Discounted sales represented 53.8% of total sales for Italian Fashion in 2018. For the sellers involved, this is of clear significance since in 2010, discounted sales account for 35%. Italians have spent 27.7 billion Euros, 2.5% less YOY¹.
All considrations for the negative trend in this market and in others, all indicate towards to the same reason; poor economic conditions. An ISTAT study last year indicated a monthly gocery expenditure for Italian families of 2,571 Euros per month, taking inflation into account, this represents a 0.9% decrease. Fashion noticed the most significant decrease, sitting at 4.9%.
Last June we discussed the dark future for fashion sales in Europe until 2020 at least, according to Moody’s. In more general terms, the issue is faced by the Western market, which we amply belong to.
If we look at America, 5,000 sales points are predicted to close this year, including brands such as Payless Shoesource, Gymboree, Dressbarn, Charlotte Russe, Shopko, Chico’s, Gap, Victoria’s Secret, The Children Place, Abercrombie & Fitch.
Fashion is increasingly becoming an Eastern phenomenon; according to McKinsey, China will take the lead as a global market this year, ahead of the USA. India is fast approaching with a growing middle class and a predicted 690 million smartphone users by 2022, with certain proximity to fashion due to the myriad of manufacturing firms.
The fashion industry of 2019 is summed up by McKinsey as: changing, digital and fast, with e-commerce becoming of greater importance. According to Statista, $418 billion USD were spent on e-commerce in 2018, this is predicted to rise to $731 billion by 2023.
Marketplaces are the definition of change. Price, offer variety and customer services all destroyed the common understanding of the fashion industry. In 2018, $1,800 billion USD flowed through fashion marketplaces, accounting for 50% of all digital global sales.
Amazon serves as evidence. In 2018, 48% of American e-shoppers bough fashion items on the platform, this year 63% of them will. Delivery dates must be stated clearly as consumers are becoming accustomed to 1-day deliveries at the latest; compared to the 9 days in 1995. Humorously, Amazon branded clothes are the ones sold the most on the platform.
Zalando is the other main player, with 25 million users in Europe, accounting for 6% of total population. Despite limiting itself to clothing items, it is the 7th largest marketplace in the world.
It offers there are 50 of the most popular brands, competitive prices and constant promotions with the potential of “pay later, if you want”. Physical stores still play a significant role with a predicted 70,000 new partners will join in the next five years to increase sales offers and reduce stock issues. By 2020, Zalando should reach 10 billion Euros in annual revenues.
On a global level, there are 2.451 billion fashion e-shoppers (+11%) and by 2023 there will be 3.363 billion (+37%). In China, 52% of the population bought online in 2018 and this number will rise to 65% in 2023, double the amount of Europe and the USA.
This perspective also affects Italy, though at a far different speed compared to global average. In Italy, 6% of Italian purchase online and this will rise to 9% by 2023².
Even if there are significant, positive, economic impacts, Italian fashion will have to adapt itself to new global consumption trends. More productivity, less costs, better delivery; these will be the determining factors for the future.
A fast omnichannel transformation will also be of crucial importance.
Physical fashion stores still remain of crucial importance, especially in Italy, for consumers, but for a while now it has not been the only reference point. It should be considered as part of a greater distribution network, build with different touch points.
Three years ago, around this time, we wrote "the store changes: competing e-commerce or omepatic cure?” Aside from its technological abilities, it will offer significant competitive advantages to the store. In a homogenous commercial logic of course.
¹ Retex Research, 2019
² Netcomm data, 2019
³ Data Coresight Research, 2019
Leggi anche “BOSS e BOPIS, medicine per il fashion”