European fashion retailing

By Utku Tansel LLB, MBA

www.linkedin.com/ in/utku-tanselllb-mba-98231636

Spending on clothing and accessories is mostly discretionary, and fashion is one of the key areas that consumers cut back on during the pandemic. So, it was not surprising that it was one of the industries impacted most negatively by COVID-19. Reduced demand for clothing and the temporary closure of shops during the COVID-19 pandemic has impacted predominantly storebased retailers hard, reflected in revenues of the leading clothing and footwear retailers, with ecommerce sales insufficient to offset falling store revenue. Moreover, consumers spent more time at home, resulting in a reduction in the demand for clothing, except for loungewear and more casual styles.

A New Dawn Brought by Shifting Consumer Priorities

Nevertheless, as highlighted in Mintel Clothing Retailing - Europe – 2021 report, emerging trends and shifts in consumer behaviour, including the rising popularity of second hand, growing sustainability awareness, increasing tech usage as well as booming online sales, create unmissable opportunities for retailers. From supermarkets to sports good retailers, fashion has always been a focus for development for a number of different non-specialists increasing the competition for specialists. However, the biggest effect has been the tremendous growth in online shopping. The ongoing pandemic has accelerated growth in the online market overall by several years even in markets where online shopping for clothes was already an established behaviour, engaging more people and forcing retailers to up their game. This underlines how crucial it is for clothing and footwear retailers to have a comprehensive, competitive online presence, particularly as there can be no certainty when it comes to the prospect of further restrictions.

Second-hand takes off

One of the most prominent trends in retail at the moment is the increasing popularity of buying vintage or second-hand clothing. We have seen a plethora of launches from retailers of all kinds vying for a space in this market. Over one-third of French consumers said they have used secondhand clothing apps to buy clothing. In addition, our research highlights that while one-third of Spanish and 29% of Italian consumers have not done this in the last 12 months, they would be interested in doing so in future demonstrating the considerable potential for growth in this area. In the UK, Harvey Nichols has launched a new resale drop off destination in its Knightsbridge store, in partnership with Kids O’Clock. Customers can drop off their children’s pre-loved clothing, and receive a £20 voucher to spend on the new Harvey Nichols childrenswear floor in return. US fashion retailer Urban Outfitters launched Nuuly Thrift, a second-hand garment platform, giving consumers the opportunity to resell unwanted clothing items. Nuuly Thrift will be a sister platform to Nuuly Rent, the subscription rental service for women’s clothing launched by the brand in 2019. Online fashion platform Zalando launched a maintenance and repair service platform as part of its strategy to extend the lifespan of at least fifty million pieces of clothing by 2023 and reduce textile waste. In cooperation with the retail app Save Your Wardrobe, Zalando offers customers a digital platform through which they can repair clothes and shoes. Consumers can go to selected local workshops and tailors for this, but the collection and return of repaired items is handled by Zalando’s own logistics service. The service is initially being tested in Berlin and Düsseldorf, but is expected to be rolled out to more markets in the future. In June 2021, Sellpy, the second-hand fashion platform backed by Swedish retail group H&M, launched in another 20 European countries (Spain, Denmark, Finland, Belgium, Czech Republic, Estonia, Croatia, Hungary, Italy, Luxembourg, Latvia, Poland, Slovenia, France, Lithuania, Portugal, Bulgaria, Ireland, Romania and Slovakia). The rapid expansion comes just months after Sellpy, which launched in Sweden in 2014, entered Austria and the Netherlands in early 2021 and Germany in mid-2020. In January 2021, online retailer Very launched a second-hand partnership with fashion re-sale platform Re-Fashion encouraging customers to donate unwanted clothes to be re-sold on the Re-Fashion resale site to give them a second life. There are three drivers behind these initiatives. Of course, there is a value element to second-hand purchasing, particularly in the premium and designer segments, allowing access to brands and styles but at a much lower cost. Secondly, the drive to create a more sustainable fashion market, with brands increasingly under pressure to create more looped systems and be clear in the ways they are improving processes. Finally, ‘thrifting’ has also become a fashion trend in itself, with some younger shoppers eschewing the fast-fashion draw in favour of repurposing items to create a more unique style.

