As the end of the first decade of the 21st century approaches, we find a slowing economy and a world heading for recession, but what does it mean to consumer? Let's take a minute to consider what apparel retailers and brands are facing as we embark upon a new year: the economy is on a slippery slope, the business environment is uncertain and the consumer base is getting increasingly diverse, informed, and technologically savvy and demanding. In these uncertain times many brands will struggle with their products. This time is indeed considered to be the time when individuality and innovation is essential to the future of the brand. While recent economic times have led to a slowdown in consumer spending and a decline in the overall success of the retail industry, there are still significant opportunities to be had in 2009.


In order to take advantage of the opportunities, changes should be put into place to give consumers exactly what they need in order to make this happen. These opportunities are listed as nine trends for Apparel retailers and brands as quoted by Mr. Sudhir Holla, Client Partner, Infosys Technologies, "When you have a brand that works for people, you should work the brand".


Nine trends for Apparel Retailers and Brands:


1) Increased focus on customer loyalty and gross margin key to surviving recession

Plummeting home values, rising unemployment and a credit squeeze mean that the freewheeling spending attitudes of the past have been replaced by a very cautious closefisted consumer. "Mindful of every penny being spent, consumers will cut back on trips and concentrate their shopping in a fewer number of stores, bringing benefits to retailers with strong loyalty programs".


As lower overall consumer spending will result in severe pressure on retailer margins, protecting gross margin through loss prevention, price optimization and inventory management systems will be key focus areas.


2) Shift from channel-centric to customer-centric mindset

Retailers have traditionally focused on improving the efficiency and experience within a channel. Most apparel retailers have a separate business unit for stores and a separate business unit for their online business and in several cases, the product offering is also different.


Now the online channel will be replaced with a brand across multiple touch points -stores, online, social commerce sites, blogs, mobile devices, etc. Successful retailers will have to invest in understanding their customer across these touch points and provide a consistent brand and service offering across them if they want to remain successful in the coming year.


Cross-channel capabilities such as "buy online, return at stores" will be taken for granted by consumers. Retailers will have to come up with value-added services for consumers across these channels that can not only help establish brand loyalty, but also help deliver value to their customer base.


Retailers are increasing their consumer touch points through social media applications. In November 2008 J.C. Penney created a "Beware of the Doghouse" viral campaign that portrays just what can happen when a husband makes poor gift choices for his wife.


Part of the campaign's success was attributed to its multi-faceted approach and how viewers could access it via Bewareofthedoghouse.com, Facebook or YouTube. Victoria's Secret's PINK brand is geared toward high school and college age women and one of the primary ways it reaches its audience is through its Facebook page.


These campaigns all illustrate how retailers are increasingly employing creative tactics over social media channels to effectively reach consumers to build buzz and brand loyalty.


 

3) Blurring of the distinction between brands and retail

Retailers will continue to invest in increasing the size of their "private-label" basket. Apart from higher margins, private labels provide retailers with increased flexibility and the ability to have shorter response times to changes in fashion trends.


Private labels also give retailers better control over the lifestyle and brand values associated with their labels. Traditionally, private labels were minimally advertised and depended on price comparisons with well known brands to drive their sales. However, the new private label brands will be better conceptualized. For example, some will include celebrity endorsements in order to attract a higher percentage of marketing dollars in the retailer marketing spend.


Stronger brands that already have a direct retail channel will continue to grow their own retail channels and will gradually start competing with retailers who were once their customers. Owning their own retail channels give brands the added benefit of tighter control over their brand identity. Weaker brands should look into becoming private-label suppliers to retailers in order to survive.


4) Focus on international growth

Retailers and brands will look for new growth opportunities in Eastern Europe, South America and Asia.


With the already saturated U.S. and Western European markets also bearing the brunt of the financial crisis, emerging economies provide an immense opportunity for growth. A strong brand identity will be critical to international success as stronger brands will be able to leverage their brand strength for international expansion using alliances and franchise arrangements. However, retailers without a strong brand identity will fail, as they will struggle to make an impact, given the aspirational nature of emerging markets.


5) Emergence of lifestyle communities and touchpoints

2009 will see a proliferation of customer touchpoints in the way of stores, mobile devices, social commerce websites, blogs, wikis, etc. Apparel will be more than just a simple product and service. Successful apparel brands will be those that will learn to build a successful brand community across these multiple consumer touchpoints.


