The fashion industry is one that is evolving. For decades, couture catwalks in Milan, London, and New York have defined what trends retailers will push next season.
With the rise of fast fashion in the e-commerce space, it became even easier to produce high-volume, low-cost garments that gave consumers the next big thing right away.
Now, however, consumers are chasing newer trends that offer more stable and timeless products. As more environmentally and value conscious consumers, Millennials and Generation Z are driving these trends.
Prior to the global spread of COVID-19, digital storefronts were rising in popularity, even among industry giants like Armani, Prada, Gucci, and Burberry.
As the pandemic spread, more and more brick and mortar stores locked their doors as regions prepared for the worst. it became necessary for apparel retailers to add branded online stores and e-commerce options to their omnichannel strategy.
Through the need for ecommerce fulfillment, the fashion industry learned how much they rely on the expertise of 3PL apparel distribution.
The fashion market is interconnected globally — meaning apparel brands often source low-cost manufacturing production in developing countries.
With 60 million workers employed, the apparel industry generated $1.9 trillion in global revenue in 2019.
With 2020, predictions for the fashion industry was already weak. As the pandemic kicked in, the industry saw the global supply chain slow down. With mandated lockdowns, manufacturing operations around the world felt the impact on their workforce.
As 2020 went on, “the average market capitalization of apparel, fashion, and luxury players dropped almost 40% between the start of January and March 24, 2020—a much steeper decline than that of the overall stock market,” according to McKinsey & Company’s The State of Fashion 2020 Coronavirus Update.
What followed was a striking number of bankruptcies for retailers. S&P Global reported 40 U.S. retail bankruptcies through July 2020—outnumbering total bankruptcies in 2019 and 2018. Fashion companies such as Brooks Brothers, Forever 21, Lord & Taylor, and Ascena Retail Group fell victim to bankruptcy filings.
As of now, coronavirus cases are surging worldwide. This means planning for future supply and demand remains difficult. These challenges are felt by not only suppliers and manufacturers, but also all across apparel fulfillment and distribution
This market uncertainty means predictions are in for a market slim down. The McKinsey & Company report, states, “We estimate that revenues for the global fashion industry (apparel and footwear sectors) will contract by 27% to 30% in 2020 year on year, although the industry could regain positive growth of 2% to 4% in 2021.”
To survive in a post-COVID-19 economy, retailers are most likely going to need an e-commerce presence.
According to Data Commerce 360, its 2020 Online Apparel report states that online apparel sales accounted for 38.6% of total U.S. apparel sales in 2019, and 100% of the growth in retail clothing sales.
Most analysists conclude, however, that a holistic omnichannel strategy that uses wholesalers, third-party retailers, and DTC as the path to maximized profitability.
McKinsey & Company reports that “Six out of ten people now use at least one digital channel in their shopping journey for an apparel garment. This has major implications for physical stores.”
A DTC model is an essential tool for tracking the customer journey. The benefits are difficult to achieve in an apparel fulfillment strategy built around third-party retailers only.
DTC models drive apparel fulfillment and distribution strategy for fashion brands by:
Personalization: From online stores to Instagram, fashion brands can create tailored visions of the customer experience. With branding, apparel assortment, and lifestyle marketing, there are many personalization opportunities.
This is best illustrated by this example — a DTC fashion brand that utilized Instagram to show what customers were wearing. By showing customer peers, the brand could include links to their products with options for in-store pick up.
Analytics: In today's competitive retail landscape, data is everything. With e-commerce storefronts, apparel brands can gather valuable data about their customers. This can range from shopping preferences to ordering experiences.
This allows companies a competitive advantage for the next round of product development.
Sustainability: With the call for more sustainable alternatives to fast fashion, higher-quality garments and timeless appeal are in style.
E-commerce and DTC complement sustainability initiatives while providing digital spaces to market to their customers.
Logistics: By removing the intermediary, luxury fashion brands can own everything from manufacturing to marketing to distribution. This reduces costs significantly while also expanding profit margins. With this approach, product inventory, apparel fulfillment, and distribution decision making are in their control.
However, owning your entire model means you have to understand every facet of the apparel supply chain — including product returns. Does your material handling provider have that kind of experience?
By outsourcing apparel fulfillment and distribution process to a leader in third-party clothing distribution, there are efficiencies and cost saving benefits to gain.
Matt Kaden , managing director at MMG Advisors, says in his op-ed The DTC Reckoning Is Real. What Next? “What DTC fashion and apparel brands need to do now is chart a new course of action that will lead to sustained business success. Well-capitalized retailers, manufacturers, and DTC holding companies present strategic partnership opportunities and a more realistic path to profitability for these brands,” says Kaden.
“Founders and executive teams at DTC brands should not underestimate the know-how that leaders who have managed through past crisis can provide, the scalability of established operating infrastructures or the force of robust balance sheets.”
It is clear that fashion brands should plan for today's volatile retail market — as well as the unpredictability of tomorrow.
SSI SCHAEFER provides e-commerce apparel fulfillment and apparel distribution solutions that make DTC options work for luxury fashion brands. As e-commerce is changing the game for fashion brands, DTC is fast becoming a regular part of omnichannel strategy.
Statista projects that the American apparel and accessories e-commerce market will generate $153.6 billion in revenue by 2024.
With this growth, apparel brands need a partner to help them scale their DTC fulfillment and distribution strategies.
SSI SCHAEFER is knowledgeable in the best practices for e-commerce fulfillment. Its solutions enable efficiencies with software and automation designed for apparel retailers.
The process starts with WAMAS®, by SSI SCHAEFER, a leading warehouse management system. This works as our control center.
Fashionable shoppers have the same order fulfillment and delivery expectations as other retail sectors — product availability with next- to same-day delivery.
WAMAS offers adaptability to both traditional and omnichannel fulfillment and distribution models. Best of all, it can integrate with fashion brands’ existing infrastructure and ERP systems.
With locations worldwide, SSI SCHAEFER offers fashion brands streamlined apparel fulfillment and distribution solutions for both in-house strategies or 3PLs.
By choosing SSI SCHAEFER, your e-commerce DTC strategy is paired with guaranteed efficiency, reliability, and scalability for the future.
Links:
https://luxe.digital/business/digital-luxury-ranking/most-popular-luxury-brands/
https://www.thefashionlaw.com/retail-woes-a-bankruptcy-timeline/
https://www.statista.com/outlook/244/100/fashion/worldwide#market-onlineRevenueShare
https://www.businessoffashion.com/articles/opinion/op-ed-the-dtc-reckoning-is-real-what-next
https://www.digitalcommerce360.com/article/online-apparel-sales-us/
https://www.supersuperagency.com/download/ecommerce-customer-experience-cx-guide-2020-pdf-download
https://qz.com/1418251/luxury-labels-like-gucci-and-cartier-going-direct-to-consumer/
https://www.abetterlemonadestand.com/direct-to-consumer-brands/
https://www.ssi-schaefer.com/en-th/market-sectors/fashion-logistics/fashion-81778
https://pages.ssi-schaefer.com/en-us/ecommerce-best-practice-guide-download