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August 18, 2022

Key drivers for growth in the global online apparel market

The metaverse, technology, 'phygital retail', and transparency online have all been flagged as key trends influencing the global online apparel market.

By Beth Wright

A sustained desire to purchase apparel online following the closure of bricks-and-mortar stores in the midst of the Covid pandemic will continue to boost online spend in the years ahead, a new study shows.

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The Metaverse is becoming a reality – adapt to meet it

Although the term resists single definition, the metaverse can broadly be described as a virtual world where users can meet, work, play, shop and socialize in real-time within simulated scenarios. The theme has gained traction following Facebook's rebranding to Meta, prompting enterprises to consider how they can seemingly develop economies, trade with other companies, and form alliances in new and imaginative ways as the metaverse use cases and applications grow broader. This is subsequently encouraging businesses across sectors to begin developing capacities related to the metaverse experience, foundation, tools, and user interfaces. Simultaneously, the impact of the COVID-19 pandemic has accelerated the technology adoption rate, thereby increasing the expectations of stakeholders. Amid all such developments, the metaverse is projected to influence multiple sectors with user engagement, collaboration, training, and learning being touted as some of its early use cases. GlobalData examines how the innovative adoption of emerging technologies can accelerate the advent of the metaverse ecosystem. This report explores our in-house data to provide our clients with insights into how various companies are driving the immersive ecosystem’s growth with their innovative solutions.
by GlobalData
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The global apparel market grew 18.7% to US$456.8bn in 2020 as the pandemic forced retailers to shut stores in an attempt to stem the spread of the virus, and the trend is set to continue, according to a report compiled by Just Style’s parent company, GlobalData.

‘Global Online Apparel Market & Forecasts to 2025’ states the global apparel market is forecast to grow by 59.2% between 2021 and 2025 to $821.4bn in 2025.

The report explores the key drivers and hot issues that savvy apparel brands and retailers should tap into as a means of succeeding in the space both now and in the near future.

Global online apparel market drivers

The report outlines four key drivers for the global online apparel market:

Long-term hybrid working
Post-pandemic, many businesses have implemented hybrid working models in a move the report authors say allows the online channel to retain its appeal as consumers can continue to take advantage of home delivery options. 

Equally, less time spent in the office means consumers are less likely to visit nearby city and town centre stores throughout the week, GlobalData notes.

Desire for convenience
The pandemic encouraged consumers to value their time so many are now seeking more convenient ways to shop. Savvy apparel brands have recognised this desire to spend more time socialising and are investing further in their online platforms to boost efficiency and improve the shopper experience by adding fulfilment options such as Click & Collect and third-party pickup.

Last month, UK value fashion retailer Primark announced it will introduce a Click & Collect service in the UK towards the end of the year, after witnessing a surge in traffic to its new website.

The company said in June, the Click & Collect trial will take place across 25 stores in the northwest across an expanded range of children’s products.

Influx of older consumers shopping online
Meanwhile, as bricks-and-mortar retail was forced to close, many consumers who had never shopped for apparel online before were forced to try it for the first time. The report explains these consumers are typically older and less digitally literate, so are more accustomed to shopping in-store.

However, this demographic is now much more open to browsing and shopping online for some products, so brands must ensure they are making their online proposition accessible to all generations, particularly those whose consumer base is largely composed of older shoppers.

Widespread use of apps
The report also points to the use of apps for online shopping as becoming more prevalent globally, particularly as many apparel brands have strengthened their capabilities in response to an accelerated shift to online.

Brands including Nike and Zara are integrating the use of apps with physical stores, streamlining the in-store experience for consumers, and encouraging sales through the app, explains GlobalData.

“On social media apps, the growing use of in-app shopping features and shoppable livestreams will make it easier for shoppers to purchase online, particularly as more time is now spent on social media in the wake of the pandemic,” the report states.

The report also explores the key trends, influencing the global online apparel market, including the metaverse which has become a buzzword in the industry as more brands realise its potential.

“Proactive brands have already dipped their toes into this new area through various means such as gamification, Non-Fungible Tokens (NFTs), and creating virtual apparel to dress avatars in. The future commercial opportunities from the metaverse are significant, and apparel brands must establish their position now if they want to be key players in this alternative reality, which could feasibly become part of consumers’ day-to-day life,” the report authors note.

Among those exploring the space are Spanish fashion retailer Mango, which claims to be the first brand to merge the physical, digital and virtual worlds, sporting goods specialists Puma and Adidas, and US fashion company Ralph Lauren.  

The report also notes how technology can help mitigate growing return rates, pointing to investments by Asos and Inditex’s Zara to assist consumers with size selection, and membership programmes which can help drive brand loyalty and boost engagement.

