INDUSTRY PROFILE: APPAREL
The revenue of the U.S. apparel market was $328 billion USD in 2017. Top apparel companies are Nike, Ralph Lauren, Old Navy/Gap, and Levi Strauss. Statista projects that the industry will grow another $62 billion USD by 2025. High-fashion leaders are Chanel, Yves Saint Laurent, Christian Dior, and Dolce & Gabbana. Adoption of disruptive technologies has the potential to enable new innovations in fashion. Robotics, mobile internet, analytics, and artificial intelligence are threatening the status quo but offering hope to millennials. “Many consumers today expect perfect functionality and immediate support at all times,” according to McKinsey FashionScope. The fashion value chain is adopting rich data analytics and granular customer insights to optimize product replenishment and price dynamically.
CUSTOMERS AND SEGMENTS
The industry generates two percent of GDP in the world, although 75 percent of sales are concentrated in China, the E.U., Japan, and the U.S. Each person in America buys 64 garments annually, while teens spend 40 percent of their available cash on apparel. Brandon Gaille reported that the average household spends about $1,700 per year on apparel, including footwear and accessories. Nearly 7 million women shop for apparel online in the U.S. and 58 percent of them are in between the ages of 25 and 45. With an abundance of mobile payment platforms already available globally, consumers are beginning to expect fashion houses to offer convenient mobile experiences. With greater personalization and curation tailored to each consumer, brands must radiate authenticity and individuality.
PROMISES AND CUSTOMER EXPERIENCE
The online journey is becoming more personalized. The in-store experience is all about choice and flexibility, so many consumers perceive return policies as part of a retailer’s brand promise. The National Retail Federation (NRF) estimates that 10 percent of garments are returned from buyers, which equates to $351 billion USD. NRF estimates that return fraud accounts for at least $22.8 billion USD. “Wardrobe renting” accounts for 39.7 percent of the fraud, while the return of shoplifted merchandise is a whopping 68.3 percent of the abuse. Retailers can modify return policies to find a balance between what consumers want and the financial losses from fraud. Bain & Company found that retailers with consistently positive customer experience see revenue grow faster by four to eight percent than market peers.