Empowering sustainable choices

Hand-in-hand with second-hand is the growing awareness of individual consumption on the planet, which is leading to a desire to minimise the impact on the environment. This area looks to be one with great prospects for retailers with agreement with 46% in Spain, 45% in the UK, 41% in Germany, 40% in Italy and 33% in France saying they have not bought sustainably-made clothing, but would be interested in doing so. An increasing number of fashion retailers are producing their own ranges of sustainably- and ethically-produced garments. For example, Mango has established as one of its key objectives to increase the proportion of sustainable fibres in its collection, which is why, by 2025, 100% of the cotton used in its garments will be sustainably sourced. At the same time, it has expanded its eco-friendly product offering, launching a sustainable denim collection for women, men, and children and most recently in September 2021 introducing Alter Made, a new sustainable brand aimed specifically at eco-conscious consumers. The company said that the new brand is centred around sustainable and ethical initiatives and its launch was due to customer demand for more responsible fashion. Products in the range are made by local experts from sustainably sourced materials and designed to be long-lasting and high quality. UK retailer Marks & Spencer has announced its plans to become net zero by 2040, starting with a 34% carbon

Retailers experiment with new formats/collaborations to create a point of differentiation

With non-essential stores being forced to shut for large periods of 2020, retailers have taken the opportunity to expand into new store launches during 2021. H&M collaborated with actor John Boyega, creating a menswear collection available in selected stores and online from the end of October 2021. Pieces included are made using sustainable materials and includes cotton that is recycled from textile production waste, post-consumer waste or organic, as well as recycled nylons and polyesters. The collection includes a patchwork denim jacket made up from collected denim and remade, as well as an organic cotton striped shirt and 100% recycled cotton jeans. As the brand celebrates its centennial year, Gucci unveiled pop-up stores across three major cities in Europe, namely Berlin, Milan and London. These neighbourhood-centric temporary spaces aim to offer multidimensional experiences to visitors, with each store reflecting the city it is sited in. Each location stocks a selection of Gucci 100 ready-to-wear, footwear and accessories, as well as a Gucci café. As these popups look to mirror their respective home city, each contains elements specially designed for the location. Gucci Circolo Berlin, which was located in the historic building Berlin-Kreuzberg, focuses on the house’s ties to music, with an interactive photo booth as well as listening lounge. The London site centres around a curated bookstore. In September 2021, Adidas by designer Stella McCartney released its newest AW21 collection and Earth Explorer campaign, as part of a continuing collaboration. The launch includes a number of sustainable material innovations, with items either using materials with a minimum of 40% recycled content, or an upper containing at least 50% parley ocean plastic. The collection also includes a Sleeping Bag Puffer Jacket which uses 100% recycled polyester, as well as WIND.RDY fabric, which is designed to protect against weather conditions. British lifestyle brand Barbour has collaborated with luxury British interiors House of Hackney for the first time to launch a womenswear collection for autumn/winter 2021, coinciding with the tenth anniversary of House of Hackney’s natural world inspired designs. The collection will be available in selected stores and online, and features three of House of Hackney’s distinct floral prints, together with Barbour’s traditional heritage style. emissions reduction by 2025, and a planned increase to 55% by 2030, as part of its wider decarbonisation process. The move comes as a relaunch of its 2007 Plan A scheme, and includes colleague initiatives, and the launch of its Green Network site, aimed at encouraging sharing ideas and innovations. Also covered is the launch of rewards for its Sparks customers for ‘shwopping’ pre-loved clothing; they can also receive a free treat through a QR code by donating clothes to Oxfam. In Spain, leading fashion company Inditex has made sustainability its number one priority, announcing that all of its Zara collections will be made from 100% sustainable fabrics before 2025, with its other brands, including Massimo Dutti and Pull&Bear, to follow suit. In September 2021, H&M launched its H&M Recycled Denim collection which is the brand’s most recycled collection to date. The products are made out of 100 per cent recycled fabrics, threads, labels and pocketing. Fashion retailer Primark announced that it is extending its clothing recycling service called ‘Textile Takeback’ to Austria, Ireland and Germany in October 2021, The scheme, which was launched in the UK in 2020, will be rolled out to 73 stores across Europe. Textile Takeback enables customers to recycle clothing and textiles, such as bedsheets and towels, from any brand, via collection boxes in stores which are then either reused, recycled or repurposed. Since its launch in the UK, Primark has prevented 23 tonnes of clothing and textiles from going to landfill. The company is targeting all the clothes it sells to be made from recycled/more sustainably sourced materials by 2030. In March 2021, Benetton revealed its new store concept in Florence, Italy featuring intensive use of sustainable materials and state-of-the-art, energy-saving technologies. The new store is part of a major sustainability project that the company is carrying out to consolidate best practices and improve its environmental and social performance throughout the supply chain. The 160-square meter, single floor boutique makes ample use of upcycled natural materials. The shop interiors are made with new materials created from textile industry scrap while the window displays make use of sustainable solutions that reduce the use of resources. Customers can choose from the wide range of Benetton sustainable garments in organic, recycled or BCI (Better Cotton Initiative) cotton, regenerated nylon, natural fibres, such as linen, and other sustainable materials. Overall, consumers increasingly want to know more about the products they buy, where they are from and how they are made. Indeed, Mintel’s Fashion & Sustainability: Inc Impact of COVID 19 – UK, 2020 report found that 37% of consumers care more about where fashion items come from now than before the outbreak. This highlights how both fashion retailers and brands need to make sustainability a growing focus while ensuring that their approach to becoming more sustainable covers all areas of their business. Using more sustainable materials for clothes and footwear that are less damaging for the environment is part of this journey. It will require retailers to invest in the latest innovations as well as in long-term partnerships with companies creating next-generation materials made from plants and textile waste.

