Evolving in style
In these harsh economic conditions the etail sector has continued to provide some very welcome good news, with consistently strong performances across the board. But perhaps unexpectedly the standout performance over the last 12 months hasn't come from the food or electronics sector, but from fashion. Calum MacLeod takes a look.
You learn something every day, it's a cliché but it's true. Today I Iearned not only that the CIA has its own website but also that on said site there's a section for kids to play with - it's full of observation and codebreaking games! You just know that this most clandestine of America's security services is keeping a close eye on anyone who performs particularly well... Anyway, I happened upon this discovery not because I am looking to take my career into a more covert arena, but while looking into the performance of the UK's e-commerce market. Not because the CIA has an online shop for UK customers (although that would be cool) but actually because they were cited in some research conducted by the e-commerce buffs at the Interactive Media in Retail Group.
The IMRG Capgemini e-Retail Sales Index showed that the overall UK online spend exceeded £4.67 billion in December 2008. This figure divided by the 60,943,912 UK citizens the CIA's 'world factbook' says there are (and who's going to argue?) gives you an average spend of £76.67. That, friends, is a great big wedge of cash - particularly as the per person figure includes people who couldn't possibly spend £80 online (like those who aren't allowed to touch the computer without Mummy or Daddy being there). Believe it or not though, this startling figure was actually slightly down on the previous record-breaking month (the peak Xmas shopping weekend fell on 29th and 30th November).
The slight slip back in December didn't alter the fact that 59.9% of shoppers spent more online than last year and 37% buying more than half of their Christmas goodies via the internet according to IMRG's survey of 2,000 consumers. Looking beyond the limits of the festive season, we're actually living in interesting times as far as e-commerce is concerned. This will be the first meeting of the UK economy in recession and an etail sector sufficiently developed to respond to it. This is a point that Mike Petevinos, head of consulting for retail for Capgemini UK, takes us: "This is the first recession we have seen where online will play a significant role in mainstream spending. Our research provides further evidence that consumers are turning to the internet as the most efficient way to save money in the downturn. It is also clear that retailers are seizing the potential of the internet to reach shoppers with targeted discounts and promotions. These factors have led to the robust growth rates we are seeing for e-retailing as a whole."
With its associations with cost savings it's little surprise that the e-commerce juggernaut continues to power through these cash-strapped times. Arguably a little more unexpected was how well the fashion sector performed online. In the earliest days of etail the theory always went that buying clothes was too personal an experience for it to thrive in the cold point-and-click internet environment. People bought clothes for fun, it was a social activity to undertake with friends, it was about immediate gratification, the argument went on, and what's more people would always want to try garments on.
While to a degree such arguments still seem to make sense, they aren't born out by reality. In fact, UK shoppers have actually taken to fashion shopping online in a big way...a really big way. Clothing, accessories and footwear is the fastest growing online sector, according to IMRG's figures. It consistently outperformed the total market and other sectors throughout 2008, with around 30% year-on-year increases every month during 2008.
You don't have to go far to see these stats in action - success stories are not hard to come by in online fashion. Take asos.com, for example, at the turn of the century it was just a twinkle in an entrepreneur's eye but now it's one of the UK's stylistic frontrunners. And it is making pots of cash at the same time more to the point. In November 2008 asos.com received the Esquire Award for being the 'Best Credit Crunch Survivor' but its Christmas trading performance suggest there is rather more going on than survival.
Try these figures on for size: sales up118% year-on-year for the 9 weeks to 16th January 2009 and 108% (YOY) for the 42 weeks to the same date. "We have had another great Christmas", said chief executive Nick Robertson. "Sales, visitors, conversion and average basket value were all at record levels with the website attracting 5.2 million unique visitors in December alone. We now have 1.2 million active customers, a 112% increase over the last 12 months". It's perhaps an indication of the severity of the times that such a stellar performer could only characterise its outlook for 2009 as "cautiously optimistic", but nevertheless it's clear the UK consumer has bought into its offer.
