The State of Fashion, Apparel, and Luxury eCommerce and DTC Strategies in 2021
In perhaps the greatest wake-up call to shake up the fashion and apparel industry, the last twelve months have shown fashion executives the need to innovate and become a part of the rapidly moving digital world. While a number of brands stepped closer to dim futures as a result of the pandemic, many more brands have now taken the initiative or accelerated their online efforts, with those who have adopted robust eCommerce strategies and direct-to-consumer (DTC) business models excelling in an otherwise crippling year. The shift in thinking among the best performing fashion and apparel brands is that of a digital and consumer-oriented experience. In our 2021 Fashion and Apparel Industry Index, we found, in our analysis, research reporting the most defining trends of the last year that will dictate which fashion eCommerce strategies will succeed and whose will pull them behind.
The Importance of eCommerce Strategy for Luxury Brands
The warming up to digital strategies has, in turn, fostered an industry-wide recognition among the fashion space that adopting the direct-to-consumer (DTC) strategy leads to greater control over how a brand chooses to portray itself to shoppers. As we see the declining trend of malls exacerbate, we witness a seminal point in how brands have shifted their omnichannel and retail strategies. No longer does more square footage give the more established names the leverage it had given them. In truth, fashion and apparel industry insights reveal a complete reversal where the brands most dependent on foot traffic in large, commercial centers like the American mall are now struggling to pivot to more modernized and streamlined approaches to retail. What that means for brands who had relied on the relationships it held with anchored tenants of supercenters is a shift in their current strategies.
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Already, we have seen some of the top-performing brands in the apparel industry weaning off their reliance on retail partners in favor of commandeering more of the shelf stocking and selling themselves. This, of course, has allowed luxury fashion brands like Louis Vuitton and Chanel and activewear names like Nike and Adidas to better control their brand images and incentivize their customer bases to buy directly from them rather than from traditional retailers and secondary distributors. As part of the move to become bigger arbiters of their brands than before, fashion companies heavily invest in online channels, digital transformations, and other such infrastructure. One of the most prominent examples of this is the speed at which luxury brands—who were once reluctant to make too much of a venture into the online world out of concern of diminishing their aura of exclusivity—have moved in the last few years. A sizable portion of the high-end space had little if any proper digital foundation or eCommerce strategy. But it has since become quintessential to future success for fashion, apparel, and luxury brands to implement a comprehensive approach to engaging and enabling the best experiences for consumers.
One would be remiss to discount the signs of the growing importance of a digital strategy when the biggest fashion houses in the world, namely Louis Vuitton of LVMH, Kering’s Gucci, and others, are taking the matter seriously. That the most influential brands in the space have made no secret of their online accelerations and investments only reinforces the notion that eCommerce is here to stay. Whether brands take this as a sign to catch up or lag depends on their agility, current leadership, and most importantly, the ability to do so. Take LVMH, for instance, whose decision to launch their own digital shopping platform in 24S has opened the group to a growing segment of the online luxury market, which is expected to comprise 25% of all luxury sales by 2025—equating to at least $75 billion in revenue generated online according to market reports and recent global fashion indexes. Compare that to the struggling brands whose fates were all but sealed due to pandemic-induced store closures and overreliance on retailing partners, while their subpar eCommerce experiences continued to fall behind.
All this is to say the fashion, apparel, and luxury industry is in no way slowing down. But the companies with the resources to sustain themselves through a historic crisis such as the coronavirus pandemic and the aftermath of economic disruption have a clear advantage over smaller brands who do not. With this advantage, fashion, apparel, and luxury brands are now turning more to direct-to-consumer (DTC) strategies, where they exert greater control over the customer experience and keep more margin to themselves.
And with the luxury market only expanding year-over-year, the true winners are those brands big enough to weather the storm and absorb smaller players, as we point out in our industry research in our inaugural edition of the Fashion and Apparel Industry Index. The most prominent brands globally have access to dispensable capital, enabling them to build out a digital infrastructure whose investment does not entirely have to be realized immediately. After all, the growth in digital demand for luxury goods will come in due time. Smaller brands whose online presence dictated their performance in a digital-first world having been accelerated by the pandemic do not have the resources nor the time to make up lost ground nearly as fast as their more equipped and accommodating competitors.
