Fashion has always been something of a paradox: a leading-edge influence on what people wear, while at the same time an old-school supply chain that maintains a significant lag between when the designs are shown and the retail sales floor. The catwalk is changing. Mobile is changing the economics of fashion and the impact is significant.
Mobile on the Runway
This story first appeared in the April 27, 2016 issue of WWD. Subscribe Today.
In today’s economy, people want their goods right now. Like shoppers everywhere, high-fashion customers live in a state of constant connection. Even at a runway show, they compare and review clothing online as the model wearing it swishes past.
Recent high-profile runway shows from brands like Diane von Furstenberg, Rebecca Minkoff and Tory Burch have answered the call for a much shorter delay between demonstration and delivery. Their buy-now-wear-now tactic demonstrates that consumers are no longer content to wait four to six months for designs to arrive in-store.
Tom Ford agrees: “The current way of showing a collection four months before it is available to customers is an antiquated idea and one that no longer makes sense.”
During the recent New York Fashion Week, Diane von Furstenberg hosted an interactive showcase in her New York studio, where attendees mingled with the models and then chatted with their host — smartphones in hand, ready to buy.
Compressing the timeline between initial exposure on the runway and hitting stores poses a significant challenge for retailers who used these displays as an opportunity to decide what the brand should mass produce and what the department stores and boutiques should order and purchase.
Buy-now-wear-now not only places the power in the hands of the consumer, but also brand owners, like Burberry, who arrived prepared to fulfill orders and deliver immediately. They are discovering two essential truths: direct-to-consumer is the new black, and mobile is the language of choice.
Mobile and Return-Based Economics
The apparel industry, like many other types of consumables, was intended to follow a primarily unidirectional process. Customers buy something and they take it home. Retailers keep the difference between its cost and the sale price, and everyone is happy. The concept of returning an item has often been seen as unwelcome, eating into margins through additional labor, damaged goods and restocking. In the analog age, that’s precisely what they did. But not anymore.
The new mobile retail economy is changing this dynamic substantially, highlighting returns as an opportunity to do more business rather than being an albatross. Vendors who catch onto this trend generate greater revenues by the mere fact that a customer who enjoys a pleasant return experience is more likely to buy additional merchandise while in the store. From a numbers perspective, this could mean the difference between making 50 cents on the dollar in a traditional sale to making $1.20 on the dollar through in-store impulse or cross-sell purchases that accompany a return.
The retailer’s online arm can cash in equally easily on this modernized approach to returns by implementing a “Buy Online, Return In Store” feature. This encourages sales from people who prefer the convenience of online shopping and then generates physical foot traffic that would never otherwise have materialized. (Many retailers currently remain unable to support BORIS because their systems are specific to discrete channels, with inventory allocated to those channels, paired with store associate compensation plans that work against an agile and optimized customer experience.) Only the most innovative retailers are leveraging returns as upsell opportunities.
The old-school mail order model has also been reborn as a high-touch white-glove, return-friendly experience. Companies like Trunk Club deliver customers a box of apparel curated by a personal stylist based on member preference data. This exemplifies effortless mobile shopping — essentially clothing as a service. This model, too, factors in a proactive and innovative return policy. Rather than expect the customer to be 100 percent satisfied with every item in the box, the expectation is that at least one item out of three will be sent back.
This illustrates a game-changing factor of mobile commerce. Rather than perceiving returns as a sunk cost, they become a valuable source of user data and a springboard for ongoing customer engagement. As consumer expectations evolve, we can expect to see retailers use data to offer customers even more tailored services and generate opportunities for continuous monetization.
The use of “Return-based Economics” covers instant-delivery and return-handling costs in exchange for prominent placement of their products or access to customer information. Essentially, the fashion economy has transformed from moving goods from designer to shopper to a multidirectional trade of services, data and brand exposure.
The growing power of mobile consumers and their preferences for customized service and product has transformed the experience on both sides. It also energizes retailers to match these value-added services, both online and in-store, using data to curate a user’s experience and to demonstrate that they just might know the consumer’s preferences better than the shopper does.
Mobile Mindshift Means More Satisfied Customers
These trends of mobile commerce reveal a more dynamic marketplace populated by engaged, connected consumers. Mobile is the thread that will bind fashion and consumers together: prêt-à-porter becomes prêt-à-acheter or “ready-to-buy.” It’s a new way of doing business that any designer, manufacturer or retailer is welcome to participate in — if they fine-tune and speed up their game.
Stephan Schambach is considered one of the pioneers of e-commerce with the launch of Intershop online shopping software in 1995. He led Intershop and Demandware to IPOs. As founder of NewStore, Schambach is looking to solve the omnichannel problem facing retailers and brands.