As major ecommerce retailers enter into strategic partnerships with transnational factory groups, the global garment industry would change forever, says consultant David Birnbaum in his latest monthly newsletter ‘The Birnbaum Report’, written for international garment industry professionals.
The 2013 Holiday sales saw in-stores sales taking a beating, while there was a substantial increase in e-business.
Today, almost all brick-and-mortar store retailers have gone omni-channel, i.e. store + Internet, and they have also seen substantial increases in e-sales. However, the omni-channel retailers still find it difficult to compete with single channel e-retailers like e-bay, Amazon, etc. due to some fundamental reasons.
People are finding more choice and lower prices online, as an Internet retailer can avoid substantial costs like high initial capital outlay, high rentals, high cost of decoration and maintenance and large inventory, says Mr. Birnbaum.
On the other hand, a traditional retail store is geographically bounded and its customers are limited to those willing to travel to the store. So, the more special a product, the more limited customer base a store is likely to have.
The virtual store is not geographically bounded and can offer the same quality clothing at half the price of a retail store. And, as the niche customer becomes the mainstream customer, the traditional store would be increasingly less able to meet customers’ needs, according to Mr. Birnbaum.
Looking forward, 2014 is expected to bring continued increases to single channel e-retailers at the expense of the store or the omnichannel (store + Internet) retailers, predicts Mr. Birnbaum.
The newsletter also makes three distant predictions about the global garment industry. It says, in the long run, the clothing retailer with 5000 stores, like the dinosaur will become extinct. Secondly, in the long run, the world’s largest clothing retailers will be Amazon, e-bay, etc.
Finally, in the long run, “when the major e-retailers form strategic relationships with transnational factory groups, the global industry will be changed forever, offering more original, higher quality, at substantially lower prices but much higher profit.”