Fashion Retail:
New Measures
of Success
Getting it right with
young consumers
By Nivindya Sharma, Director
of Retail Strategy & Insights,
Analytics Division, WGSN
Create
Tomorrow
About WGSN’s
analytics division
WGSN is the world’s leading fashion trend forecaster used
by 6,500 companies globally.
WGSN’s analytics division helps fashion businesses
optimise trading by combining data analytics and specialist
fashion insight. Our data science team process millions
of new data points daily on our clients’ business and,
importantly, on their competitors, from our proprietary
consumer and e-commerce platforms, Barometer and
Instock.
Our fashion industry specialists apply their years of
experience to pinpoint the underlying factors driving
trading performance, right now, across product, price, place
and promotions, so they can identify revenue opportunities
and barriers.
Richer than a data platform alone and more timely than
one-off consultancy projects, our combination of live
dashboards and frequent, practical recommendation-based
reports, allow over-stretched clients to easily track progress
over time.
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“Fashion retail: New Measures of Success” is a White Paper by WGSN’s
analytics division.
The digital and ‘fast-fashion’ revolution of the last 30 years has brought
a deluge of data into fashion brands and retailers. Despite this, many
retailers are still struggling to manage risk, predict consumer behaviour
and optimise their product offering. The rise of online pure plays has
changed consumers’ expectations from fashion retailers forever. What
makes a fashion business thrive today is very different from what it was
only five years ago.
In a quantitative study using WGSN’s proprietary daily consumer and
e-commerce data, this White Paper defines what the new measures of
success are for fashion businesses targeting young female consumers,
especially those planning to operate in the fast fashion and mid-
market segments. In contrast to other extant studies, this White Paper
focuses on the valuable stories within the data, rather than on the data
itself. The study reveals that to succeed in the young fashion market
today, businesses need to function like tech leaders, and put agility
and reactivity at the core of the business. In addition, offering the ‘right
product at the right time’ has never been as important in fashion as it is
today, and successful businesses must increasingly use data-led insights
that matter to connect and communicate with their customers.
Contents
05 >>
Market Dynamics
09 >>
Brand Love: What’s
love got to do with it?
17 >>
New Measures of
Success
34 >>
Key Takeaways
Market
Dynamics
5
The dynamics
of the fashion
retail industry
are shifting
dramatically.
For a fashion retailer to position itself well for
the future, it not only has to keep up with the
fast-moving nature of trends and fashion, it
also has to keep pace with rapidly evolving
consumer demands that now require a level
of freshness and newness not only in product
but also in the shopping experience. As a
result, delivering newness, is increasingly a
source of concern for fashion retailers, and
ongoing macro-economic shifts, as outlined
below, keep this a vital measure for retailers.
1 Rise of online
pure plays:
The growth of online fashion pure plays such as
ASOS, boohoo and, more recently, Amazon, has
disrupted the fashion landscape on an immense scale
and fundamentally changed consumer expectations.
Online pure plays offer broad product ranges – a mix
of private labels and branded products – so shoppers
are more likely to find styles that they are looking for.
Shoppers, especially younger ones, increasingly want
(and expect) a broad range of products, new trends
and regular newness, and online pure plays, with
their short lead times and reactive product mixes, are
able to offer this – putting pressure on established
retailers to match up.
6
2
Instant consumer
gratification:
The ultimate game-changer has been the rise (and now ubiquity) of
social media. In ways similar to the agile offerings of online pure plays,
the instantaneousness of platforms such as Instagram and Snapchat has
created a desire for immediate gratification by consumers. They want
new and they want it now, and pure plays such as ASOS and boohoo
are using tech-led features such as ‘shop now’ and image recognition
technologies to create a seamless shopping experience that capitalises
on shoppers’ demands at point of desire; while over in the US, Amazon
is testing customer-centric services such as Prime Wardrobe and Echo
3
Look that place the apparel customers’ needs at the heart of innovation,
– making these some of the most targeted efforts to dominate the
apparel market in the US.
