Challenges and Opportunities Lay Ahead
Online fashion retail is set to experience an upward trend over the next few years. Rebounding from the declines witnessed at the end of the online sales boom caused by the COVID-19 pandemic. Consumers returned to in-store shopping but are now facing inflationary pressures affecting the wider economy. Despite these challenges, the sector is confidently expected to grow, driven by evolving consumer behaviours and technological innovations.
Technological Developments Provide Consumers With More Options
In 2022, online platforms captured two-fifths of fashion spending, a significant number considering that there are no longer any barriers to in-person shopping. This indicates a strong consumer preference for online shopping within the fashion industry. It is a trend likely to continue and expand, but not dominate, the fashion industry.
Looking ahead, the market is expected to develop into a more integrated multi-channel environment over the next five years. This evolution will likely see a seamless blend of online and offline experiences, offering consumers the convenience of digital platforms along with the tangible benefits of physical retail.
A notable development in this space is the experimentation with live shopping features by brands and retailers, like M&S and Threads Styling. These innovations represent an effort to enhance the online shopping experience, making it more interactive and engaging for consumers. Live shopping, which often involves real-time product showcases and interactive sessions, can bridge the gap between online convenience and the experiential aspects of in-store shopping.
Overall, the online fashion retail market is poised for growth and transformation, adapting to changing consumer preferences and leveraging technology to create more immersive and integrated shopping experiences.
Online Shoppers are Driving New Habits and Opportunities
The future of online fashion retailing is poised for significant evolution, driven by increasing competition, changing consumer behaviours, and technological advancements.
The pure-play fashion sector, which operates exclusively online without brick-and-mortar stores, has become markedly more competitive. ASOS has established itself as a leading player in this space while Chinese retailer Shein is exhibiting the fastest growth in the sector, reflecting the global nature of online fashion retail and the increasing importance of emerging markets.
A key trend shaping the future of online fashion retail is the rising use of smartphones, particularly among older millennials. With a 19% increase in smartphone usage for shopping in this demographic, there’s a clear shift from traditional desktop and laptop browsing. Companies should adapt to this change by leveraging the additional data available from mobile devices, such as camera capabilities and location tracking. Brands and retailers can use this data to provide a more personalised shopping experience and better meet shoppers’ needs.
There’s also a growing concern among millennials about sustainable practices, particularly in terms of packaging. 7 in 10 women aged 16-24 say sustainability is important to them when buying fashion. This demographic is increasingly conscious of the environmental impact of their purchases, prompting online fashion retailers to consider eco-friendly packaging options. Adopting sustainable practices is not just an ethical imperative but also a business strategy to attract and retain environmentally conscious consumers.
Significant Market Potential Still Exists for Online Retailers
The market potential in online fashion retail lies significantly in expanding the male customer base. While the majority of both men and women have reported making online purchases in the past 12 months, women aged 33-54 are twice as likely to shop online compared to their male counterparts. This discrepancy highlights a notable opportunity for growth in the male market.
Given the already strong presence of female shoppers in the online fashion space, retailers have a solid foundation to build upon. However, to tap into the male market, a strategic approach tailored to male shopping preferences and habits is necessary. This might include curating more male-oriented fashion selections, employing targeted marketing strategies, and considering the unique factors that influence male shopping behaviour online.
The integration of innovative features like live shopping by brands such as M&S and Threads Styling also points to a market that is evolving and adapting to new consumer behaviours and preferences. This evolving landscape presents an ideal backdrop for targeting the underrepresented male demographic, potentially leading to a more balanced and expanded online fashion retail market.
By focusing on the male market and continuing to innovate in line with broader market trends, online fashion retailers can unlock new growth opportunities and further solidify their presence in the digital marketplace.
Looking Ahead with Mintel
The future of online fashion retailing is set to be shaped by increased competition from diverse global players, the shift towards mobile-first shopping experiences, and a heightened focus on sustainability.
A well-executed two-pronged strategy will enable brands and retailers to capitalise on emerging and established technological opportunities which can both widen their demographic appeal in underserved markets and defend their businesses against encroaching competition.
Retailers who can effectively integrate these elements into their business models are likely to succeed in this rapidly evolving market.
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