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Shopify president Harley Finkelstein shared three of the most impactful themes that emerged during BoF and Shopify’s series of global Executive Retail Forums in New York, London, and online at VOICES 2021, BoF’s annual event in Oxfordshire where global changemakers gather to discuss the future of the fashion industry. Watch the video above to learn more.
Taking place throughout 2021, business leaders from MatchesFashion, Ralph Lauren, Tom Ford, Browns, Bloomingdales, t.a., Allbirds, Neiman Marcus, Christopher Kane, Saks Fifth Avenue, Nordstrom, Alighieri, and Machine A were invited to connect under the Chatham House Rule to share insights and learnings, as well as market opportunities and challenges.
Shopify is in a good position to inform the fashion industry about retail trends that will help businesses navigate this period of change, as its partnership base now accounts for 10% of the total global e-commerce market share.
“During the Black Friday and Cyber Monday weekends in 2021, [Shopify] merchants saw $6.3 billion in sales. “That’s a 23 percent year-over-year increase,” Finkelstein said at VOICES in an interview with BoF’s Imran Amed. “It’s a stand-in for independent retail.” We’re attempting to arm the insurgents, entrepreneurs, and independents. They were victorious this weekend.”
Following are more details on the most common themes raised by Finkelstein, as gleaned from a series of global forums held in London, New York, and online.
New York, Insight 1: Mobile Browsing Shifts to In-App Commerce
According to the State of Fashion Report 2022 by BoF and McKinsey & Co., social commerce is one of the top three themes that will impact fashion executives’ businesses in 2022. Indeed, according to Shopify’s Future of Commerce 2021 report, 54 percent of younger consumers who buy from independent retailers learn about brands through social media, and, more importantly, 28 percent of younger consumers now transact through those social media channels.
At each Retail Forum, retail leaders discussed the rapidly growing importance of in-app commerce. “[Retail’s] second, large paradigm shift, from mobile browser to native apps,” one executive in New York said. Consumers are spending more time online, but in fewer apps, implying that social networks and marketplaces are capturing a larger share of e-commerce spending.”
It’s no longer all about the return on investment. Now it’s all about brand perception.
Short online videos are the primary driver of data consumption, accounting for more than three-quarters of all data consumed in 2020. As a result, businesses must invest in new content on a regular basis, but the focus of return on investment is shifting.
“It’s not as much about the return on investment as it once was. “Now it’s all about brand sentiment,” one attendee said. “We’ve worked with the research firm on engagement, awareness, and consideration — those kinds of purpose and equity scores.” It’s not about going straight to the checkout; it’s about how this content generates engagement. Is this the type of audience we want to attract in the future?”
Another participant talked about how their acquisition strategies had to change in order to take advantage of the emerging social and gaming spheres.
“Shifting to a social-first photography is a big deal for us.” We now know that we should shoot social media first. […] We make certain that everything we do is adaptable. We’re going to put it in this environment.”
Supply Chain Disruption necessitates collaboration and innovation, according to Insight 2.
According to The State of Fashion 2022, nearly half of global businesses experienced supply chain disruptions in 2021, with one out of every eight severely impacted. Similarly, supply chain disruptions were cited by 49 percent of fashion executives as the most important theme affecting their businesses in 2022.
Finkelstein discussed how transparency with customers can effectively prepare customers for delays in his VOICES interview, citing Black Friday sales as an example. Adding that, while supply chain shocks are felt by all businesses, some are better able to weather them than others.
“While supply chain complexity is putting pressure on every business, the story is missing that many direct-to-consumer brands have significantly higher margins than larger brands.” Black Friday shopping began 19 days before [the event] last year. It began about 28 days ahead of schedule this year. Brands ensured that consumers knew what to expect by prioritizing [consumer trust].”
The first Retail Forum focused on the increasing complexity and cost of supply chain and distribution management. New economic challenges accompany new and extensive logistical challenges. One attendee shared, “Containers are now seven times more expensive.” “However, designers have already costed out their goods [prior to the price increase].” We’re not only sticking to the price point we sold nine months ago, but we’re still dealing with chargebacks and the consequences of shipping late at global prices.”
The focus of the discussion on how the attendees are adapting to the operational challenges was on technological but long-term solutions. “I’m most interested in blockchain technology,” one participant said. “It’s the only way we’re going to have a sustainable world.” “Forget about sustainable fabrics; if your product is on the blockchain, people will know where it came from.”
Making less but meaning more is the new supply chain perspective.
“We’re all trying to speak to the consumer while managing our supply chain at the same time,” said another executive, recognizing the complexities that all retailers face. “The new supply chain perspective, in my opinion, is about making fewer things that mean more. The future is about reducing the supply chain and rethinking cycle counting while amplifying other aspects […] working to better include and [collaborate] with your supply chain partners.”
The need for and willingness to collaborate in order to support one another was a recurring theme throughout the forum. Another attendee stated, “Shipping, supply chains, […] these are the areas where brands can form alliances.” “Those are [topics] where brands can work together to effect change.”
Insight 3: Consumer Choice and Flexibility Are Critical to Success, London
Choice is now a critical consideration for success, and retailers must look across the entire value chain to increase flexibility and find opportunities for efficiencies, from point of access to sales channels and operations.
“Brick-and-mortar stores are transforming into fulfillment centers, and online stores are transforming into catalogs.” At VOICES, Shopify’s Finkelstein said, “Retail is blending, which is a good thing.” “Our most recent integrations and partnerships [demonstrate] our commitment to the concept of retail being everywhere.” From TikTok to Instagram and, more recently, Spotify, the best brands understand that digital and physical are inextricably linked. “It’s all just retail,” says the narrator.
The theme of the Retail Forum in London was operational and channel flexibility, and executives started by discussing the long-term importance of bridging online and offline commerce capabilities. Many participants mentioned the need to repurpose physical stores as fulfillment centers, with one asking, “How can we spin out more distribution centers for the next pandemic or crisis?”
The best brands recognize that the digital and physical worlds are inextricably linked. That’s all there is to it in terms of retail.
Another speaker emphasized the physical store’s ability to capture valuable data on customers’ purchase paths and shopping habits, with a connected app tracking intent and fostering more meaningful interactions within brick-and-mortar locations.
Many businesses had turned to online communication tools and apps to connect associates with end-customers, necessitating the upskilling of retail associates. One attendee stated, “The way the customers felt that service and brand came through was massively enabled by technology, and that carried us through the pandemic so successfully.” “That consistency has been maintained across all channels.”
However, a number of attendees stated that the main challenge is the “hostility between stores and e-commerce,” prompting them to come up with new ways to incentivize retail staff through a commission structure.
Indeed, despite the global industry’s ongoing disruption and the complexity of innovation, independent businesses must adapt in order to survive. The forums had a consistent upbeat and action-oriented tone.
“[Shopify] is as bullish as ever for the future of retail, commerce, and brands,” Finkelstein said at VOICES. We’ve seen what customers want, and we believe the rebels will triumph.”
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