Trans-seasonality:
Shoppers want products that transcend trend and season, resulting in
a rising demand for trans-seasonal products. This change has been
necessitated by multiple factors, including tighter disposable incomes
(such as in the UK, where wage growth hasn’t kept pace with inflation),
volatile weather patterns, the casualisation of work places and the
consequent breakdown of formal dress codes, and increasingly flexible
working and nomadic work lives. Retailers have therefore had to react
with product mixes that are increasingly season-agnostic. This is
evidenced by the increased volumes of swimwear and sandals available
throughout the year, instead of being concentrated in the traditional S/S
drops. Online pure plays, with their broad product ranges and shorter
manufacturing time frames, have also driven some of this change;
they are able to offer season-agnostic ranges that can react to volatile
weather patterns.
7
4
Shift to experiences:
Both in the UK and US, there has been a noticeable shift in the
prioritisation of experiences over clothing. Shoppers are looking to
enjoy themselves, favouring shared experiences with friends and
family over material belongings. In the US, this is evidenced by a
slowing footfall to clothing retailers at shopping malls.
All of the above factors have necessitated retailers to deliver
smaller drops closer to season, and to operate a flexible phasing
schedule to react to short-term demand.
It is now more important than ever for retailers to ensure the right
product is delivered to the right people at the right time. Using our
proprietary e-commerce and consumer data from our Instock and
Barometer products, we dissect the emerging strategies necessary
for fashion companies to stay relevant to young female consumers
in a dynamic, fast-paced and rapidly evolving fashion market.
8
Brand Love:
What’s love got
to do with it?
9
Retail footfall
is continuing
to suffer
Retail footfall is continuing to suffer – as
evidenced by declining shopping mall traffic in
the US and dropping High Street numbers in the
UK – leading a number of established retailers to
rationalise High Street portfolios. This has, in the
main, been driven by the increasing shift towards
a digital world, the ease and access of which
means established retailers’ store portfolios
appear overly bloated.
It is therefore a no-brainer that in order to
succeed in the future, retailers have to be adept
online. They also have to develop a deeper
understanding of the online drivers of purchase,
especially in the context of the younger, digitally
native demographic, who will command a
bigger share of spend as they age and take their
shopping habits with them.
In the context of these evolving market
dynamics, how pertinent is it for a brand to be
loved? Does a consumer’s love for a brand lead
them to shop with the retailer, irrespective of
the channel?
10
New Look 28.0%
ASOS 25.7%
Amazon 24.0%
PrettyLittleThing 20.9%
H&M 20.2%
boohoo 19.5%
Topshop 18.2%
Missguided 15.8%
Chart 1: UK - Selection of the most
loved brands among 16-39 year olds
Q. How would you describe your opinion of the following womenswear retailers?
The love for the retailers (stated as a percentage of all respondents who are familiar with the retailer
and state that they ‘love’ the retailer).
Source: WGSN Barometer data, sample size circa 15,000, time period: Mar–May 2018
11
To understand this dynamic, we mapped some of the most loved
brands in the UK and US against purchase frequency online to see if
the engagement and connection they have built with customers over
time had translated online. Our data shows that purchase frequency
online is not directly correlated with brand love; a fact that has also been
evidenced by the declining fortunes of much-loved retailers such as
M&S and Macy’s. The retailers that are successfully enabling purchase
frequency online are, in both the UK and US, online pure plays – and
ones that are not necessarily the most loved among 16–39 year olds.
This suggests that in order to succeed in the digital space, other factors
– such as delivery and fulfilment options, availability, range of options,
targeted marketing and newness – start to matter more than brand love.
Furthermore, online pure plays are, by virtue of being leaders online,
increasingly setting expectations of newness, agility and reactivity that
other retailers will have to match up to if they are to remain relevant
in a digital future. If Amazon is able to deliver next day, then any other
retailer should also be able to offer this service. If ASOS can offer a broad
range of products – coats in summer and sandals in winter – then other
retailers should also be able to do the same.