It's a similar story at upmarket online fashion house Net-a-Porter. Again born in 2000 Natalie Massenet's swanky online emporium now employs something like 850 people across its two offices in London and New York. In fact so confident is the Net-a-Porter founder of the internet fashion business model that she is going to launch a new 'outlet' site targetting the other end of the market. TheOutnet.com will stock designer labels such as Stella McCartney, Marc Jacobs and Jimmy Choo - all at dramatically discounted prices. Who would like to bet against in being a success? Anyone?
So what has changed, what's the secret, why does online fashion work so well in the face of the old objections? After all, people do like to feel the quality of a garment and clothes shopping is a social experience and you don't get the instant gratification of putting it on when you get home...and what about the expense and/or aggravation of delivery?
There many reasons to which one could attribute the tremendous successes of e-fashion (for want of a better term). Like their high street counterparts the businesses that have done well online have got the fundamentals right. They have the right product, presented in the right way at the right price so as to maximise sales to their carefully identified target market. Clicks or bricks, the basics of retail remain constant.
And of course the online shop has some distinct advantages of its own. Lack of overheads often means the e-tailer can offer goods at low prices. There's a huge convenience factor in its favour too, very important to time-poor British workers. Clothes can be considered, price compared across a range of stores and purchased in a shorter space of time than it would have taken to park the car. Furthermore you are able to discover you're rather larger than you thought you were in the privacy of your own home rather than beingforced to ask a skinny sales assistant for the next size up.
Beyond that, the simple fact is that the etailers and traditional retailers with an online offering have really upped their game. In the three-dimensional world the in-store experience has pretty much reached maturity. But online, year-on-year new features continue to be added to improve the shopping environment and customer experience. They can't make up for the fact that you can't touch the merchandise, but they can keep increasing the breadth of options available and the speed at which they are delivered to you. And these improvements will continue to be made as the technology continues to evolve.
In the early days an e-fashion site wasn't really much more than an online catalogue. They were all a bit slow and clunky to use, availability was poor, searchability negligible, very little promoting multi-bag buys - all about as far from where we are today as a Sinclair 48k is from an Xbox 360. Nowadays, the likes of asos, Net-a-Porter, MyWardrobe, MyCelebrityFashion and Oli are bringing you a whole new world of options.
MyCelebrityFashion.co.uk is a particularly interesting case. Like asos before them the site taps into the cult of celebrity, enabling fans to emulate the stars' styles without having to spend crazy money. But rather than selling the merchandise itself, MyCelebrityFashion finds the fashions the stars are wearing and tells you at which retailer you can buy them. You can even search by celebrity or by the glitzy event they might have attended. Click on Cheryl Cole's celebrity profile, for example, and you're presented with a range of different 'tagged' outfits the Girls Aloud songstress has been seen wearing. Click on the tag, click 'Steal Style' and you're redirected to a third-party website to buy a near identical item. Now while this may not be to everyone's tastes, there is very clearly a market here that the site's creators are going after with gusto.
While the asos.com business model is a little more mainstream e-commerce than that of MyCelebrityFashion, the site is no less innovative. It's got the feel of a fashion glossy than a website ("The very latest celebrity, fashion & trend news at your fingertips"). Select an item, decide which of the available colours you want, zoom in on the item from various angles and, in many cases, watch a mini catwalk video of someone actually wearing it. All the while the 'Complete The Look' and 'Other Customers Also Bought' windows offer-up complimentary items as you browse through the cyber-racks - a useful tool for the shopper that every opportunity the site encourages the multi-bag buy. Like all good e-commerce sites it's intuitive to use, fast and welcoming.
Whichever site you frequent, however, once you have bought clothing online, the sites start to remember your preferences, which means they know with which items to market you in the future...and that increases the chances that you will go back.
From an unsteady start e-fashion has embraced each new development in online technology allowing for the provision of an ever-more appealing shopping environment. For those businesses that also have the twin retailing keystones of good product and sound customer base it's a powerful combination that's only going to gather in strength.