The emergence of the virtual world

Our survey for Mintel Clothing Retailing - Europe – 2021 report confirms that some 39% of Spanish respondents and 31% in Italy said they have not tried on clothing items online virtually (eg using sizing tools, augmented reality) over the past 12 months, but would be interested in doing so in future. 16% of shoppers in both the UK and Spain have already tried clothing items virtually over the past 12 months. The pandemic has accelerated developments in this area as retailers and brands have had to find ways to engage with their customers while shops were closed and enhance the online shopping experience. Some examples include Ralph Lauren’s partnership with Zepeto, a social networking and avatar simulation app to launch an exclusive virtual fashion collection. The app lets users dress their own avatars in the new collection and socialise in the virtual world using customizable 3D avatars. In October 2021, leading fashion retailer H&M launched virtual in-store fitting features into a number of its stores in Berlin and Hamburg. As part of the initiative, customers are given a free virtual avatar, with their exact body measurements in the scanner of the store which allows them to try on around 30 items from a new collection. In Spain, leading Spanish brand Zara has rolled out an augmented reality experience in some of its flagship stores including Barcelona whereby customers using the Zara app on their phones can see models walking around the store and wearing clothes which they can then select and buy. It has also launched Store Mode, a function on the Zara app, that includes Click & Find, which uses geolocation to allow shoppers to find specific items in-store, and Click & Try, which allows shoppers to book fitting rooms which are accessed using a QR code. The tech-driven experiences sit well with consumers’ increasingly digitally-led habits, giving them the hassle-free online experiences they have come to expect from ecommerce, but the ability to see, touch and experience the product in person before committing to the purchase.