As described in Fashion Goes Tech, my latest book, retail hasn’t changed much in the last century but, over the last 20 years, digitization has drastically transformed the way companies do business and how customers shop. Retail was already facing the digital challenge when Covid-19 unexpectedly forced a shortening of the “adaption deadline” (Fashion Goes Tech. 2021).
In the past, companies were organized according to a “stable” merchandising lifecycle. The product lifecycle curve that goes from introduction, growth, maturity and decline phases had a predictable pattern. It was basically a made-to-stock approach that set the tone from concept to design to retailing, aligned with a marketing calendar (Best-in-class retailers could use a calendar at country level). The retail calendar was very basic, meaning that there was a full-price sales season and a sales period. In some countries, Government regulations restricted promotions or special marketing campaigns. Therefore, brands followed the same rules and calendar requirements. Pricing (e.g. price promotions) was simple: making changes at the pace of product life cycles and seasonality. In this context, fashion retailers moved their inventories from the Northern to the Southern Hemisphere, to outlet stores and discount stores, including online flash sales platform, trying to protect gross margins and cash flows. In this scenario, in-season planning wasn’t “critical”.
Today, retail requires a different approach: a configuration and flexible model with different inventory models (e.g. made-to-stock, made-to-order, customization), distribution channels (e.g. owned store, franchise, wholesale, e-commerce, pop up, marketplace), outsourcing (near shore, off-shore) or vertically integrated model, and multiple shopping options (e.g. recycle, reuse, renting, showrooming, click & collect) linked to circularity.
Black Friday changed retailing marketing calendar. The merchandise seasonality has become more atomized. Black Friday became the busiest shopping day of the year, but other global sales days have been added in the marketing calendar like Cyber Monday.
Transforming the Marketing Calendar (Illustrative)
These changes obliged planning, buying and operations, amongst other processes, to adapt to a “standard uncertainty” or continuous volatility within a hyper-segmented market. Artificial Intelligence, for example, is enhancing designing and planning processes when forecasting trends and demand. Brands need to plan at local level aligned to a specific marketing calendar. If you are selling sportswear and casualwear items in Barcelona, for example, merchandising/ marketing planning should curate events to suit local “tastes” and deliver authentic retailtainment (e.g. Barcelona’s Marathon, Sonar Music Festival, World Mobile Congress, St George’s Day or World Roller Games) while creating special brand’s shopping or Community (e.g. Members) days. These days are inspired by brand’s history, its core values, achievements or tech like Nike‘s Air Max Day.
Brands should be more proactive and less reactive, creating curated experiences (e.g. items, events) to improve their operations and margins.
On the one hand, backend business is adapting to change. On the other hand, marketing see new opportunities to boost sales while, in more and more countries, there is no longer a legally period for sales and other regulations are changing (e.g. store opening hours). This is not only about liberalization of the market but also about moving from a product-oriented to a experience-oriented strategy. Companies are communicating differently, in regards to the “how” (e.g. Instagram, Tik Tok) and the “what” (e.g. Not only product but yoga courses like Lululemon is doing) as seen in previous articles about brand’s activism, sustainability or Fashion as a Service model. Some of the majors objectives are fostering customer loyalty and building a strong brand community.
An example of how brands are adapting to local tastes and new retail experiences is the store format transformation or retail space. For example, unique stores like H&M or Nike‘s Unite and Rise store formats. Another “proactive” solution is launching a capsule collection and creating FOMO (Fear Of Missing Out).
Fashion Goes Tech (How technology is empowering retail businesses. 2021) mentions Nike’s latest moves into adapting to incertain times, including new store formats, SNKRS site, customizations or limited editions. A couple of weeks ago, Nike celebrated Air Max Day (March 26th). We can read between the lines of Nike’s announcement and see what are the trends (in blue, capital letters, below) and strategy followed by Nike:
For Air Max Day 2021, Nike will launch an immersive virtual experience (VIRTUAL REALITY AND CUSTOMER EXPERIENCE), Air Max Day Worldwide, inviting visitors to watch, listen, connect and experiment (DISCOVERY) through a range of activities inspired by the design lineage of the storied sneaker series and its dedicated community (LOYALTY).
The day-long celebration will feature a full itinerary of events happening in Istanbul, Barcelona, Milan, Toronto, Los Angeles, Tokyo, Chicago, New York, Shanghai and other cities (NIKE’S TIER 1 CITIES WHERE RISE, UNITE AND LIVE STORES FORMATS ARE OPENING). The events include creative workshops, panels, collection tours and exclusive content going live throughout the day (RETAILTAINMENT). Also look out for special guest appearances, product drops (LIMITED EDITIONS) and musical performances (ENTERTAINMENT).
In addition to the Air Max Day Worldwide platform, SNKRS Live will host Air Max-focused conversations with Nike collaborators and designers (LIQUID DESIGN AND COLLABORATIONS)
In retail cash is king and technology, even from a marketing perspective, is helping brands to consider uncertainty (seasonal forecasting) and reduce overstocking (or stocking in the wrong place and time). The pillars of Modern Marketing include customer experiences (creating new events through a flexible and in-live calendar), omnichannel strategy and data integration and curation to optimize marketing’s funnel impact (awareness and conversion to advocacy) across multiple touchpoints during the customer journey.
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