What’s eating into Fashion’s business lunch?
Industry press has been reporting that, to date, 2018 has seen the worst trading on record for the UK high street as a whole, with many predicting not much better for the remainder of the year. We’re reading that consumers are spending less, as the cost of living rises and there is a pinch on our purses.
Fuelled not only by inflation and Brexit uncertainty, resulting in the UK having the lowest economic growth last year amongst the G7 nations, but also a shift in lifestyle and attitudes. The vast majority of consumers are still spending their hard-earned wages, but they are simply not purchasing fashion products with the appetite seen pre the 2008 economic collapse. So where are they spending and what’s eating into fashions previously so appetizing lunch?
Tech and High price spending
Customers are still spending and still reaching for the credit card for the high-ticket items. We’re not afraid to part with our cash for the latest phone, home comfort electronics such as TVs or the hottest gadget of the year such as the Fitbit.
It’s expected that consumer spending on apps alone will top $110 billion in 2018. As we increasingly use our tablets and mobiles, the expectation is consumers will wish to acquire more add-ons and seek more experiences via their devices.
We’re also looking to improve our lifestyles and home comforts with increased spending on home gadgets, integrated systems and automated tech. As the technology has become more affordable, 2018 will see more mainstream consumers adopting smart home tech. With currently only 25% of UK homes owning a smart home device there is a huge market opportunity here for tech companies, so expect consumers to be targeted with home tech and their appetite for this to grow.
Wellness has been consistently taking priority for many people as we look to satisfy ourselves with a more balanced and holistic lifestyle. From gym class crazes to the latest diet, wellness is not a new addition to our monthly budgets, but the way in which the industry has grown and adapted to changing tastes, leaving the consumer constantly looking for more. It’s the world’s youngest trillion-dollar industry, worth $3.72 trillion and growing 14% annually (as of August 2017).
The athleisure market has been in the prime position to capitalise on this shift in our shopping habits, naturally picking up the taste for appropriate attire that goes with it. Lulu Lemon saw unprecedented growth for the first 5 years it was listed on the stock market, and despite since running into financial troubles, the brand has now continued it’s risen again. But with our closets full of gym gear that bubble may be deflating slightly. This premium brand, however, has shown innovative ways of veining the community spirit that has grown around the ‘yogi’ movement into their stores. Offering free yoga classes from teachers who own local studios, bringing clientele into the store where many leave with a cheeky purchase, or at least an increased awareness of the brand and increased customer loyalty.
We’re looking to consume and feed our bodies and minds in more ‘natural’ and holistic way than previous generations and the industry looks set to capitalise.
There has also been a consistent increase in mindful vacations; be that a weekend meditative hotel treat to a two-week stint at holistic yoga retreats. Consumers are craving a more considered lifestyle and will apply this approach to all their spending.
This aptly leads to a conversation about ‘experience’ spending, with a tightened budget the average household is not looking to spend on more ‘stuff’. People are spending on experiences, and are more likely to be doing so together. Spending within the hospitality industries (bars, restaurants and hotels) has grown by 4.4% in 2017 following a seven-year trend of uninterrupted growth.
We’re saving for holidays, looking to broaden our perspective with enriching new cultures or to increase out skillset by learning new craft or hobby. There’s been a significant increase in craft workshops, such as the incredibly successful Workbench who host evening classes at pop up venues around the UK where you can carve your own wax ring that is then cast in silver or gold. These nights usually sell out as with many others of this ilk, such as London terrariums and Wildlife drawing. There has also been a boom in café spaces dedicated t bringing back craft nights such as Drink Make Do in Kings cross or Café Craft in Birmingham.
As consumers are drawn to the allure of handmade crafted items, so is the art world, seeing a recent boom in the value of ceramics. With prices of ceramic art at an all-time high. The collective studio space Turning Earth Hosted an event at the Barbican which saw two hour long queues for customers waiting to get inside to purchase and view the pieces by both ceramic artists and hobbyist makers alike.
Consumers are also using their extra time and cash not to shop for more clothes or products, but to have dinner with friends at a great restaurant, enlist in a wine tasting course or attend a local event. Whether it’s wanting to feel part of something to regain that community spirit, or simply being time-poor and looking to utilise the little time we have for pleasure with friends and family, the desire to spend time shopping is ebbing down the chain in our list of priorities.
The Convenience economy
As more and more of us feel time-poor, we’re increasingly spending our money on convenience rather than products. This is documented in the rise of delivery services such as Uber Eats and Deliveroo. Our wallets are stretched and were spending more time at home looking for ways to treat ourselves or just simply too busy. Take away services are cashing in.
Consumers want services at their convenience via multiple devices. Uber Eats and Deliveroo are successful as they tap into a multi-platform approach with customers able to order via multiple devices. The ultimate in convenience food anytime, anywhere, it’s estimated that Deliveroo alone could contribute £1.5bn to the UK economy by June 2019.The desire for convenience isn’t restricted to the food industries; at home, beautician’s and massage services have also seen an increase with an estimated value of £6bn, as of Feb 2017. The desire for an at-home pedicure, massage, even fake tan is proving increasingly popular, and although many services are a touch more expensive than the traditional high street beautician, there’s no doubting that consumers are valuing the convenience and comfort of the service over heading out to the nearest beautician.
It appears consumers are still consuming, and we’re still prepared to part with our cash, but just not for more ‘stuff’. Whilst fashion may be down, other channels are increasing. So how can traditional fashion retailers retain the consumers’ imagination when we’re simply not seeking more ‘stuff’? The two biggest takeaways from the major industries biting into consumers pockets are:
- Convenience: Take a tip from the convenience economy drivers and look at new delivery models and tech that can help improve the accessibility of your products to market. Make it so easy to purchase and receive the product at the consumer’s convenience to break down that checkout barrier.
- Experience: The experience of buying a new piece of clothing needs to be re-imagined by high street retailers to reinvigorate the consumer’s desire to purchase when it’s not driven by necessity.2018 is sure to be a tight year for retailers, but those accessing and implementing the most innovative practices and adapting their business to harness the current consumer mindset will be best placed to ride out turbulent times.
We’d love to know what you think about how your business is informed by these huge changes and please share if you’ve enjoyed this article.