Reinventing retail shopping markets for apparel and footwear sales
As shopping malls and traditional brick-and-mortar stores devolve, retailers are reinventing themselves.
Mass store closures have a significant downstream effect on other businesses related to fashion, apparel, footwear, distribution, manufacturing, wholesalers and secondary industries. If they haven’t already adapted to online marketplaces, businesses are scrambling to diversify to online sales, omnichannels and e-commerce in order to survive and grow.
In the first three months of 2017, U.S. retailers announced 2,880 store closings. That suggests record-breaking retail downsizing, with analysts predicting more than 8,600 closures by year’s end.
“It’s reminiscent of the real-estate collapse, if you will,” said Rick Helfenbein, president and CEO of the American Apparel & Footwear Association. “We bought too much space, and we don’t need it and we’re paring down.”
Location and traffic
With less foot traffic in stores, there is more e-commerce traffic on websites and mobile platforms. The Great American Group reports: Contrary to brick-and-mortar sales, e-commerce sales continue to grow. During the fourth quarter of 2016, e-commerce sales represented 12 percent of total retail sales, excluding automobiles and gasoline, reaching $102.8 billion, according to the U.S. Commerce Department.
In her state of the industry presentation earlier this year California Fashion Association Executive Director Ilse Metchek discussed the range of distribution channels available to apparel manufacturers, including: department stores, e-commerce, mobile commerce, TV, pop-up shops, catalogs, big-box stores and specialty retailers. “We are the only country in the world that has this amount of distribution channels,” she said. Online apparel sales, currently at 8.5 percent, are on the rise and on track to grow to $86 million this year. By 2025, 30 percent of total retail will be online, Metchek said.
Although the locations of the retail sector are shifting, actual retail sales figures have been on a positive trajectory, with total holiday sales for 2016 up 4 percent, according to the National Retail Federation (NRF). Going forward, the NRF projects 2017 retail sales to increase between 3.7 percent and 4.2 percent over 2016. The e-commerce and off-price sectors are expected to continue to perform well in 2017; however, department stores and specialty apparel retailers could face further store closures as businesses right-size.
Success shifts to multiple-channel touchpoints
During the 2017 holiday season, 85 percent of shoppers between the ages of 30 to 44 are expected to shop online.
Most experts agree that the shopping dynamic is changing from a mall-based experience to a smartphone point-and-click experience. Offering touchpoints across multiple channels seems to be the primary goal and indicator of success.
A business selling women’s apparel, for example, might want to consider diverse opportunities: an online catalog, search engine ad, retail store, online customer service rep, testimonials, ratings and reviews, promotions, website, and follow-up marketing emails.
A 2015 McKinsey Quarterly report found that companies with greater digital capabilities were able to convert sales at a rate 2.5 times greater than companies with fewer digital touch points.
In 2016, online sales were expected to capture 11.6 percent —or $394 billion—of all U.S. retail sales, but “digital touch points” commanded an estimated 49 percent of U.S. sales. This is according to a report by National Retail Federation’s (NRF) Shop.org division and Forrester research firm.
The report also found that retailers are focusing their efforts and investment on ways to enhance customer experiences online. More than half of the retailers surveyed—54 percent—listed mobile commerce among their top three initiatives in 2017. Additionally, they said m-commerce sales—or sales using a mobile device—increased 65 percent over last year. Nearly half (47 percent) of online traffic came from smartphones and 30 percent of online sales were made using a smartphone.
“Smartphones are driving retail sales more than ever, and retailers have found that even modest investments in mobile initiatives can result in huge returns,” said Artemis Berry, NRF vice president for digital retail. More touchpoints equate to more customer connections.
Crestmark adapts financing needs for apparel and footwear businesses
Crestmark provides financing support for wholesalers, importers and distributors in various apparel, accessories, and footwear businesses across the country. With an eye on the changing retail space, Crestmark financing experts are helping small- and medium-sized businesses remain versatile and competitive.
Apparel and footwear clients often rely on factoring to support their operations, which may experience cash-flow crunches due to seasonal or unforeseen market shifts. This funding flexibility allows them to treat their invoices as collateral and receive cash advances on each invoice.
The up-and-down nature of fashion is understandable, and Crestmark can guide businesses through both sluggish and prosperous seasons with versatile and responsive financing.
Crestmark can help. Call us at 888.999.8050.