Social networking websites, event marketing efforts, designer blogs, online competitions, store advertisements and events and sales campaigns will all have to come together in offering one consistent brand and lifestyle identity. Retailers will need to build or partner with relevant social networks. Retailers will also need to learn to diversify their predominantly print media driven marketing mix and include newer media vehicles.


6) Intelligent technologies for intelligent consumers

Today's shoppers are getting smarter and embracing new technology that gives them more information and control over how they manage their shopping process. Kiosks, RFID, mobile devices, smart carts, wireless sensors, contactless payment solutions, magic mirrors and virtual closets are all technology components that will evolve, morph, and integrate to adapt to the changing consumer needs.


The emergence of smart phones, communication standards, and consolidation among carriers and mobile vendors will mean that mobile commerce is poised to fulfill its potential. With over 3 billion mobile handsets worldwide compared to 1 billion PCs, there is an incredible amount of potential. Retailers who are ahead of the curve will exploit the always-on, always-available medium by enabling a variety of services for their customers. These services range from mobile vouchers, coupons and loyalty cards, location based services, mobile purchasing and building mobile social networks. Retailers will also be able to initiate highly responsive and interactive marketing and advertising campaigns with their customers.


The next two years will breed more experimentation, utilizing one or more of the aforementioned capabilities. Successful retailers will learn the trick of being nimble with their experiments and learn to quickly move on if the experiment doesn't succeed.


 

7) Green initiatives will go main stream

Terms such as sustainability, reduced carbon footprint and green supply chain will continue to become more prevalent in the marketplace. Retailers that just pay lip service to sustainable business practices and treat it as a fad will do so at their own peril. In the short term, retailers and brands that demonstrate genuine commitment to environmental stewardship will be rewarded by the growing green consumerism movement by way of greater brand loyalty and higher margins, especially in the premium market segment. In the medium to long term, sustainability will be a factor that consumers expect.


Early adopters will enjoy significant first mover advantage while laggards will have a tough time playing catch up. Apparel retailers and brands will be well served to prioritize sustainable business practices from quick wins such as environmentally responsible packaging to medium- to long-term initiatives such as eco-friendly product lifecycle management and carbon footprint reduction in manufacturing, transportation and stores.


8) Fast fashion and customization will prompt retailers and brands to acquire greater control over their supply chain

Consumers are increasingly demanding products that are tailored to their individual lifestyle needs and aspirations. Leading retailers and brands have begun paying attention to the growing demand for customization. For example, both Nike and adidas offer customers an online template to customize their shoes completely.


The Internet era and the omnipresent media have presented consumers with myriad choices and instant information resulting in highly transient fashion trends and radically shortened product lifecycles.


Retailers with long product lead times and traditional seasonal cycles are rapidly losing market share to fast-fashion exponents such as Zara and H&M. However, customized products and the fast-fashion model require exceedingly flexible and responsive supply chains. Leading apparel retailers will become more vertically integrated and closely collaborate with their suppliers in order to respond to rapidly changing customer demand.


9) Uncommon insights from common sources

As the competitive environment gets tougher, retailers will need to hone their competitive intelligence capabilities, no longer being able to rely on half-hearted or manually intensive ways of capturing competitive intelligence. The leaders will build capabilities that help them understand their competition's latest price change or promotion and enable them to quickly react to their competitor's latest move.


Retailers will combine traditional sources such as syndicated data with new technologies such as web harvesting to leverage "common" sources that have not been tapped before. Tools such as social web analytics and blog scraping will allow leading retailers and brands to "listen" to their customers by continuously monitoring their conversations with each other rather than relying on periodic focus group discussions and surveys. This will help them respond faster to perceived trends, customer complaints, unmet needs, etc.


The above trends are a result of the unprecedented economic uncertainty, massive changes in the technological landscape and paradigm shifts in consumer behavior. Leading retailers and brands are focusing on these trends to change adversity into opportunity.


Followers would do well to examine their operations in relation to these trends, as it will help them ride out the perfect storm currently facing the retail industry, and ensure that they are in line to succeed in 2009 and in the years that follow. What is required is an approach much more imaginative; the retailer needs to develop an intuitive relationship with the customer. As per the words of Jack Trout, "People want to express themselves through brands- brands express a person's personality and the people they like to be with."



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