With the dramatic shift in thinking among fashion executives in just the last few years, the far-reaching embrace of digital and direct-to-consumer (DTC) strategies among the fashion industry has undoubtedly led to the belief that there has to be a digital side to the brand experience. And while most in the fashion industry agree, the reality is that thinking of digital as a separate entity from the business is one of the biggest misconceptions in the space. Instead, a digital approach must be harmonious with the overall strategy. Consumer behaviors point to a growing demand for accessibility and convenience—something digital channels can offer where in-person points of contact did not. Simply put, consumers seek brands that can marry the interactive and engaging elements of an in-person experience with the expedience offered online.
It’s the same reason why the most critical error for fashion brands in the past year was not just ignoring the signs of an emerging component to their business model, but treating it as its own operation—separate from the brand experience and holistic strategy when it must work in tandem. The repercussions of this flaw in action have still yet to be fully seen. We expect the largest groups to enjoy a boom to their market valuations as they protect their brand image by bringing more operations in-house and a decade marked by innovative ways brands will utilize to attract and engage consumers in a growing market.
What DTC insights are there to gather from the fashion and apparel world?
Once-reluctant fashion and apparel brands have now come to embrace eCommerce as consumer behaviors point to a vast increase of digital transactions. A quarter of luxury goods are expected to be sold online according to market reports and industry index insights. Of course, this pivot to include more digital innovation means more brands have adopted DTC strategies to gain a significant share of their sales back from retail and wholesale partners, where they can control the narrative and command every point of interaction consumers have with their shopping experience. The strengthening of eCommerce strategies and direct-to-consumer approaches to follow will lead to more personalized user experiences and higher levels of customer affinity to brands.
Why is it important for fashion, apparel, and luxury brands to invest in their eCommerce strategies?
It is not optional for fashion, apparel, and luxury brands to have a strong eCommerce presence. Consumer behaviors have turned more towards online shopping in the last few years and show no signs of slowing. Market analysis shows that brands that do not just invest in their eCommerce strategies but consider them integral to their overall approach in engaging consumers have a clear advantage over their digitally feeble counterparts.
To best engage with consumers today, eCommerce strategy for luxury brands must adapt their current methods for a more immersive omnichannel approach. The tide of digital innovation does not mean the extinction of in-store experiences. On the contrary, a brand must leverage the accessibility and convenience found in eCommerce approaches with that of the in-person interactions that build up consumer sentiment and affinity to a brand.
How do user experience (UX) design and user interface play a role in fashion and apparel brands’ eCommerce and DTC strategies?
The top-performing fashion and apparel brands know all too well that experience drives revenue. In a digitally connected world, consumers appreciate brands that offer them the utmost convenience possible. It’s why the most innovative brands in the fashion and apparel industry, as we rank them in our Industry Index and market analysis, make a large point about their online presence. The most successful fashion brands of the last few months have all committed themselves to incorporate digital capabilities into their overall eCommerce and omnichannel strategies. Of course, allowing consumers to navigate a brand’s catalog and interact with their wares beyond the rudimentary touch-and-point engagement is what brands must do to excel in this increasingly digitally savvy and competitive age.
What should CMOs and other c-level executives consider as part of their fashion playbook when it comes to DTC and eCommerce strategies moving forward?
Fashion executive and CMO surveys, core research insight reports, and global fashion indexes done in the last few months point to a few key things: consumers want brands that work to provide a state-of-the-art shopping experience, take an active role in sustainability efforts, and better connect with them in more relevant ways. In sum, consumers expect fashion brands to personalize their DTC and eCommerce approach for an optimal shopping experience, be it online or offline.
If you’d like to learn more about what a comprehensive approach to your fashion brand strategy looks like, contact us at firstname.lastname@example.org.