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The Limits of e-Commerce Growth in Fashion

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After a pandemic-induced boom, e-commerce stabilises

After a dramatic rise due to the COVID-19 lockdowns, the growth of e-commerce sales in fashion has been slowing in the US and globally since the gradual easing of restrictions in most countries. E-commerce now accounts for 38% value sales of Apparel and Footwear in the US compared to 27% in 2019, but in 2022, for the first time in years, bricks-and-mortar stores performed better than e-commerce with the latter channel’s value sales growing by just 1% compared to 3% in-store over the same period. A similar trend has been observed worldwide (in USD million, current prices, and fixed 2022 exchange rates).

Globally, e-commerce sales of apparel and footwear grew by 3% in 2022 compared with 6% growth in-store

Source: Euromonitor International Apparel and Footwear, Edition 2023. Data in USD million, current prices, and fixed 2022 exchange rates

However, as the digitalisation of consumers’ lifestyles is set to continue, e-commerce is set to record further growth, albeit at a pace more on par with that of retail offline.

Limits of e-Commerce Chart 1.svg

Consumers now demand the best of both worlds

Euromonitor International’s Voice of the Consumer Lifestyle Survey shows that online shopping ​is motivated by convenience in terms of being able to shop anywhere, anytime, the choice of various delivery options, and the ability to easily and quickly compare options, prices and reviews.Limits of e-Commerce Chart 2.svg

In fact, according to the Euromonitor International Voice of the Consumer Digital Survey 2022, for over 60% of global consumers, ​the shopping journey now starts online​ where they initially conduct research, no matter whether they are making the actual purchase online or offline. Hence, having a strong online presence and a clear SEO strategy is essential to increasing visibility among consumers.

However, if consumers largely expect online searches and e-commerce to offer greater convenience, the same survey also shows that they also strive for personal service and distinctive experiences that only physical stores seem able to provide. Many consumers want to interact physically with the brand and products, have immediate access, and avoid inconvenient or negative delivery experiences. Most of them also perceive actual stores as more trustworthy than online purchases as illustrated by the Euromonitor International Voice of the Consumer Digital Survey 2022, which shows that only 26% of global respondents are comfortable buying from companies that only offer online customer service, while 58% prefer to talk to a human when it comes to customer service questions.

Only 26% of global respondents are comfortable buying from companies that solely offer online customer service

Source: Voice of the Consumer Digital Survey 2022

Hence, digitally native players are expanding offline, such as the British athleisure unicorn Gymshark, which opened a state-of-the art flagship in Central London in 2022. Even Shein - the Chinese ultra-fast-fashion online player which managed to take the fashion world by storm via social media platforms such as Tik Tok to become the world’s eighth largest apparel and footwear player in less than 10 years - is now banking on pop-ups and is likely to open more permanent physical stores around the world following the success of its first permanent location in Tokyo in 2022.

Inflation and sustainability concerns further fuel the need for omnichannel excellence

In a time of unprecedented inflation levels, building an omnichannel presence and creating distinctive experiences is becoming all the more imperative as consumers’ budgets tighten. In such a context, consumers are more selective in their fashion spending and will increasingly favour retailers and brands that offer them a positive and seamless shopping journey, both online and offline.​Limits of e-Commerce Chart 3.svg

Inflation also exacerbates the costs which retailers must bear for free returns. In Spring 2022, Inditex started charging online consumers in the UK for returning unwanted items unless they deposited them in-store. Since then, the Spanish giant has rolled out similar policies in many other countries, including its home market of Spain. Other high street retailers have followed suit in select markets, including Boohoo, Uniqlo and Next to mention a few.

More are expected to end free returns for online orders in the short term, as companies are likely to increasingly leverage their physical touchpoints, not only to reduce their costs and maximise customer engagement, but also to reduce their waste and carbon footprint in anticipation of possible new environmental regulations, starting with the EU Strategy for Sustainable Textile, and the NY Fashion Sustainability & Social Accountability Act, in the US.

For more information about this topic, please read our report, Competitor Strategies in Apparel and Footwear, and Transforming Fashion Supply Chains in A High Inflation Environment.


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