“An increasing number of brands, such as Nike, Adidas, and H&M, are offering free membership programmes via their websites and apps to deepen their connections with customers,” GlobalData says in the report. “Membership schemes create a sense of community among shoppers and help integrate the brands into more aspects of their lives beyond purchasing and wearing items. Membership schemes also allow brands to collect valuable data on their consumers and drive loyalty through personalised recommendations and constant communication.”

Another key trend is ‘phygital retail’, or the trend of integrating digital features into stores. 

A function on the Zara app allows shoppers to ‘click & find’ the exact location of a product instore via an RFID tag in addition to booking fitting rooms and a ‘click & go’ feature that allows products to be reserved and picked up in just 30 minutes.

Elsewhere, Swedish fashion retailer H&M Group recently rolled out a host of tech-enabled shopping experiences across its Cos stores in the US, including smart mirrors that offer personalised styling recommendations and virtual try-on.

H&M Group said the launch of its new in-store technology-based shopping experience is part of its wider aim to build more relevant and meaningful relationships with consumers.

The report also suggests transparency online is a growing trend and explains it helps brands capture conscious consumers’ attention.

“As consumers become more environmentally and ethically conscious, they want to learn more about the manufacturing processes of the products they buy,” the report authors note, adding brands can do this through a breakdown of prices and materials online as done by US apparel retailer Everlane. The company details the exact cost of each step in production and transportation on each product page.

Other hot issues or key trends listed in the report include strengthening distribution functions, with GlobalData pointing to moves by the likes of Asos, Gymshark, JD Sports, and M&S investing in distribution, and social media marketing, which it says can help brands stay competitive.

Drilling down

GlobalData apparel analyst Darcey Jupp tells Just Style exclusively: “While in-person shopping has now returned across the world after temporary pandemic closures, the appetite for online apparel shopping will persist, as many consumers prefer the convenience and choice the online channel offers. However, with more players gaining prominence in the digital space, it is vital for brands to innovate their online offer to stand out.”

She points out that as consumers are spending more and more time on their phones, keeping up to date with social media trends, and their global variations, will be vital to engage with the lucrative Gen Z consumer.

Furthermore, she says these young shoppers are more inclined to participate in membership schemes and build brand loyalty, as the community aspect built on social media transforms into consumer-brand connections.

Jupp sees the metaverse as being a key talking point in the apparel industry, yet its true potential is still unknown.

She says: “Launching NFTs and partnering with games such as Roblox are good ways for apparel brands to dip their toes into the metaverse, and players such as Nike and Adidas already have numerous projects under their belts. While the metaverse in its current form is unlikely to become a widely used selling channel, successful projects are good marketing tools to encourage more consumers to engage with their physical products and boost sales.”

Strategies for success in the online apparel market

Finally, the report identifies a series of strategies for success in the online apparel market, listing five tips for those hoping to succeed in the space.

Integrate developing technologies
While technologies such as augmented reality and NFTs are revolutionising the global online apparel market, GlobalData says brands can also integrate technology through less-intensive means such as partnerships with games like Roblox, warning those that fail to innovate are likely to fall behind.

Replicate online experiences in stores
Embracing phygital retail will be important for multichannel brands, particularly as more consumers return to stores after lockdowns. Taking advantage of app features and scannable QR codes streamlines the shopping experience and can help transfer sales online if a product is out of stock instore

Grow fulfilment offer
As consumers seek greater convenience, apparel brands must ensure their online fulfilment options are flexible to suit their consumers. Offering options such as next day delivery, Click & Collect and third-party pickup, as well as free delivery with a minimal spend, is essential for brands to remain competitive and desirable.

Membership schemes
While membership schemes can encourage repeat custom through exclusive benefits such as discounts and limited-edition collections, brands can also harvest important consumer data through these schemes to help shape future business decisions

Informative product pages
Increasing diversity among models in product imagery will increase confidence with purchasing online and reduce returns rates, while including detailed product information for each product will help engage conscious consumers and help shoppers envision products online.

Click here to access the report in full.

Related Companies

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The Metaverse is becoming a reality – adapt to meet it

Although the term resists single definition, the metaverse can broadly be described as a virtual world where users can meet, work, play, shop and socialize in real-time within simulated scenarios. The theme has gained traction following Facebook's rebranding to Meta, prompting enterprises to consider how they can seemingly develop economies, trade with other companies, and form alliances in new and imaginative ways as the metaverse use cases and applications grow broader. This is subsequently encouraging businesses across sectors to begin developing capacities related to the metaverse experience, foundation, tools, and user interfaces. Simultaneously, the impact of the COVID-19 pandemic has accelerated the technology adoption rate, thereby increasing the expectations of stakeholders. Amid all such developments, the metaverse is projected to influence multiple sectors with user engagement, collaboration, training, and learning being touted as some of its early use cases. GlobalData examines how the innovative adoption of emerging technologies can accelerate the advent of the metaverse ecosystem. This report explores our in-house data to provide our clients with insights into how various companies are driving the immersive ecosystem’s growth with their innovative solutions.
by GlobalData
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