Q. The health emergency is not yet over, but the situation seems clear: the fashion & luxury sector is among the most hit by the pandemic. Or not?
AC. The numbers aren’t pretty, that’s for sure. According to McKinsey, the Clothing and Footwear industry will suffer a sharp drop this year of between 27% and 30%.It will return to growth only in 2021. Also the luxury segment will be similarly affected, although less in the high-end range. But two important things must be said. First that Covid-19 explains only part of the problems and, second, that Retex, fortunately, addresses the situation with two aces up its sleeve: Venistar’s enormous experience in the management of fashion stores, and the Group’s partnership with WeChat.
Q. Let’s first try to understand problems and perspectives.
AC. The current economic situation is by no means easy and sales volumes are affected by many factors, with quickly changing trends and purchasing paths.For brands and retailers, the line between success and failure is getting thinner and the swings in demand increasingly wider. A radical and, in some ways, violent restructuring of the sector has been underway for some time and must be distinguished from the effects of the pandemic and traced along the entire supply chain up to the distribution point.
Q. An example of this?
AC. I am thinking of the emotional and media impact of the so-called American retail apocalypse, which heavily affected fashion brands and retailers, often of primary importance.Thousands of shops closed or vacant, the growing map of flagship stores closures, rising unemployment, frequent recourse to Chapter 11. Accused number one: e-commerce. As we have pointed out for years, the problem was in excess supply and in obsolete distribution models.
Q. Adopting the wrong solutions, perhaps?
AC. Of course, a great many misunderstandings occurred in the turmoil of the pandemic.For example, that cost cutting was enough to get back on track, when this, unless it is accompanied by a decisive innovative action, will only make things worse. Or, again, harnessing the capacity of e-commerce, which, however, if it is not part of a global strategy, can absorb large investments without the desired results.
Q. Fast fashion seems to have a lot of responsibility in the market slide.
AC. The events of Inditex and H&M in the first half of this year are sensational, but not unexpected. We are talking, respectively, of a 50% fall in turnover and the plan to close 1200 stores worldwide.The pushiness of that business model, which overloads stores at regular intervals and generates enormous quantities of unsold and discarded items of clothing, is the basis of the express opposition of brands and stylists to the multiplicity of collections every year and the lightning-fast life of the garments in the store, what’s more not aligned with the season. In short, Giorgio Armani’s letter to Women’s Wear Daily.
Q. So yes to the shop then, but how?
AC. Fashion stores will put more emphasis on the integrated shopping experience, in a unique and seamless relationship with the customer on the different channels, against a reduced floor space and assortmentsCustomization will be crucial and, consequently, the technologies useful for supporting it and engaging the customer will be increasingly important.Those who have chosen this path, combining physical and digital commerce and every other touchpoint, are winning the game. In the words of Pablo Isla, CEO of Inditex Group, “greater store quality also means greater e-commerce results”.
Q. For those working at Venistar, seems like the digital reform of the store has became normal routine.
AC. Indeed. At Venistar we have constantly accompanied and anticipated market trends, consolidating in our digital Venistar CX platform the experience gained over the last 15 years, in themselves revolutionary for the market approach by the brands within the industry.We boast dozens of digital innovation projects, for more than 70 international brands. We serve more than 30,000 users and are the first European partner of Retail Pro, the international leader in fashion retail management software.
Q. Perhaps technology has not always gone hand in hand with the market evolution.
AC. This is an important point. Unfortunately, systems are not quickly and easily adaptable to changes in business models and demand. Often they represent the real brake to innovation in the impact with a complex and vast set of processes: logistics, production, infrastructures, research, development, products, customer service, administration and related legacy business systems. To respond to such needs, appropriate and adequate responses are essential.
Q. Tell me more about the technological offer.
AC. To offer new services to the digital globe shopper it is not enough to just add a new tool or some extra features to the management system in use. It is instead necessary to have an advanced digital platform able to effectively support the omnichannel innovation and that makes access to the business systems simple and immediate.Venistar CX is just that, as it allows to overcome the constraints of traditional IT management processes. We can thus enable the constant transformation of the purchasing cycle in a context common to all physical and digital touchpoints, which can exploit virtual assistants, augmented reality, voice shopping, machine learning and predictive algorithms.
Q. Other important changes on the horizon?
AC. The most significant change over the years has been the customer. He has become very demanding, nomadic and digital, is very attentive to the quality of the services and products offered and, above all, to the values of the brand and sustainability.
Q. The assessment for the luxury market is the same for the fashion sector as a whole, or something changes?
AC. If, after the health emergency, also this sector has and is still picking up the pieces, the prospects for recovery are encouraging and, more than anything else, the centrality of the Chinese market has been reaffirmed.According to Bain, the importance of China for luxury operators will be even more decisive, reaching almost 50% of the global market by 2025, estimated at more than €300 billion.In that country, the presence of a consolidated digital commerce infrastructure has contained the fall in demand for luxury goods and, to some extent, it has not even suffered it, and we, at that table, are going to play the second ace in our sleeve.
Q. Let’s see it, then.
AC. Retex holds a very long collaboration with Tencent, the Chinese holding company that controls WeChat, the first digital services platform in the world, which due to its widespread popularity is, de facto, the Chinese internet.In the fashion & luxury sector, and not only, Made in Italy holds for the Chinese an irresistible appeal. But commercial success in China would not be possible without the technological mediation of WeChat, which has been our tool cabinet for years and has brought us a lot of satisfaction. With this in mind, in June we launched the Italy Pavilion project.
Q. What are the characteristics and objectives of the project?
AC. In addition to us and Tencent, also ICE, the Agency for the promotion abroad and the internationalisation of Italian companies, is involved in the project. We provide the professional competencies in WeChat, a multilingual and multicultural team and a direct presence in China.The core values of the project are technology, strategic consulting and digital marketing, and the primary objective is to sell Made in Italy products cross-border to China, supporting it, step by step, in all the necessary operations.Warning:Chinese consumers today are among the most sophisticated in the world and without an accurate perception of diversity (see the sensational communication slips of some leading brands) and adequate innovation for a very advanced market, failure is just around the corner. Italy Pavilion is the insurance policy against this risk.
Q. The key word is ‘optimism’, then?
AC. Yes, but it is not a simple statement of will. Based on what we have already done and what we can further do, we are convinced that fashion & luxury will represent a substantial part of the development of our Group