In the three years since Boo.com failed so spectacularly, a pall has descended over the notion of selling apparel online. But that hasn’t stopped specialty stores, cataloguers, and certain department stores, which already had the infrastructure in place, from quietly going about their business. In the last three years, these retailers have proven that selling clothes over the Web is an important and profitable business.
Last year, online sales of apparel and accessories reached $10.2 billion, and the category is expected to ring up sales of $11.6 billion by the end of this year, according to an annual study conducted by Forrester Research for Shop.org, the association for online merchants. More important, close to 80 percent of online retailers (in all categories) showed a profit last year, up from 70 percent in 2002.
“Online retailing has arrived as a profit engine with double-digit operating margins,” said Shop.org chairman Elaine Rubin in a prepared statement.
The success of so many big names in the online apparel game — from Lands’ End to J.C. Penney to Neiman Marcus — has changed the view of online stores, as well as their role in the apparel industry. As the business becomes more established, offline retailers are realizing not only that the Internet is a significant sales channel that makes an important contribution to the bottom line, but also that it is crucial for brand marketing and for driving sales to physical stores. In particular, customers are using the Web to “preshop,” a new behavior in the apparel industry that involves using the Internet to check out trends and what’s available at a variety of stores online, plan a wardrobe and shopping trips, prioritize spending and then actually go to the stores in person to feel and try on merchandise.
“Chief executive officers of apparel retailers take the Web very seriously,” said Marshal Cohen, chief industry analyst at the NPD Group of Port Washington, N.Y. “They look at it as another mode of business which offers the opportunity to expand into a wider range of products and opportunities, as well as one that’s an entity unto its own — meaning it has its own idiosyncracies, and running it requires a whole other set of knowledge. Online is in most cases as big if not bigger than any individual store’s performance.”
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