Why Fashion Adn Retail in Same Industry
Illustration past Diego Blanco
The fashion manufacture is no stranger to innovation. 2PM reports that thirteen of the meridian 20 DTC brands are in the fashion and clothes industry. Brands similar Skims, Allbirds, and Gymshark make the shortlist, proving the crushing power way brands hold in the ecommerce infinite.
Digital innovation, rise globalization, and changes in consumer spending habits have catapulted the way industry into the midst of seismic shifts. Merely, no thank you to the accelerated retail apocalypse acquired by the coronavirus, the fashion sector is more unpredictable than always.
This guide shares the statistics, trends, and strategies shaping the ecommerce fashion market place in 2022 and across, giving y'all an updated look on where we are and where nosotros're heading.
- Industry-wide data
- The COVID impact
- Clothing and apparel
- Shoes segment
- Accessories and bags
- Jewelry and luxury
- Ecommerce fashion manufacture: trends and strategies for 2022
Ecommerce mode manufacture: statistics
1. Industry-wide data
According to Statista, the ecommerce fashion industry's chemical compound almanac growth rate (CAGR) is tipped to reach 14.2% betwixt 2017 and 2025, with the manufacture hitting a $672.71 billion valuation past 2023.
Sales of apparel, footwear, and accessories catapulted in 2021, hit $180.5 billion in the The states lonely. That's tipped to grow by xiii% this year, with consumers set to spend $204.9 billion on fashion items online.
Driving this growth are five notable opportunities:
- Expanding global markets exterior the Due west
- Increasing online access and smartphone penetration
- Emerging worldwide center classes with disposable income
- Harnessing the power of celebrity and influencer culture
The biggest threats to established brands include:
- The death of brand loyalty due to market saturation
- Pressure from consumers to use ethically sourced and green manufacturing materials
- Technological advancements with virtual worlds, such as NFTs and the metaverse
We'll go into strategies to combat these issues after. For now, allow'south examine how these large numbers play out in manufacture sub-verticals.
two. The COVID impact
The coronavirus pandemic wreaked havoc on the final few years' manner ecommerce predictions. When lockdowns were enforced globally in March 2020, 27% of United states consumers said they planned to spend "somewhat" or "a lot" less on luxury and fashion items than they had budgeted prior.
Despite this, McKinsey named information technology the "perfect storm for fashion marketplaces." Brands like Zalando reported a 32% to 34% growth in gross merchandise value (GMV) during the 2d quarter of 2020. Fast-fashion brand Shein saw its valuation double to $xxx billion, making information technology the earth's largest online-only fashion retailer.
Ane branch of way retail that has taken off is athleisure. Athleisure'south market size was valued at $155.2 billion in 2018—a figure that'south ready only to ascension.
Casualwear remains dominant on Amazon, with athleisure predicted to have a CAGR of vi.7% from 2019 to 2026 and reach $257.1 billion. The loungewear and sleepwear market shows similar signs of growth, poised to increment by $xix.5 billion between 2020 to 2024.
The result? Way brands with an ecommerce store maintain a stronghold in athleisure, like Nike and Lululemon, have reported incredible growth over the course of the pandemic.
3. Clothing and apparel
Lower digital barriers to entry for all article of clothing merchants offering the opportunity to marketplace, sell, and fulfill orders globally and automatically. As a result, worldwide revenue and revenue per user (ARPU) are both projected to grow.
In the US alone, the apparel and accessory industries accounted for 29.five% of all ecommerce sales in 2021. In Europe, information technology'southward expected that past 2025, each consumer volition spend $999 on mode-related items over the course of a twelvemonth.
four. Shoes segment
As a segment of ecommerce fashion, the shoe industry saw similar peaks in marketplace value. In global market size, the footwear segment will increase from $365.v billion in 2022 to $530.iii billion in 2027.
Asia is dominating this segment, property 54% of the global footwear market (compared to just 14.8% for Europe and N America, respectively).
Athletic footwear is also a growing segment, tipped to generate $63.five billion in 2023—a 23% increase from the $51.4 billion valuation in 2020.
5. Accessories and bags
Not surprising, the bags and accessories segment—although yet growing at a stronger charge per unit—will likewise come across double-digit growth. The fashion accessory segment will have a CAGR of 12.3% between 2016 and 2026, with Asia-Pacific being the fastest growing marketplace.
