For those of us in the apparel, footwear, and retail business, we have been seeing headlines on the retail apocalypse in every major business publication for months. It’s true, 2017 was a rough year for our industry. Not only did we experience 21 bankruptcies, but we also saw more than 8,000 storefronts disappear. But is “doom and gloom” really the future of retail?
As we kick off 2018, I would argue that the current business environment is not the Armageddon. Rather, this is a big opportunity for the industry. We just have to be brave enough to take it.
Let’s look at the numbers. Despite a record number of bankruptcies in 2017, last year also had some telling positives for retail. Online sales continued to grow–the Singles Day event resulted in $25 billion in sales for Alibaba and $19 million for JD.com, while Cyber Monday saw record sales of $6.5 billion. At the same time, brick-and-mortar still owned the majority of total retail sales (online accounted for just under 10 percent of all retail sales in 2017) and businesses that began online continued to venture into brick-and-mortar—as seen by the Amazon purchase of Whole Foods, among others.
So, what does all this actually mean for you and your business?
It’s not too late to reinvent your strategy
Change isn’t easy, and as witnessed in the apparel and footwear industry, it can be painful. However, if we can learn anything from Charles Darwin–only those that are able to adapt will survive.
Here are a few areas to focus on:
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Amp up your tech. Dedicate resources to mobile. Increasingly, we live in a mobile world where customers want to buy product anytime and anywhere, meaning your brand experience needs to translate to a cell phone screen. Cyber Monday saw a record $2 billion of sales on mobile devices, and we can certainly expect to see this trend continue.
It’s all about the data. Data analytics play a key role in understanding customer preferences and enabling personalized messaging. Having the right data hierarchy and the team in place to act on these insights is critical.
Reimagine how you engage with customers. Successful retailers need to create and sustain an engaging, personalized experience. Stores aren’t going away, yet their role is changing. Physical stores still provide the unique opportunity for consumers to touch, try-on, and experience your brand and products. Think about how you can leverage your digital assets to drive traffic in stores, and vice versa. Remember, consumers don’t think along channel lines. They just think about the brand.
Product. Product. Investment in product innovation will continue to be of utmost importance going forward. Having a focus on creating unique and differentiated products, coupled with a compelling experience, will keep consumers coming back again and again.
Don’t forget about Washington
As if any of us could these days! Washington holds many tools that can benefit our industry, from opening new markets for our products, to reducing duty burdens and protecting your intellectual property.
Here are a few areas for you and your teams to keep an eye on in the coming months as you navigate commerce globally and at home:
Reducing duty burdens. As your sourcing teams look for ways to reduce costs, keep in mind that there are a multitude of policies designed to do just that, such as the Haiti HOPE program, the Miscellaneous Tariff Bill (MTB), and the Generalized System of Preferences (GSP). The textile, apparel, footwear, and accessories industry generates 51 percent of all duties collected by the U.S. government (totaling $15.5 billion), despite only accounting for six percent of total trade. Being engaged with Washington, and providing insights on how policies impact business, is essential to help lowering this duty burden.
Protecting your brand. While e-commerce has opened your business to a world of new customers, it has also made counterfeiting your brand exponentially easier. Counterfeit products, fake websites, and parasite brands continue to threaten the apparel and footwear industry. Communicating with agencies such as the Office of the U.S. Trade Representative and the Department of Commerce, among others, is essential in the global fight to protect intellectual property.
Fasten your seatbelts
All in all, 2018 will continue to be another year of dramatic change. The industry will face continued pressure to acclimate to shifting consumer expectations by trimming fleets, aggressively expanding digital capabilities, and rethinking experiences. While this process may be difficult, I fully expect to see plenty of success stories at the end of the year. This is truly a golden opportunity to be brave and bold.
Paula Zusi is global operations advisor, Retail Supply Chain for Advent International Corporation, and chairman of the American Apparel & Footwear Association.