Turning adversity into opportunity

2020, was an apocalyptic year for fashion retail, traditional retailers, seeing a 90%* plus fall in profits and UK high street net closure rate exceeding 9500 stores.

These bleak and disheartening figures look to worsen in the first quarter of 2021. Adding to this, reports coming from some of Europe’s strongest economies reporting that 1 in 7 companies is in essence a zombie company (https://www.investopedia.com/terms/z/zombies.asp), it could be that recovery will not begin until deep into 2022.***

This said, there is a significant silver lining, for retailers who have embraced ecommerce. Ecommerce sales increase by over 46% in 2020 (Iv)

With this continual trend creating a seismic shift in consumer habits, adaptable and agile ecommerce providers are hitting record numbers and firmly encroaching on traditional high street markets.

However, one element of ecommerce that is fundamentally different to ecommerce is the volume of returns, some sources estimate that these could be as high as 30% (vs 8.9% brick and mortar)(V).

Graphsml

The global fashion industry’s profit is expected to fall by 93 percent in 2020.

For a long time, this has been accepted as being part of the ecommerce journey and as such the focus has been on primary market sales, at the jeopardy of the implications, financially and environmentally for returned items.

This however need not be the case, having a strategy for a secondary market solution is fast becoming a buzz word amongst ecommerce providers, who realise the potential secondary financial reward as well as the opportunity to engage directly with environmentally conscious consumers, who look to spend their disposable income, with companies that aligned with their core values.

Returns aren’t the problem; they are quite possibly the solution!

Sources;

(I) https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion

 (II) https://www.theguardian.com/business/2020/oct/18/huge-rise-in-uk-shop-closures-with-worse-yet-to-come-covid-19

(III) https://www.theguardian.com/business/2021/jan/27/gordon-brown-calls-for-urgent-budget-help-as-1-in-7-uk-firms-face-collapse

(IV) https://internetretailing.net/industry/industry/ecommerce-grew-by-46-in-2020—its-strongest-growth-for-more-than-a-decade–but-overall-retail-sales-fell-by-a-record-19-ons-22603

(V) https://www.invespcro.com/blog/ecommerce-product-return-rate-statistics/

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