Those projections actually brand numberless and accessories 1 of the healthiest segments of ecommerce fashion, despite its accented numbers being the smallest.
vi. Jewelry and luxury
In 2020, the global jewelry market was valued at a total of $228 billion. It's forecasted to reach $307 billion past 2025, with ecommerce sites expected to facilitate xx.8% of sales in the luxury goods category this twelvemonth. Luxury watches are gear up to take a huge slice of that revenue—customers will spend $nine.3 billion on them in 2025.
The growth (despite coronavirus-related recessions) mirrors other financial crises. McKinsey predicted that consumers will "render more chop-chop to paying full price for quality, timeless goods, as was the case later on the 2008–2009 financial crunch."
Increasing affluence in Asia-Pacific and in the Eye East collection upwards the average acquirement per luxury good consumer to $313. Despite luxury goods sales seeing sluggish growth, at 3.4% annually, McKinsey forecasts indicate that ecommerce could triple in sales over the next decade—reaching €70 billion ($79.v billion) by 2025.
The biggest threat is the affordable luxury market: Should the manufacture offer luxury goods at multiple price points to grow the marketplace overall? Or will affordable luxury dilute or erode the high-terminate luxury market—dampening consumer confidence that what they are buying is "truthful luxury"?
Ecommerce fashion industry: trends and strategies for 2022
The above data points offer a wealth of growth opportunities for fashion and wearing apparel retailers—despite the huge shifts in consumer behavior, global trade, and "normal" day-to-mean solar day lives for millions around the world.
Below are some of the latest ecommerce trends that y'all tin work into your long-term fashion sales strategy.
- Personalization is a balancing act
- Into the metaverse
- Brand-building over paid ads
- Sustainability at the forefront
- Social commerce
- The transition back to brick-and-mortar
Personalization is a balancing act
Personalization has long been hailed as the secret of modern ecommerce. By showing items a shopper was previously interested in, or retargeting them based on the activeness they've had with your ecommerce website, you're providing a tailored online shopping experience—i that convinces them to purchase.
Our research shows that 44% of customers are OK with brands using their personal data to personalize messaging and improve the client experiences, such as product recommendations. Simply there's a fine line.
Online shoppers are increasingly concerned about their privacy. Too much personalization can exist creepy, hence why brands that over-personalize are three times more likely to be abandoned by shoppers.
Culture Kings is the perfect case of how fashion ecommerce brands can rest under- and over-personalization. Instead of customizing the experience downwardly to "start name" tags on the website, information technology built four global storefronts to sell in unlike currencies. The result? More than half of the fashion brand'south revenue now comes from its ecommerce business.
I believe nosotros'll see more than local brands branching out and offering customized shopping experiences for international customers to remain competitive. This will include things like geo-targeted domain names, pricing in local currency and local production aircraft, with the help of 3rd-party distribution or visitor owned warehouses."
—Leanne Lee, Marketer at Blue Bungalow
Into the metaverse
The definition of "metaverse" is open up to interpretation. The not-quite-defined hope of virtual societies is still in development, though the idea is that people tin can deport daily activities—like connecting with friends, playing a game, and purchasing products—through an online, virtual world.
One blazon of item that functions both in and out of the metaverse are non-fungible tokens (NFTs)—unique digital tokens that can simply be owned by one person, usually paid for in virtual currency like crypto. Data shows $87.03 1000000 was spent on NFTs on January 1, 2022, alone.
Celebrities like Reese Witherspoon were mocked for predicting, "In the (nigh) future, every person will have a parallel digital identity. Avatars, crypto wallets, [and] digital goods will be the norm."
In everything we do, we're helping the client imagine. We want them to imagine being the man in every picture. To imagine the states being their stylist. To imagine, 'That could be me wearing those clothes.' We're not and then much curating content as curating imagination."
—Kevin Dao, Co-founder and CEO/CCO at ORO LA
In reality, fitness dress brands like Under Armour are experimenting with NFTs in the retail space. Its Steph Curry collaboration reproduced shoes the basketball star wore when he broke the NBA record equally all-time superlative three-point shooter.
Digital NFTs were released alongside the physical product launch. Owners of the NTFs could most wear the shoes in three metaverses: Decentraland, The Sandbox, and Gala Games.
