, with vlogger (video blogger) Zoella having 6.2m subscribers on YouTube listening to her views on fashion and beauty - more than watch the ITV News. "If you're a brand and want to advertise or talk to someone, would you want to reach her targeted audience or put an ad next to ITV? This is an interesting phenomenon."
The over-riding message: "The world is moving incredibly fast. If the internal clock of the retailer isn't moving as fast as the external clock, they're losing. So the internal clock of the business has to move faster than the external clock of the rest of the world."
Vicky Brock, CEO of Clear Returns, is on a mission to tackle what she describes as the "big black hole of knowledge" around e-commerce return rates. In the UK, one in three fashion items sold online is returned, creating "a massive problem, with huge implications." Research also shows that 80% of first-time customers who return an item "never shop with you again."
"It's costly in having to over-buy to keep stock in, getting it cleaned, logistics and the impact it has on customer experience," she explains. "The reason online returns have to be tackled is that they're growing faster than sales - and because you could sell the same amount of stuff and make a lot more money."
Although 43% of retailers capture online returns data, they do nothing with it. "But it's a huge opportunity. You can keep trying to sell more to make your numbers, or you can help your customers keep what they bought in the first place. It makes business sense."
Returns are driven by a combination of customers, service, products and marketing, with each retailer having a different balance across these four areas.
"We look at consumer groups very specifically; we don't just look at what's returned, but who's returned it. Retailers need to listen when a high value shopper returns something as it's likely to be a delivery, fulfilment or quality/product issue. It's the good customer, or the first-time customer who's experiencing the sharp end of product issues. Typically in fashion we see about 10% of products causing 50% of returns."
Clear Returns is tackling this with an "early-warning system that captures any bit of return information (such as online reviews or forms received at the warehouse), aggregates it all together, bundles it into key pillars of reasons for return, and then looks at a particular product category, size, or time, to see if something abnormal has occurred."
Items returned for poor quality or not as described "are ranked as very actionable, so after five returns there's still time to get it re-shot, write a review - "it comes up a bit small" or "more pink than you think" - as long as it's early enough in the product sales cycle to have an impact. The worst thing that can happen is if you've had 10,000 back and they're sitting in a warehouse still to be processed."
Having now built a set of characteristics about high-returning items, "we're in the position that we're moving from an early warning system to a prediction system so that we can make an accurate prediction at category - and item - level at what it's likely to return," Brock explains.
"That's when it gets from how do we dispose of this stock to how do we go forward. Increased customer satisfaction has got to lead to increased profitability."
Future proofing brand identity
While there's no doubt the challenge of counterfeiting is a global issue, the goalposts are changing continuously, according to Peter Nunn, associate at law firm Mishcon de Reya. Counterfeit goods account for an estimated 5-7% of global trade - worth US$500-600bn - and, in the UK alone, around GBP3bn is spent each year on counterfeit clothing and footwear.
But the problem is no longer confined to the luxury sector. Nike was the most counterfeited brand last year, and mid-market labels such as Abercrombie & Fitch and Superdry are increasingly being targeted. Fakes here are harder to identify, and because they are sold at a price point closer to the genuine article, consumers may not spot the difference.
A worrying new front for counterfeiters is 3D printing, Nunn explains. Counterfeiters are already able to 3D print simple, synthetic imitations of designer accessories such as belt buckles, sunglasses and jewellery, but they can also print designer logos "which opens up the opportunity of 'finishing' in the UK, which is very hard to detect until the items are on sale."
He also notes that design files are a "valuable commodity" that could be hacked into, eventually enabling counterfeiters to 3D print the "exact same garment cheaply using the exact same technology, making it even harder to detect counterfeits."
In terms of intellectual property, 3D products can infringe design right in the garment, the design file, and any trade marks reproduced on the product. The last point is particularly relevant to logos that appear on the garment in places other than the label: "If someone is 3D printing these they'll automatically be printing off the trademark at the same time and you can use the infringement act against them. We're also likely to see more people subtly incorporating trademarks into their garments," Nunn explains.
He advises that it will be essential to protect electronic design files to stop them being hacked - but there is even an opportunity to get ahead of the trend and offer design files for sale.
"The idea being that in the future people will want to print garments themselves at home or at their local store as the technology becomes more widely available, and whoever is the first to capitalise on that could find themselves becoming to 3D fashion design files what iTunes has to the music industry."
Click on the following links to see what else was discussed at 'Fashion's New Frontiers - What's Next?'
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