The 2019 financial results are in for the retail, fashion and luxury sectors

2019 sees a consolidation of recently emerging trends. Traditional retailers are in crisis, while retail companies that have chosen to invest in omnichannel solutions and new technologies continue to gain ground.

Retail and Fashion & Luxury Industry Results in 2019 show traditional retailers in crisis, in favor of omnichannel Retail companies.

Is the traditional retail sector in crisis? 

A total of 4,200 stores closed in the US in the first quarter of 2019 alone. That’s a 23% increase compared to the same time last year. 2018 was a very difficult year for the retail sector, resulting in the closure of numerous shopping centers. However, the crisis has mainly affected retail giants, who have got into difficulty because they are less adaptable and flexible.

In actual fact, more stores are opening than closing, and this fits in with a new trend that sees online companies opening physical stores, rather than the other way around.

Why are omnichannel retailers doing so well?

Omnichannel retailers have been successful for some years now.

The Harvard Business Review* collaborated with a major US company that manages hundreds of retail stores to produce a study showing that omnichannel retail strategies are beneficial to companies.

Investing in omnichannel solutions leads to positive results because:

• Omnichannel customers interact with retailers on multiple touch points. Not only do they use smartphone apps to compare prices or download vouchers, but they are also frequent users of in-store digital tools such as interactive catalogues.
• Omnichannel retailer customers have more money than single-channel customers. Omnichannel customers spend an average of 4% more per in-store purchase and 10% more online compared to single-channel customers. Furthermore, the more channels a buyer uses, the more likely he or she is to spend more in store. For example, customers who use more than four channels spend an average of 9% more in store than those who only use one channel. Overall, this leads to a 13% increase in in-store spending among omnichannel buyers.
• Omnichannel retail customers are more loyal. In fact, within six months of making an in-store purchase, 23% of customers make repeated purchases at the same chain.

How did the fashion and luxury sector fare in 2019?

The first six months of 2019 saw the fashion and accessory textile sector cement its growing export trends, with a 7.2% growth rate and a total value of almost 33.5 billion euros**.

The sector saw such positive results due to an increase in the value of goods, which allowed the Italian fashion sector to reposition itself at a higher value, compensating for the sharp decline in purchase volumes as a result.

“We’re very proud of these results because they prove that we have a quality supply chain that is able to survive market adversities caused by factors such as Brexit and changing tariffs,” states Claudio Marenzi, CEO of Confindustria Moda.

Deloitte further confirmed the trend, stating that the world’s 100 largest luxury goods companies generated 247 billion dollars in sales in 2017, with an average of 2.47 billion dollars per company.

Thanks to stable exchange rates, the top 100 leading companies saw a growth rate of 10.8%, which is a significant improvement on the 1% growth rate recorded last year.

What conclusions can we draw from the success of the retail, fashion and luxury sectors in 2019? 

“In an era of rapid change and evolution, companies operating in the luxury sector face numerous economic, social and generational pressures.

We’re dealing with a new generation of consumers with radically different consumption habits and profoundly influenced by social media and data sharing. This means that companies have no choice but to make targeted investments in digital technologies that allow them to implement new, effective strategies based on the intelligent use of shared data. By adopting these strategies, companies will gain the loyalty and satisfaction of new consumers,” states Giovanni Faccioli, Deloitte Fashion and Luxury Leader Italy.

Made in Italy brands and new digital technologies are contributing to the success of international businesses.

Despite the aforementioned results, the journey towards curating a mature, and high-performance omnichannel experience is still ongoing. Omnichannel experiences such as BOPIS (Buy Online Pick Up In-Store) are now considered fundamental by many consumers but have still only been implemented by 42% of retailers.

Investments in this area of the retail sector still need strengthening to allow customers to choose when and where they want to receive their purchases within the speediest possible timeframe.

Artificial intelligence and machine learning are helping to accelerate the adoption of omnichannel solutions thanks to IT performance monitoring, inventory optimization, stock visibility, fraud detection and much more.

Bizeta helps companies operating in the fashion and luxury sector to implement customized development and internationalization projects. 

Contact us for more information.

*Sopadjieva, Dholakia and Benjamin, 2017

**Teleborsa/Confindustria Moda