This topic is ever present. Is it the warm winter, the lack of fashion, the political debates, the economy or is she just done shopping? Or has the shift from the top regions (NYC, LA) to smaller regions (Orlando, DC) for pace of growth had a greater impact than we realize? Is reality, as we suspect, that she is shopping more than ever but buying at lower prices so units are moving but volume is not? Is she spending so much time browsing online at home that she tires of new styles before she even buys them? The answer? A little bit of everything. All of these elements are having an impact on retail sales. Highlights:
Browsing at Home: The last several years we have talked about how women are shopping more than ever but it is our belief that shopping consists of browsing and buying. We believe the shift to browsing at home versus in the malls has changed the way she shops. To this women are shopping less frequently and they are shopping more like men in a directed manner. Conversely men are shopping more like women and enjoying fashion shopping more than ever. We have often said in today’s world she is arriving at the mall with a plan, she knows what she wants to buy, from which stores and at what price. This means in order for retailers to get her attention they must reach her online. This speaks to the importance of brands and the use of social media to reach today’s shopper. In the stores the retailers must attempt to do something really special to grab her attention as she rushes by on her way to her planned destination. She is in fact buying at home as well as browsing but much of the traffic online is informing her purchases in store. One cannot survive without the other anymore.
Less Impulse Buying: The result of shopping and browsing at home is that she is making fewer trips to the mall and stores in general. Teenagers are socializing online and at affordable restaurants. Teens are also browsing online for the things they will eventually buy. The problem with this type of shopping is that the impulse buying that used to fuel the upside in sales has been all but negated. According to NPD, impulse purchases of apparel occur for 32% of in-store sales, while online only generates impulsive purchases 22% of the time. She is shopping with a mission. The impulse buying that is happening is likely happening in the stores she is already visiting and not, as used to be the case, the stores she is passing by and browsing. Thus, if the brand or retailer has captured her attention (and sale eventually) online and she comes to the store to buy they are afforded the opportunity to upsell with fun fashion impulse items.
Conversion: There is a lot of focus on price and value when you walk through the mall. Signage throughout screams about BOGOs and deals. This approach is targeted at getting her attention as she walks on her way to the item she planned to buy. In some of these cases the goal is to simply get her in the door. Given the manner in which we shop today the biggest hurdle retailers’ face is actually getting her in the door. Thus it is reasonable that retailers tend to use these bold tactics. However, in our view retailers need to focus on conversion as much as traffic. Each customer that walks into the store today is more valuable than she was just a few years ago. Thus, converting her to sale is an imperative while allowing her to browse with the hope that she will buy is no longer an option. While we are not advocating aggressive sales people we are advocating making the buying process easier and making the story / merchandising compelling so that she wants to be part of the narrative. Clean stores that are pleasant, even fun, to shop are more important today. This is where the impulse buy can happen.
What is the Right Price? Over the last decade with price compression in certain segments and inflation in others it is harder to discern what the right prices should be. In handbags we view this as a push and pull. Brands pushed prices high as consumers were willing to pay, but as prices got too high there was push back. As a result some brands have had to evolve their pricing strategies. The same can be said for shoes. In active we have seen price inflation as fashion has been added into a segment that used to be simply functional. This has been true too in outerwear. In junior’s apparel and entry contemporary the price of apparel has compressed thanks to stores like Forever 21 and H & M. We do not believe this is as much about fast fashion as it is about disposable fashion. She has fashion ADD and as part of the Instageneration she wants change, often. She does not care about the quality and thus gets what she pays for but that is fine for the one season wear. Women’s apparel has been a problem as she is willing to pay for some level of quality (she has less fashion ADD than her younger self) and in certain cases she is wiling to pay for perceived quality or a brand. However, today even this is less clear as some of the “best” brands have taken quality out and pricing has been discounted with promotions. It is evident some brands have moved to re-capture the quality and improved sale. Scarcity helps to foster this effort. The result of this confusion is a customer who is unsure of what real value is and is thus more reluctant to spend on a whim without doing some research first.
Fashion Saturation: While the term fast fashion is bandied about constantly we do not believe it is actually about fast fashion as aforementioned. In fact we feel as though trends have been slow to change of late. Skinny jeans, leggings, boho styles and active have been “in style” for a long time. While some colors may come and go this is an easy update to a wardrobe that does not need a complete overhaul. Her closet is saturated with these looks. Additionally, it is almost as though everything is in style, skinny, flare or boyfriend~ plaids, florals or denim shirts neutrals, pastels and brights. While we do not think a big shift in fashion will suddenly help reverse traffic trends, it will change the pace of sales for a few years. Skinny jeans helped drive the sales of denim as well as the right shoes and tops to match the skinny style. The next iteration of this was a shift in active from the boot-cut yoga pant to the skinny legging and then prints. This has helped drive apparel sales in active most recently. While styles are moving away from this look it is very slow to change. Softer pants, boyfriend styles and even some cargos are emerging and taking hold. This will be very good for retail (like active has been good for retail) as she shifts back to denim and shoes. We are beginning to see this at retail today.