The Future of Bricks and Clicks in Personal Accessories - Part I: The Physical Store

November 2016

Retail distribution in personal accessories has undergone upheaval in recent times. The evolving landscape has internet retailing as a rising star, whereas traditional stalwarts, specialist retailers and department stores, struggle to regain identity and renewed purpose. This report pinpoints the key forces driving fundamental shifts in store-based retailing and analyses the focus areas and future opportunities in store for specialist retailers and department stores.

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Online retailing is growing fast but the physical store is far from dead

Store-based retailing is dominant even though growth has been stagnant. Instead, lost share is increasingly being attributed to internet retailing, which offers advantages such as cost-effectiveness and convenience.

Modern retailing channels grow in emerging markets

Emerging markets such as those in Eastern Europe, India and South Africa have relied on traditional non-grocery retailers, led by open-air markets, for personal accessories sales, but specialist retailers and increasing mobile penetration are contributing to growth in modern retailing.

Stores are integral to luxury sales

Although luxury internet retailing is growing rapidly, the fact remains that luxury brands have been slow and reluctant to adopt e-commerce. Consumers continue to worry about product authenticity and buying an expensive product that they have never seen or touched personally. In luxury watches, warranty remains a key concern and driver for store-based sales.

Brands seek to grow direct-to-consumer sales

More brands are seeking to move revenue from wholesale to direct-to-consumer to gain more control over, and insight into, the supply chain and their customers. The wholesale channel has been marked with excessive discounting in recent years, creating a highly promotional environment and discount-addicted consumers.

Department stores need to reinvent and upgrade

Department stores are sluggish in performance in North America due to pressure from other channels and tectonic shifts in the way consumers now research and buy, but are thriving especially in Asia Pacific. Rejuvenation could come in the form of less discounting, a move towards the concession model, and introduction of fresh and up-and-coming brands.

Introduction

Scope
Key findings

Overview

Distribution dynamics evolving slowly but surely
Global markets are similar yet different across channels
Differences between categories exist due to pricing

Growing Specialist Retailers

Specialist retailers lead but threatened by online movement
Bags and luggage specialists integral to bags retail strategy
Jewellery sales via specialist retailers divided by pricing
Specialist retailers reign in luxury watches
Apparel and footwear specialists take on traditional specialists…
…while traditional specialists fight back
Battles within specialist retailers
Brands push for greater ownership through direct-to-consumer
The iconic flagship is more important than ever

Reinventing Mixed Retailers

The department store: A stagnant channel
Department stores growing faster in emerging markets
Duty-free department stores and malls exert further pressure
Department stores plagued by deep-seated issues
Traditional department stores need to reinvent and upgrade
Lane Crawford moves with the digital revolution to stay relevant

Key Takeaways

Key takeaways

Report parameters

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