Shopping online e-commerce

Climb aboard if you’re not already on this train. Apparel had the greatest increase in online buyer penetration of any retail industry: the percentage of all e-commerce consumers buying apparel online has grown 4 points to 51 percent in the 12 months ending October 2017.  That four-point increase was the highest of any industry, and apparel now ties with consumer technology for the highest online penetration rate, according to NPD’s Checkout, a data source which analyzes actual e-commerce receipt information.

This should send a signal to retailers that if you’re not fully focused on the online channel, it’s time to sit up and pay attention. Here’s why: my estimate is that three-quarters of the growth we’ve seen in the online apparel channel is the result of the investments retailers have made in their e-commerce capabilities. I’d say that the rest of the growth is attributable to the consumer’s increasing comfort level with buying apparel online. As of the 12 months ending October 2017, online apparel sales have grown to represent more than 20 percent of total industry dollars. So apparel retailers who don’t start sharpen their online game are potentially missing out on capturing the majority of the channels growth potential.

Price, selection, timing and delivery are as important for online apparel retailers as they are for any online retailer. But there are some unique areas of online apparel identified in NPD’s Checkout e-commerce data that shouldn’t be ignored. These include:

Demographic changes.

The stereotype of the older consumer is that she’s not as comfortable buying apparel online because she needs to connect physically with the product through size, fit, touch and feel, but our data shows otherwise. In the year ending October 2017, although we saw a slowdown in apparel purchase frequency among the 55-and-older crowd, we still saw steady increases in the number of overall consumers in these age brackets.

Apparel has done a better job of helping sell online to the younger consumer — a consumer who, from toddlerhood, was accustomed to seeing products bought online. Retailers need to fine-tune and target their offerings to communicate with each different generation in the way that set would like to be addressed.

Niche categories are on the rise.

Outerwear, dresses and intimate apparel — all niche markets — have been gaining more attention from shoppers in the online environment, and continue to do so. In traditional retail, these are the categories that have helped pull customers into the store; now, counterintuitively, niche categories have become the area where the stores are pushing the customer online. Why is this?

Niche categories’ success online is driven by comfort level, availability and maybe most important — especially in swimwear and outerwear — online retailers are able to maintain a constant, year-round, 24/7 presence. Stores don’t always carry bathing suits and parkas, and when customers need these things, they need them right away.

Remember, part of the apparel story is about price, and part is about timing. Offering the right product at the right time, or the right product all year, is something that retailers need to pay attention to in order to succeed.

Frequency of purchase indicates more customers are testing the online waters.

NPD’s Checkout e-commerce data found that 77 percent of total buyer growth in e-commerce apparel was driven by “light” buyers who make an average of one to five purchases a year. This indicates that more people who previously wouldn’t have purchased clothing online are starting to dip their toes into purchasing apparel online. With all the deals constantly barraging their inboxes, even slow adopters figure they’ll try some of them out.

Bottom line: a lot of online apparel’s growth is going to come from the light user, and retailers who want to be successful will lean on the convenience factor to convert them into heavier users — and to understand and cater to the light users, they need to look at the business their competitors are capturing in order to micro-tune their offerings.

Pricing and delivery.

In the coming year, online apparel retailers will need to focus most on speed of delivery. As online consumers become more accustomed to the idea that virtually everything is available at a discount, and the best price is to be found online, they will turn the focus of their demands toward getting the product they ordered online faster and faster. Soon retailers will be called on to outdo themselves in meeting their customers’ expectations with a “white knight” sensibility.

What separates retailers who excel at online apparel from those who flounder as a mere convenience is the ability to create product that resonates with the consumer — selection and curation — along with the ability to deliver and exceed expectations. As the previously identified light users, who will be a source of much of the growth for online apparel, look for confirmation of a site’s validity and worthiness, ratings become a critical component of success. Just as these consumers are paying attention to ratings, so should retailers and brands — understanding which sites score well and what resonates with consumers.

Success in online apparel demands constant innovation and creativity — and increasingly, the ability to objectively measure, compare and understand the nuances within the market — what worked, what didn’t work and why.

Marshal Cohen is chief industry advisor, retail, at The NPD Group Inc., and is a nationally known expert on consumer behavior and the retail industry. He can be reached at Marshal.Cohen@npd.com.

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