29 April 2021

During the past months, the fashion industry has proven its resistance and flexibility and adjusted to changed 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. He explains in the interview how digitalisation, customer centricity and sustainability can be united into a consistent concept.

Mr Beiter, how do you assess the current market sentiment?
The fashion sector is very labour intensive, and, due to high inventories and rental costs, tends to be susceptible to losses in turnover. Yet, in the middle of this transition, the industry has demonstrated its resistance and managed to adapt to the changes. Various measures, from creative marketing concepts all the way to complete restructuring of business models, help to absorb the structural change and improve the competitiveness. A new sense of solidarity and mutual support can also be felt in the market.

How can digitalisation also help brick and mortar retailers?
Above all, brick and mortal retail has to remain present, despite closed doors. Very often, the expression “digitalisation” is only connected with e-commerce. Digital technologies, however, are applicable to all channels. Necessity is the mother of invention, and so retailers have come up with various ideas in order to remain visible and combine local shopping with digital tools. Some of many examples:

– QR codes on closed shop doors for vouchers or discounts in the online shop
– Surprise bags with discounts and right of return in connection with Click & Meet
– Private shopping sessions in the store or online, depending on the local corona restrictions
– Increased use of social media networks like LinkedIn, Instagram, Facebook and TikTok
– Building and maintaining online communities
– Online platforms to support small companies, 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 uses the digital opportunities.

How can apps help to improve the contact to the customers?
In this context, there is a growing demand for apps. Safety and convenience are most important aspects here. One example is the app rezolve, which offers the customer just that and enables small retailers to be present and keep in touch with their customers without a webshop or initial investment. Both sides benefit: Retailers can increase turnover and thus ensure the survival or their business, and for the consumers it is easier to demonstrate their loyalty to the local shops. In their partnership, rezolve and SPH AG have worked on a close connection of the shopping & payment solution with the SPH IN:FASHION software and thus created ideal conditions for companies in the fashion, sports and outdoor industry.

How important is service in online retailing?
The growth of online retail is a trend that has been apparent for quite some time now. Due to the crisis, turnover has increased enormously.
However, e-commerce does not work on its own but requires well thought out advertising activities on the one hand and technologies that help to avoid friction losses between store, online and telephone sales on the other. Customer centricity plays a major role in the course of digitalisation. Customers expect individual buying experiences in the virtual shopping world just as much as when strolling through the shops. 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, direct communication has to work digitally, too?
By all means. No matter whether webshop, platform or app: Customers who feel lost in the infinite space of the digital universe will pull out, whereas interaction and help with navigation through the product range are rewarded. Advice and lists of questions instead of inflexible filters make product selection easier. Complete outfits for inspiration as well as possible combinations cannot replace trying on clothes in the shop but can help with the purchase decision. In case of acute problems during the buying or paying process, chatbots or customer hotlines are very helpful. Retailers who understand their customers’ needs and keep their demands in mind in the course of digitalisation will be successful in the long term.

The issue of sustainability is on the minds of all market players more than ever. What impact does the crisis have on this commitment?
No doubt, customer centricity also includes the issue of sustainability. The programmes and commitments to sustainability of the fashion industry include ecological as well as social aspects. These initiatives have been pushed by factors like the consumers’ increasing awareness of and interest in the sustainability of their clothes. Transparency on the part of the fashion brands strengthens the relationship of trust with the customer.
However, this crisis puts the commitment to a more responsible use of resources to the test. For one thing, the manufacturers have to struggle with short-term economic difficulties, and for another, the consumers are forced to be more price-conscious in their purchases.
Nevertheless, shopping habits have already changed. Fast fashion is increasingly being questioned; consumers appreciate timeless quality fashion with a longer product life cycle – not least due to the necessity to limit the number of shopping tours. Casual basics that make people feel well dressed when working from home and which can be combined with stylish pieces for the office are trending.

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