Retailer Forever 21 partnered with Roblox to create virtual stores in its metaverse, accordingly named the Forever 21 Shop City. Players run the virtual store equally if it was their own, and purchase merchandise for their avatar through the game.
With Forever 21 Shop Urban center, our goal is to expand how we appoint with customers, extending our presence and product in new ways."
—Katrina Glusac, chief merchandising officer at Forever 21
Fast-style retailer PrettyLittleThing also recently began showcasing products on virtual models. The brand posted the news to its Instagram page, turning its new "avatar in the metaverse" concept into a contest to spark conversation.
Just like Fortnite community inspired Balenciaga's designs, fashion companies tin can movement towards becoming creative collectives. Each collection can have its own identity within the brand universe, reputation, and community. Collectives can focus on the actual product designs and/or on content creation, with associated royalties based on item/content performance, delivering returns to creators in perpetuity and ensuring that a make attracts the very top talent."
—Ana Andjelic, Founder of The Folklore of Business concern
Brand-edifice over paid ads
To say fashion ecommerce is saturated would be an understatement. Consumers have more pick than e'er before—making information technology difficult to bulldoze loyal customers dorsum to one particular online store.
Unfortunately, that means brands are competing against thousands of competitors when advertising their products to their target market. Some 41% of brands plan to increase their investment in paid search. This rush of budget meant that between the second and third quarters of 2021, the cost per click (CPC) of paid search ads increased by 15%.
It's an increasingly bleak picture when combined with the "death of the cookie." Engineering science giants similar Google plan to restrict brands from collecting cookies in its browser by 2023. Some 28% of technology decision makers expect this alter in regulation to hinder their 2022 growth goals.
1 culling to expensive advertising and limited customer information? Brand building. Studies bear witness companies that invest in branding see more organic acquisition and customer retention rates. They too find information technology easier to increase profits since customers of stiff brands are more receptive to price hikes.
I apparel make leaning into this strategy is Noémie. Yuvi Alpert, its founder, Creative Director, and CEO, says the brand balances both performance marketing and brand building: "We wanted to move abroad from typical short form ad that did not draw an emotional connectedness to our products, which is why nosotros diversified our promotions and the channels we utilized to feature narrative ads.
"Narrative or storytelling promotions had share rates of up to twenty%, and in recognizing this fact, we decided to enquiry the best ways to implement that strategy.
"By creating storylines almost our customers, and and then placing those in content rich formats such every bit blogs, newsletters, and emails, we found dramatic increases in appointment rates over the typical imprint ads or short videos on social media.
"In addition, they were far more than cost effective and could easily be repurposed. Past moving to a storytelling technique, we increased engagement rates while bringing down our CPA."
Sustainability at the forefront
The fashion manufacture is no stranger to criticism. Fast-fashion brands especially are (sometimes rightly) chastised for the methods they employ to industry and produce inventory.
In calorie-free of these criticisms making mainstream news, plus consumers' increasing commitment to eradicate climate change, some 52% of shoppers say they're more than likely to purchase from a company with shared values.
An important value for modern style consumers? Sustainability. Statista's research shows 42% of global customers purchase eco-friendly and sustainable products. Certain countries are leading the trend—online shoppers in Vietnam, Bharat, and the Philippines purchase sustainable products more often.
With people spending more time online, it is going to facilitate faster exchange of that information [about suppliers]. We've become more aware of how things that happen in far flung places affect us and the planet. That's been a existent key change we've seen."
—Grace Beverly, Founder of TALA
Purchasing habits are also shifting off the back of the pandemic. Some 65% of customers program to purchase more durable mode items, with 71% planning to go along the items they already have for longer. The style resale market is booming for this reason—growing 11 times faster than traditional retail and tipped to reach a $77 billion valuation in the next 5 years.
Patagonia is one wearing apparel make with sustainability rooted in its brand values. The retailer actively campaigns for environmental causes, and demonstrates its commitment to sustainability with its Worn Wearable plan. Shoppers are encouraged to buy and sell used items instead of ownership new.
We're proud to offer our customers a conscious shopping option with sustainable, affordable pieces that are all handpicked and on trend, but we believe every make needs to take responsibleness, and push themselves to become more than circular."