12
Amazon 4.15
ASOS 3.80
Purchase Frequency
boohoo 3.74
Missguided 3.39
New Look 2.40
Zara 1.90
Topshop 1.87
H&M 1.81
Chart 2: UK - Purchase frequency
online among 16-39 year olds
Q. How many times have you purchased womenswear from these retailers
online in the last year? (Among those who purchased any womenswear)
Source: WGSN Barometer data, sample size circa 15,000, time period: Q1 2018
13
Amazon 48.4%
Target 40.0%
Walmart 25.8%
Forever 21 25.8%
Kohl’s 24.2%
Old Navy 22.0%
Macy’s 16.7%
JCPenney 16.7%
H&M 15.5%
Gap 13.1%
J. Crew 9.0%
ASOS 8.7%
Chart 3: US - Selection of the most
loved brands among 16-39 year olds
Q. How would you describe your opinion of the following womenswear retailers?
The love for the retailers (stated as a percentage of all respondents who are familiar with the retailer
and state that they ‘love’ the retailer).
Source: WGSN Barometer data, sample size circa 15,000, time period: Mar–May 2018
14
While there is no doubt that brand love contributes hugely to a
brand’s equity and its consideration as part of a shopper’s basket,
retailers cannot solely rely on brand love to drive spend and
purchase frequency online. The changing nature of fashion retail,
and its imminent digital future, necessitates new measures of
success.
Ten years ago, brand love was driven by a retailer’s efficacy
and creativity in the basic principles of product, place, price,
promotion and people, and its ability to offer choice and
convenience. These principles still hold true online, but the
fundamentals of the game have changed irrevocably. The rise
of e-commerce has meant that store format and size – once a
retailer’s strength as the only physical touchpoint with customers
and, hence, one of the dominant drivers of brand love – are not as
relevant in the digital era. Retailers, therefore, need to consider
whether the physical restrictions caused by store format and size,
once major strengths, are now major Achilles heels.
15
Amazon 4.94
ASOS 4.09
Walmart 2.32
Purchase Frequency
JCPenney 2.27
Gap 2.12
Forever 21 2.05
Target 1.99
Kohl’s 1.86
Macy 1.82
Old Navy 1.76
J.Crew 1.76
H&M 1.57
Chart 4: US - Purchase frequency
online among 16-39 year olds
Q. How many times have you purchased womenswear from these retailers
online in the last year? (Among those who purchased any womenswear)
Source: WGSN Barometer data, sample size circa 15,000, time period: Q1 2018
16
New Measures
of Success
17
Online pure plays
define the new
measures of success.
Consumer data from WGSN Barometer shows that 16–39 year olds
consider online pure plays more ‘exciting’ retailers over fast fashion
incumbents, such as Topshop and H&M.
Additionally, our data analysis shows that this perception of excitement
is one of the key drivers of online purchase frequency in fast fashion –
and ASOS and boohoo are exceptional at getting their shoppers coming
back to them again and again. For example, boohoo averages a stated
online purchase frequency of 3.8 annually compared to H&M’s 1.9.
So how are they doing it?
18
Chart 5: UK and US – ‘Exciting’
brands drive purchase frequency
Source: WGSN Barometer data, sample size circa 30,000, time period Sep 2017 - Feb 2018
5.0
4.5
4.0 ASOS
boohoo
Online purchase frequency
PrettyLittleThing
3.5
3.0
Forever 21
2.5 Miss Selfridge Urban Outfitters
Zara New Look
Topshop
2.0 River Island
1.5
1.0
0% 10% 20%
Exciting
19
Chart 6: Being perceived as
‘Stylish’ is no longer enough
Source: WGSN Barometer data, sample size circa 30,000, time period: Sep 2017–Feb 2018
5.0
4.5
4.0 boohoo
ASOS
Online purchase frequency
PrettyLittleThing
3.5
3.0
Forever 21
2.5 Urban Outfitters
Miss Selfridge New Look
Topshop
2.0 Zara
River Island
1.5
1.0
0% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55%
Stylish
20
Perceptions
of style are no
longer a key
differentiator,
but speed to
market is.
