Fashion and apparel companies are positioning themselves for business recovery efforts as states’ stay-at-home orders lift and economies begin to reopen. The so-called new normal brings many considerations for business leaders.
It could be several months before consumers return to or approach their pre-COVID-19 spending behaviors. According to a recent poll by Coresight Research, approximately 52% of respondents say they won’t go back to their pre-COVID-19 shopping habits until at least five months from now. When they do, online purchasing will be their first choice.
In addition, approximately 66% of respondents said they would likely shop differently after returning to their somewhat normal lifestyles. Consumers have experienced Amazon Prime with its seamless ordering and fast, free delivery. Business leaders will need to consider whether this is something fashion brands must offer to be competitive now. Keep in mind that 92% of Coresight’s poll respondents use social media and 48% of them make purchases on social media, with clothing, footwear and accessories as the most shopped products on social media platforms. It seems fashion brands will need to consider a social media strategy as an important tool for success going forward.
To dive deeper into these recovery topics, RSM, as well as representatives from the American Apparel & Footwear Association and investment bank MMG Advisors, recently hosted a roundtable with retail, fashion, beauty and home furnishings leaders to understand what’s on their minds and next moves.
“What we learned was that many companies are shifting strategies to meet consumer needs amid a tightening economy,” said Carol Lapidus, RSM’s consumer products practice leader and one of the roundtable facilitators. “However, they must also review their supply chain as well as improve liquidity to survive and succeed.”
Summarized from the roundtable discussion, key themes that retail, fashion, beauty and home furnishings executives discussed included:
- How are buying behaviors changing as a result of COVID-19? While the growth of e-commerce was quite prevalent before COVID-19, pandemic-related stay-at-home orders have accelerated the consumer need for even more robust e-commerce solutions. Speed and convenience are a must and consumers will continue to expect this. Another interesting trend that has emerged is consumer abstinence. As quarantine and stay-at-home orders have curtailed movement and nonessential buying, consumers have learned to live without, forgoing the luxuries they may have had in their lives, becoming accustomed to a simpler way of life, perhaps one that is aligned with a more sustainable lifestyle. Time will tell if this particular trend has staying power, but it’s certainly something businesses are watching.
- Will there be a shift in supply chains? Many fashion and apparel executives discussed the need to become less dependent on traditional supply chains, particularly those based in China. Some are looking at supplier alternatives, such as those in other Asian countries or even options in other parts of the world, but cost efficiencies and margin squeeze must be considered. A majority of the world’s supply of fabrics and raw materials comes from China; trade and policy changes may be needed as well to support improved supply chain costs and strategies.
- Will business structure need to shift? Many fashion brands have traditionally used the department store channel as the predominant way to reach consumers, mixing with e-commerce to a lesser extent. However, shoppers have shifted their preferences, and it seems fashion and apparel businesses will likely need to do the same. Some brands are resetting and restructuring to be smaller, faster and smarter in this tightened economy, and e-commerce strategies and direct-to-consumer channels are likely needed to get there.