29 April 2021

In recent months, the fashion industry has proven its resilience and flexibility, adapting to changing circumstances. The SPH Editorial Department asked Detlef Beiter, Chairman of the Management Board and CEO of SPH AG, for his assessment of the current market situation. In the interview, he explains how digitalisation, customer centricity and sustainability can be combined into a coherent concept.

Mr Beiter, what is your assessment of the current market sentiment?
The fashion industry is very labour-intensive and tends to be vulnerable to sales downturns due to high inventory levels and rental costs. However, in the midst of this transition, the industry has shown its resilience and has managed to adapt to the changes. Various measures, from creative marketing concepts to complete restructuring of business models, are helping to absorb structural change and improve competitiveness. There is also a new sense of solidarity and mutual support in the market.

How can digitalisation also help brick and mortar retailers?
First and foremost, brick and mortar retailers need to be present, even if their doors are closed. Very often, the term “digitalisation” is only associated with e-commerce. But digital technologies are applicable to all channels. Necessity is the mother of invention, so retailers have come up with various ideas to stay visible and combine local shopping with digital tools. These are just a few examples:

– QR codes on closed shop doors for vouchers or discounts in the online shop
– Surprise bags with discounts and right of return in conjunction with Click & Meet
– Private shopping sessions in the store or online, depending on the local corona restrictions
– Increased use of social media networks such as LinkedIn, Instagram, Facebook and TikTok
– Building and maintaining online communities
– Online platforms to support small businesses, often initiated by city marketing associations

Of course, all these activities do not replace the shopping experience downtown, but they show that the industry is flexible despite the crisis and is taking advantage of digital opportunities.

How can apps help to improve customer engagement?
There is a growing demand for apps in this context. Security and convenience are the most important aspects. One example is the rezolve app, which offers the customer exactly that and enables small retailers to be present and in touch with their customers without a web shop or initial investment. Both sides benefit: Retailers can increase their sales and thus ensure the survival of their business, and consumers find it easier to show their loyalty to local shops. In their partnership, rezolve and SPH AG have worked on a close integration of the shopping & payment solution with the SPH IN:FASHION software, creating ideal conditions for companies in the fashion, sports and outdoor industries.

How important is service in online retailing?
The growth of online retail has been a trend for some time. The crisis has led to a huge increase in sales.
However, e-commerce does not work on its own; it requires well-designed promotional activities on the one hand, and technologies that help to avoid friction losses between in-store, online and telephone sales on the other. Customer centricity plays an important role in the process of digitalisation. Customers expect the same personalised shopping experience in the virtual world as they do in a physical store. They want to be able to access fashion offers across all channels and enjoy the same service digitally that they are used to when shopping in-store.

Does this mean that direct communication must also be digital?
Absolutely. Whether it is a web shop, a platform or an app: Customers who feel lost in the infinite space of the digital universe will withdraw, whereas interaction and help in navigating through the product range will be rewarded. Advice and question lists, rather than inflexible filters, make product selection easier. Complete outfits for inspiration and possible combinations cannot replace trying on clothes in the shop, but they can help with the purchase decision. Chatbots or customer hotlines are very helpful for acute problems during the purchase or payment process. Retailers who understand their customers’ needs and keep them in mind as they go digital will be successful in the long run.

Sustainability is on the minds of all market players more than ever. How has the crisis affected this commitment?
There is no doubt that customer centricity includes the issue of sustainability. The fashion industry’s sustainability programmes and commitments include both environmental and social aspects. These initiatives have been driven by factors such as increasing consumer awareness and interest in the sustainability of their clothes. Transparency on the part of fashion brands strengthens the relationship of trust with the customer.
However, this crisis is putting the commitment to a more responsible use of resources to the test. On the one hand, manufacturers are struggling with short-term economic difficulties and, on the other, consumers are being forced to be more price-conscious.
Nevertheless, shopping habits have already changed. Fast fashion is increasingly being questioned, and consumers appreciate timeless quality fashion with a longer product life cycle – not least due to the need to limit the number of shopping trips. There is a trend towards casual basics that make people feel comfortable working from home and can be combined with stylish pieces for the office.

What is your conclusion?
The rapid pace of change in the fashion industry requires agile business models and constant adaptation of strategies to changing circumstances. Ideally, the different business models should not compete with each other, but rather complement each other to provide the omnichannel offerings that consumers demand.