A long-held belief is that consumers flock to
fast-fashion retailers who have the most stylish
proposition – a belief that was certainly true
even 5-8 years ago when retailers such as
Topshop were market leaders with their unique
style-led propositions.
However, with almost all fast-fashion retailers
now offering a competitively designed product
range, perceptions of style are no longer a key
differentiator.
21
Chart 7: US – ‘The most stylish’ brands
based on consumer perception
Q. Which of these words/statements do you most associate with the retailer?
Source: WGSN Barometer data, sample size circa 15,000, time period: Mar–May 2018
STYLISH
ASOS 44.0%
JCPenney 43.8%
H&M 42.6%
Kohl’s 42.5%
Old Navy 37.1%
Gap 30.5%
Target 29.3%
Amazon 23.8%
Walmart 20.2%
22
Same as the UK,
perceptions of style
are also not a clear
driver of purchase
frequency in the US.
23
What is increasingly pertinent is speed to market, which online pure
plays, unencumbered by store portfolios and following a test-and-
repeat business model, are excellent at.
Online pure plays’
agile response to
trends and regular
updates to basics,
breeds desire and
an urgency among
customers to visit
regularly, generating
excitement around
their product
proposition.
Without the benefit of a physical touchpoint with their customers,
online pure plays are increasingly using their data to understand and
react to their younger consumers’ fickle tastes. This approach ensures
their customers are at the heart of their decision-making process –
from product range, depth and pricing, to communication – evident in
the fact that customers feel that online pure plays’ style offerings are
more targeted to them than established retailers, whose offerings, by
comparison, feel more generic.
24
Chart 8: UK – Brands that suit my
style based on 16–24 year olds
Q: Thinking about when you visited in-store/online and bought
something, how satisfied were you with the following? (10 =
completely satisfied, 0 = Not at all satisfied, ? = Don’t know/not sure).
Source: WGSN Barometer data, sample size circa 15,000, time period: Q1 2018
ASOS + 8.34
PrettyLittleThing + 8.23
Missguided + 8.23
boohoo + 8.11
New Look + 7.91
H&M + 7.84
Topshop + 7.80
25
Think of newness
beyond product
For every fast-fashion retailer, delivering newness is a big source
of concern. And for most retailers, newness has always been
considered predominantly a product imperative and the one
way that retailers can generate feelings of excitement.
Unlike multichannel retailers’ struggle with sporadic drops,
online pure plays’ test-and-repeat strategy means they maintain
a regular drop of new-ins and use frequent markdowns as their
key customer acquisition tool. This ‘constant assault’ strategy
puts pressure on established fast-fashion players to deliver
regular newness.
So this means that established players such as Topshop and
H&M have had to fundamentally change their approach to
phasing, so as to drop new products more frequently – a fact
evident in the flattening online phasing patterns for established
retailers such as H&M and Topshop (see Chart 9 overleaf).
26
Chart 9: ASOS and boohoo – Monthly
volume of new-ins and markdowns
10,000
69%
New-Ins
% Markdowns
ASOS
41%
3,000 96%
boohoo
New-Ins
% Markdowns
60%
Source: WGSN Instock data, time period: Oct 2016–Feb 2018
Chart 10: H&M and Topshop – Monthly
volume of new-ins and markdowns
1,000
New-Ins
66% % Markdowns
Topshop H&M
32%
1,500
New-Ins
% Markdowns
47%
6%
Source: WGSN Instock data, time period: Oct 2016–Feb 2018
27
Chart 11: UK – Correlation between
‘Newness’ and ‘Excitement’
Size of Mark = total volume of new-ins A/W17
20% Topshop
New Look
Missguided
% of Newness A/W17
Miss Selfridge
Zara ASOS
10% River Island
boohoo
0%
0% - 10% 15% 20%
Excitement
Source: WGSN Barometer data, sample size circa 30,000, time period: Sep 2017–Feb 2018
This move towards more spread out drops is a much needed one, and goes some way in
making established fast-fashion retailers more aligned with online pure plays. However, a
look at Chart 11 on the left shows that online pure plays do not necessarily have the highest
newness levels throughout; and yet, they are considered the most ‘exciting’ -
so product alone cannot
be responsible for these
perceptions of excitement.
