It is not a word play. It is a rather a semantic condensation to spot a new possible dimension of post-Covid retail. In such dimension the line between physical and digital fades and turns, to brands, into something they must absolutely understand and meet
Had they told us, a couple of years ago, that the future of retail would have been the way it is right now, most likely we would have been flabbergasted, while being sceptical and incredulous at one time. In other words, we would have imagined it like a possible dimension, but, at the same time, like a rather unlikely scenario too.
Yet, then the pandemic suddenly broke out: a tragic event which is however bound to “boost” the future and make it faster, as everyone agrees. That is why post-Covid retail might be potentially onlife, which we all consider, for the time being, plausible and understandable. What does it mean?
Post-Covid retail is onlife
The latest Altagamma Retail Insight, recapped by daily newspaper Il Sole 24 Ore, took a clear picture of the overall situation. We have just stepped into “an all-encompassing digital dimension”, which consists of “stores turning into research labs and buyers looking for the best possible shopping experience, both stopping by the boutiques and sitting on the couch at home”.
Therefore, “the retail business, deeply affected by the pandemic, is changing right now: companies and brands must rise to the challenge and strive to go aboard this multi-faceted shuttle, which is moving so fast. Such new shopping world is more and more patterned after the concept of onlife, that is, a dimension where the line between digital and physical fades and disappears in the end”.
Digital takes a great leap
According to Bernstein’s financial analyst Luca Solca, throughout the year affected by the Covid epidemic outbreak, e-commerce fashion, including luxury, made a 12-month journey which is the same as a 5-year development plan. It was quite inevitable: in fact, the closure of stores alongside online sales drove fashion brands towards a necessary digital transition to survive. Basically, “in 2020 online sales used to account for about 50 billion euros.
Looking at the high-end global turnover, online sales amounted to 12% in 2019 and enjoyed a boost, up to 23%, in 2020: they are going to account for one third of total sales by the end of 2025”. As reported by Il Sole 24 Ore, we are talking about gigantic figures: “brands will have to deal with this scenario while looking for the most suitable business channels to support their growth”.
In such context, players who manage to upgrade the concept of “experience” stand out (and become more important) while dealing, firstly, with those brands consistently on the lookout for up to date and feasible sale solutions.
That is why some platforms “such as Farfetch and Lyst – pointed out the daily newspaper –, which can rely on millions of users and play worldwide on a global scale, keep making progress thanks to a close relationship with fashion brands, e-concessions and by profitably sharing data and information about buyers.
E-concessions enable platforms to directly tap into stocks owned by brands, which keep holding them, by paying approximately a 15% commission on retail price, which is clearly much lower compared to 40-50% to be paid on wholesale. For the records, on the wholesale channel (and this is not a coincidence) luxury brands are progressively decreasing”.
From buyers’ perspective, effects and consequences are very well described by Chris Morton, founder, and Chief Executive Officer of Lyst (the largest fashion search platform in the world). “At this point, online and offline make no more difference to customers, who simply aim at a touchpoint with the brand: that is what really matters to them”.
Top and small brands
As everyone openly says, due to such ongoing change the gap between top and small brands is apparently going to turn remarkably bigger. The former will benefit from that of course. The latter, then, “are supposed to find their own place in the current scenario, which is getting more and more competitive: this is going to be the challenge to stand out in the business”, wrapped up Solca.
Which way? They must focus their efforts on “research, service and relations with customers, meeting their demand and needs. That might also entail, for example, going along with them on their new journeys”. There we go with the other side of onlife shopping: it relies on the recovery of tourism travelling and shopping.
Travelretail, which drives fashion brands and their turnover prominently, is the most important unknown variable on the post-Covid stage. On the one hand, there is no doubt it is going to start again; yet, on the other hand, still we are unable to predict how and to what extent
Chinese buyers will be playing a leading role: in fact, for the time being, they look quite happy to go shopping and buy in their home country. We will analyse this topic more closely another time.