Tech Natives: 5 ways retailers are gearing up for the new generation of customers
Fashion retail is gearing up for a seismic generational shift in 2019. This is the year that members of Gen Z (born between 1995 and 2005) will outnumber Millennials as the most populous generation, and it’s expected they will cause a wave of tremors through the fault lines of the industry.
Trying to attract this powerful new consumer group, while also retaining existing audiences will be a big challenge. So what steps are the smartest retailers taking?
Here is fashion retail’s ‘to do’ list for winning customers and driving growth in 2019:
One:
Totally master digital strategy
Fashion retailers that deliver sales and profit growth are those with robust websites and the capabilities to fulfil online sales growth during peak trading periods. Next do very well in this respect, as do Joules, the British country clothing brand. Analysts at Liberum praised Joules's 'resilience and customer appeal' and had admiration for the management's successful digital strategy which has ‘driven good uptakes to social media, digital marketing and targeted promotional activity’.
"Stores need to be designed and laid out with Instagrammable spaces”
Thanks to its ‘total retail’ model Joules reported an impressive 11.7% rise in sales over last year’s Christmas period and confirmed that online trade accounted for almost half of total retail sales. Fashion brands with world class technology and robust service delivery will be best-positioned to meet shopper needs and scale up as demand takes off. As seamless CRM capability becomes central to customer growth, it will be vital for retailers to have in place the most reliable, secure and flexible networks to support new types of customer transactions.
To progress their digital strategies, many retailers are abandoning legacy datacentres and adopting hybrid cloud infrastructures. The benefits are cost reduction, security improvements, and productivity gains. Hybrid cloud is considered to be the gateway to digital transformation by many in the industry.
Two:
Splash out on in-store tech
It’s not just the grocery sector that has embraced self-service technology. Recent store openings by Nike and Zara owner Inditex have included self-service facilities, enabling their core demographic to buy and walk out without passing through a traditional till-point. These self-service payment terminals are proving a hit with younger shoppers, who have been born into a world of automation and who expect immediate gratification and convenience.
AR and VR investments are also enhancing the physical retail experience. Andreas Olah, Digital Retail Analyst at GlobalData says that fashion retailers are most likely to use the technology for various purposes, “from in-store navigation and virtual apparel trials to product demonstrations, games, and interaction with virtual shop assistants”.
The likes of Zara, Burberry and Gucci have allowed customers to interact with new ranges via smartphone apps that bring displays and images to life and connect to the buy button. The challenge will be managing costs while at the same time driving higher rates of conversion. But it’s expected that inventive store formats that feature the latest tech and Wi-Fi capabilities will help retailers improve visitor numbers, conversion rates, dwell time, and Average Transaction Values (ATV).
"There is a strong affinity amongst Gen Z shoppers for freedom of expression and the right of an individual to celebrate their life choices”
Three:
Embrace conscientious consumerism
On another matter, over-consumption of clothes is high on the agenda right now, and the extent of unwanted clothing sent to landfill has shocked European consumers. In February a group of British MPs put forward the idea that clothing brands and retailers should pay a penny on every garment they sell to fund a £35m annual recycling scheme. They also called for more sustainable designs and repair services.
Waste and unsustainable business is proving a turn off to Gen Zers and Millennials. They are looking to ascribe to companies that focus on sustainability and have a socially beneficial purpose. High street retailers such as H&M have well publicised apparel recycling points in stores, and department store John Lewis has run a trial to buy back customers’ unwanted garments to reduce landfill. Watch this space for innovative retailers impressing customers with ‘clothes to rent’, recycling, re-use, and repair schemes as the year progresses.
"Freedom of expression is also at the heart of a crop of new brands”
Four:
Get serious about gender neutral fashion
There is a strong affinity amongst Gen Z shoppers for freedom of expression and the right of an individual to celebrate their life choices, and gender fluidity is a major part of this. According to research 56% of Gen Z already shop outside of their specific gender. Aiming to keep ahead of the curve, H&M launched its Ungendered, gender neutral collection with cult brand, Eytys, offering styles that defy gender definition.
Freedom of expression is also at the heart of a crop of new brands like Agender and The Phluid Project which cater to consumers who don’t want to be told what’s men’s or women’s fashion. Gender neutral ranges will be new territory for apparel and footwear retailers who need to analyse their data as this trend develops and adapt their offer accordingly.
"Fashion retailers have their work cut out to keep pace with increasingly tech-savvy, experience-craving customers”
Five:
Delight with ‘Instagrammable’ spaces
Pop-up stores are nothing new, but we’ll see them get ever-more creative and fun in 2019, and pop-ups within larger stores will proliferate. In the age of social sharing, pop-up stores should need to be designed and laid out with Instagrammable spaces – able to create unique and memorable experiences for visitors. Pop ups, or indeed instore temporary features like DJ booths, nail bars and chill out zones, can also be a means of testing a concept before rolling it out more widely.
Fitness and lifestyle brand New Balance has launched a pop up destination in London which combines a pub, a gym studio and running clubs – all promoting the brand’s London Marathon sponsorship. Projects like these confirm how the most inventive fashion brands are venturing well beyond the traditional role of the shopkeeper.
In summary
It’s clear that fashion retailers have their work cut out to keep pace with increasingly tech-savvy, experience-craving customers. And in a world where everything is connected, investing in the right technology infrastructure, and working with a partner that fully understands the challenges has never been so important.
As James "JC" Curleigh, President of Levi's puts it so charmingly, it helps to think of the mullet hairstyle in this context. “That’s the business model today – simple in the front, sophistication in the back."
Key takeaways:
Brands with world class technology and robust service delivery will be best-positioned to meet shopper needs and scale up.
Embrace self-service technology to enable shoppers to buy and walk out without passing through a traditional till-point.
Adopt conscientious consumerism and focus on sustainability initiatives.
Be inventive - venture beyond the traditional role of the shopkeeper.