28
So if established
retailers are broadly
aligned with online
pure plays in terms
of perceptions of
style and newness,
why are online pure
plays considered
more exciting?
29
Targeted
communication of
newness delivers
excitement and
engagement -
Online pure plays are unique and market-leading in their very targeted
communication, ensuring dynamic imagery and energetic wordplay
(‘oh-hey vacay’) through product images and marketing. In addition,
they regularly update editorials, create targeted product-led content
and primarily engage through social media – all of which serves to
create a perception of regular newness and keeps landing pages fresh.
Through these targeted initiatives, they keep building buzz around
their product proposition, create an aspirational, engaging community
and thus entice shoppers regularly, leading to higher levels of purchase
frequency online.
Increasingly, these are the standards that any fast-fashion player
operating online has to compete with, as young shoppers will continue
to demand excitement and near-instant gratification; so established
retailers have to match up if they are to succeed online.
30
Zara Case Study -
How the veteran retailer uses agility to its advantage
For every fast-fashion retailer, delivering newness is a big source of concern.
While some retailers have responded to consumers’ demands for newness by
spreading out their new-in drops, Zara has stuck true to its established and
successful strategy.
Using WGSN Instock data, our analysis shows that Zara maintains a clear
phasing pattern – evident in the ‘wave’ pattern of drops; it also keeps new-in
volumes relatively low compared to peers. So while Zara may not be considered
the most ‘exciting’ retailer, its phasing strategy and data-driven agile assortment
create demand for it’s new products - evident in the retailers continuing
commercial success.
(Continued on pages 32 and 33)
31
By bringing in regular but low volumes of products (compared to its peers), Zara
not only maintains regular levels of newness, but creates ‘perceived scarcity’,
thereby creating demand for its newness. While Zara’s phasing patterns hold
across both the UK and US markets, the retailer uses its strategy of highly
dynamic stock assortments to tailor assortments to local shoppers’ tastes.
Chart 12: Zara UK phasing pattern
600
85%
New-Ins
% Markdowns
Zara
6%
O N D J F M A M J J A S O N D J
16 16 16 17 17 17 17 17 17 17 17 17 17 17 17 18
Source: WGSN Instock data, time period: Oct 2016–Jan 2018
Chart 13: Zara US phasing pattern
83%
1,400
New-Ins
% Markdowns
Zara
N D J F M A M J J A S O N D J F
16 16 16 17 17 17 17 17 17 17 17 17 17 17 17 18
Source: WGSN Instock data, time period: Nov 2016–Feb 2018
32
Newness perception more
vital than volumes
Zara amplifies the newness effect through both its in-store and online merchandising.
In-store merchandising (store fits and layouts, outfit building on mannequins and window
displays) is updated very regularly, so walking into each store feels like a fresh experience
every time.
Online, Zara recreates this experience though its frequently updated, beautifully
shot editorials, which create a perception of newness by offering something fresh and
engaging to shoppers every time they visit. By communicating about new products
regularly and appealingly, Zara not only ensures newness, it also breeds desire for it and
generates urgency among consumers to visit regularly.
Ensure consumer
reactivity through clear
phasing and markdown
strategy
But, the true value of Zara’s newness strategy lies in the manner in which it works in
conjunction with its markdown phasing (i.e. when it discounts), which works almost
exactly opposite to new-in phasing.
When Zara discounts heavily, it doesn’t bring in huge volumes of new products; and when
it brings in new products, it doesn’t discount heavily – thereby creating a clear signalling
pattern to consumers that ensures reactivity. As Zara discounts only strategically and for
limited periods, it maintains price integrity, thereby imbuing its new-ins with more value.
