The start of the Covid-19 pandemic seemed like it would be the end of the retail fashion industry. However, by mid-August this year, the recovery progress seemed tenuous. According to a Forbes article, the consumer price index for apparel rose 4.9% from June 2020 through June 2021. However, the retail sales also rose 7.4% from January to June of 2021. fashion brands are coming up with various creative solutions to this very disruptive time in fashion history. The most effective adaptation tool for retailers is utilizing digital programs and facilities to incentivize consumer participation in the retail market, such as “in-store pickup” options or Channel’s Concierge Service. However, these options still might not be enough.
Currently, the fashion industry faces a demand for digitization and sustainability of the apparel industry. As a result, online business models are more likely to be successful, which was even apparent during this past Black Friday sales, where the discounts were exactly alike to the ones in the store. Something that was not as popular in the pre-pandemic world. On the other hand, some of the biggest challenges, according to McKinsey & Company, the industry is facing are “supply chain disruption, patchy demand and persistent pressure on the bottom line.” Thus, physical retail faces significant pressure to outperform previous years. Otherwise, store closures are not a new concept since 2020. According to Statista, “the online fashion industry was worth over $439 billion in 2018. This staggering figure is projected to grow to more than double that amount ($953 billion) by 2024 and is currently expected to reach over $758 billion in 2021.”
By the end of 2021, “online channel share is expected to amount to 22% of the fashion market sales worldwide, whilst the eCommerce penetration rate in the fashion industry is expected to hit 50%.” The overall issue with retail is that it is still catching up to its previous losses from 2019-2020, while E-commerce is only growing.
Although, according to BoF, there was a slight decrease in e-commerce sales on Black Friday from $9 Billion to $8.9 Billion. Stores like Ulta & Sephora had their first-ever retail spike of 10% and 20% in-person traffic in a decade. However, that is not enough to conclude that retail is back and busy. Without E-commerce, retail stores cannot survive. Unless brands provide a solution that integrates the present and future demands, the competition might not be online vs. offline, but more about profit vs. loss.
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