—Kate Peters, Managing Managing director of Beyond Retro
Social commerce
Social media plays an integral role in the ecommerce marketing strategy of many online mode brands. That'south hardly surprising—our smartphone habit is out of command. The typical social media user now spends nearly fifteen% of their waking life glued to an online networking app.
Only the truth is: social media is no longer a place for shoppers to consume new way trends. Many social media platforms are evolving their business models to facilitate in-app shopping, helping online retailers reach customers actively in the purchasing frame of heed.
Social commerce sales are expected to near triple by 2025, with more than one-third of Facebook users planning to make a buy straight through the platform in 2022.
Unfortunately, most brands are plagued past a single sin. Andy Crestodina, co-founder of Orbit Media, describes the situation perfectly: "Nigh branded content is advertizing nether a sparse layer of information or entertainment. Scratch the paint, find an ad. It's the brand putting itself first."
Thankfully, manner and social media are a match made in ecommerce heaven. Even when it comes to explicitly "branded" content, and specially on Instagram.
Social media engagement rates for global manner brands are abysmal:
- Instagram: 0.68%
- Facebook: 0.03%
- Twitter: 0.03%
So, what types of content is working for fashion brands? Some 46% of consumers want to watch product videos before they buy. Platforms like TikTok and Instagram are praised for driving sales for large fashion brands since shoppers can visualize the product on a real person. Bonus points if it'southward a social media influencer they already trust.
Long gone are the days of celebrities beingness only someone y'all'd run into on TV. Today, anyone with a passion tin can get a celebrity in the social media niche—partly due to the ascent of entertainment platforms similar Instagram, LinkedIn, and Twitch.
Beyond influencer marketing on social media, multi-channel ecommerce integrates native selling off site to build straight buying paths in the places your audience spends their time. Social media platforms are creating their ain commerce features—like Shopping on Instagram, Facebook Shops, buyable pins on Pinterest, and more.
Livestream shopping is as well in its heyday. Nordstrom launched its ain livestream shopping channel last year. It's in good company: 81% of companies plan to increase or maintain their investment in livestream selling to drive sales over the coming yr.
Why? Because online brands are seeing conversion rates of up to 30% through Facebook and Instagram livestreams, along with lower product return rates.
My prediction is that in a couple years, the hottest part for a brand to hire is going to exist a head of alive shopping."
—Kevin Gould, Co-founder of Glamnetic
The transition dorsum to brick-and-mortar
The shopping experience is more circuitous than e'er—particularly in the fashion space. Some 22% of online returns happen because the product ordered online looks differently in the flesh. It's this never-ending claiming that'south driving many manner brands back into traditional retail.
The future is neither ecommerce or retail. It's just commerce. So the question becomes, 'How do you symbiotically integrate both channels?'"
—Hemant Chavan, founder of Brik + Clik
Data compiled in the Future of Commerce report proves omnichannel commerce isn't disappearing anytime before long. Mod consumers want both online and offline sales channels—and synergy between the 2:
- 54% of consumers are probable to look at a product online and buy it in a concrete store.
- 53% vision themselves doing the opposite: viewing products in-store and ownership it online.
- 55% of consumers want to browse products online and cheque what's available in local stores.
- Over fifty% of adult shoppers use BOPIS, with 67% adding extra items to their carts when they can pick them up immediately.
Brands investing in brick-and-mortar retail include Canadian fashion brand SMYTHE, which opened its store in Toronto. Afterward years of experimenting with pop-upward shops, Gymshark as well opened its first permanent flagship shop in cardinal London.
"A children's wear retailer I spoke to pivoted from in-store events to virtual shopping events via Zoom during COVID," says Kyle Monk, Manager of Insight, British Retail Consortium.
"Suddenly, they were having one member of staff walking around the store selling products to 2 to 300 people per call every week, instead of merely a few in person. Retailers who idea innovatively and pivoted thrived over the last menstruation."
Information technology'south no wonder 53% of brands are investing in tools that allow them to sell anywhere.
Want more most the state of ecommerce fashion?
The country of ecommerce fashion is developing more quickly than ever. What worked two years ago is outdated at present—largely due to consumer preferences changing, values becoming integral to the purchase decision, and footfall returning to brick-and-mortar stores.
Read our Futurity of Commerce written report and get the ecommerce trends, insights, and advice yous demand to succeed in 2022:
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