In addition, Zara’s sales benefit from pent-up demand.
Zara’s strategy demonstrates that there are several moving parts to newness: dropping
regular products isn’t enough – retailers also have to create demand and desire for them,
and to do so, they need to think beyond a product-driven newness strategy.
33
Key
Takeaways
34
A sense of excitement is
one of the key measures
of success online.
Data analysis shows that being seen as an exciting retailer is one of the key drivers
of online purchase frequency in fast fashion. Online pure plays are currently
driving this, and established retailers must catch up.
To generate excitement,
perception of newness
is more important than
actual volumes.
For the fast-fashion market, retailers must think of newness beyond product;
they must also consider how to create demand and desire for it. When competing
alongside super-speedy ASOS and boohoo, stores just cannot match up, as they are
plagued by long lead times and store management. Therefore, retailers need to drive
home the concept of perceived newness, where it is less about what is being sold, but
rather how it is being sold.
35
Build perceptions of
excitement through
regular editorial updates,
content and social
engagement.
By communicating about new products regularly and appealingly, retailers can not only
ensure newness but also breed desire for it and generate urgency among consumers to
visit regularly. A reactive merchandising approach must be utilised in addition to this –
both online and in-store – to react to short-term changes in consumer demand. Existing
products can be restyled and repurposed alongside other items, mimicking the concept of
newness – vital to help balance assortments and discourage markdowns.
Use data to your advantage
to develop an agile,
responsive business.
There has never been greater availability of data for retailers – from pricing data, to social
media and customer behaviour. There is great power in this data, that can offer direction
in terms of advertising, product drops and customer engagement – as the online pure plays
have proven with their agility and reactive approach to their consumers’ needs.
Retailers must increasingly use data wisely to react to short-term demand, capitalise on
emerging trends and react to external factors such as the weather. Retailers such as Zara
have built their businesses around data-centric decision-making – a factor that has kept
them relevant in the digital world – while online pure plays are consistently using data to
deliver the right product at the right time to their shoppers.
To truly harness the power of data, it has to be an imperative that filters across all levels of
the business – from senior management to store management. Additionally, there needs to
be an understanding of the context and relevance of the data to business decision-making.
Too many retailers are wedded to old ideas of brand love and Net Promoter Score – which
often narrow the scope of discovery.
36
Methodology
This White Paper is based on the analysis performed by our data scientists and fashion specialists
using our proprietary e-commerce and consumer data sets, Instock and Barometer respectively.
Barometer is our daily consumer intelligence tool that measures the perception of male and female
consumers of more than 300 womenswear and menswear fashion retailers across the UK and US.
At a glance:
• 150,000+ womenswear and menswear consumers interviewed annually across the US and UK.
• 150+ metrics tracked across brand health, consumer and shopping behaviour, customer
experience and media effectiveness.
Instock is our daily retail analytics tool that monitors products on the e-commerce stores of more
than 400 retailers across six regions (Australia, Germany, South Africa, Spain, the US and the UK).
At a glance:
• 400+ different product categories are constantly monitored.
• 100+ million SKUs are constantly monitored.
For this piece of research, e-commerce data analysis is based on women’s products across 53 UK
retailers and across 49 US retailers between October 2016 and March 2018. Specific time frames are
given in the sources under individual charts.
Definitions of key measures used:
• New-ins: new products available online during the specified period by retailer, category or
subcategory.
• Newness (%): new products as a percentage of the total product offering.
• Markdown: if a product is available for purchase at a price lower than the original price listed on
the retailer’s website, we call it a ‘markdown’.
• Markdown percentage (%): this represents all products within a category or subcategory that
have one or more SKUs marked down during a given period as a proportion of the total.
From a consumer data perspective, we have only looked at female shoppers aged 16–39 in both the
UK and US.
We interlock quotas set at a daily, weekly and monthly level, by age, region and socio-economic
group to ensure national representation.
Respondents are permitted to complete the survey a maximum of twice a year.
37
