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6 rules for retail innovation

Innovation is one of those words that is often misconstrued in retail. Those who avoid it, claim they want to stay away from gimmicks. And those who love it, often use it as a PR-driven initiative or as an opportunity for technology to be deployed without much strategy. 

Sadly, innovation in retail has been largely about bells and whistles and not true fundamental change. 

Innovation in its true sense of the word – implementing new approaches to generate a different result – should be critical for anyone operating a major retailer or brand today. But it’s definitely not. A recent study by Gartner shows companies typically allocate 90% of their tech budget to “keeping the lights on”, or indeed what we can call ‘incremental innovation’, and only 10% to that which is deemed transformative.

The question then is how do you get it right? And how do you do it to bring progress and actual results? Frankly, the first step is to move away from old approaches. Over the past decade, numerous retailers around the world have introduced internal labs, accelerator programs and incubators. And what we’ve seen time and again, is that while such programs start strong and sharp, over time they are devoured and diminished by surrounding day-to-day business processes. The outcome even with the right intention, tends to only be marginal. 

What the industry needs is a new mindset and a willingness for new ways of working. 

We believe innovation should be actionable by connecting the right strategies to the right solutions, and closely managing integrations to make them a reality. This ties to our mission of solving challenges and facilitating change. So here are six rules for industry executives to follow to make this a reality:

1/ Validate the challenge

Deploying solutions without a defined problem is an unproductive method of innovation. It’s too easy to get lost in a sea of internal objectives and cost-cutting exercises while forgetting about what your customers really desire or need. 

To successfully determine the challenge, you must align on a united vision. Innovation internally is hard – it’s often political and frequently siloed. The best case studies out there have come from companies who have validated their roadmaps through a process of internal buy-in so they can achieve a common goal.

2/ Bring the outside in

Establishing a team that can bring different perspectives, both from outside the industry and in, as well as varied cross-disciplinary inputs, is always going to lead to greater results. New ideas come from diversity of thought – taking different things that work from other experiences, and making a new recipe out of them. It’s about getting outside your own department and making sure you have people from other parts of the company involved. Cross-pollination leads to the best ideas and strongest results. 

It’s for this reason we believe in the notion of “open innovation”: stepping outside of the internal model of building to co-create with a broader innovation ecosystem. It’s about resource and expertise coming in from experts on the outside, connected to ideas from around the globe. And it’s about increasing your chances of success by leveraging the knowledge and harnessing the success of others.

3/ Avoid the one-trick pony

The most successful projects should be updated over time, as opposed to achieving one incremental thing for a singular moment. This is about PR being the icing on the cake and not the cake itself. 

We all know innovation should have a broader goal, and often the challenge is convincing stakeholders to invest in the long term, laying the groundwork so that you gain economies of scale, not to mention scale itself, for every integration. It’s better to deploy two technologies with a clear purpose and defined ROI, then 10 pilots without strategy or buy-in.

4/ Mentor your partners

Simply put, you can’t treat startup partners like traditional vendors. These are companies big and small that provide collaborative partnerships. It’s crucial to work in a more hands-on sense, and to get help to manage these integrations if your own bandwidth is limited. 

Even when it is clear what value a technology brings to a retailer, partnerships fail due to cultural differences and conflicting expectations. To avoid this, try making time to offer your mentorship to these partners. Startups are not going to necessarily understand how to navigate your red tape or be as flexible with payments or delivery deadlines being moved. But with a strong connection in place, they could give you opportunities to co-create a brand new offering or be first to market with a technology.

5/ Empower your store teams

One of the biggest missteps with innovation is the idea of dumping new tech into store, for instance, without fully training or driving advocacy among employees. New technologies are worthless without buy-in and understanding to help things work smoothly and ensure shopper engagement. In-store, we’ve seen this with everything from smart mirrors to immersive experiences. 

This is simply about demonstrating the benefits in place for sales associates. If all this piece of tech does is add more to the checklist of things they need to do and doesn’t help their day-to-day relationship with the customer, it won’t interest them to help you as a retailer. Innovation ultimately needs to be enhancing the lives of those who have to use the tech.

6/ Calculated risks are better than failure

Innovation is usually associated with experimentation and accepting the Silicon Valley notion of ‘failure’. We’ve seen retailers trying to emulate this approach by investing in labs and incubators that fail to impact the bottom line. After all, retail corporate culture doesn’t believe in the “luxury” of merely trialing projects that won’t lead to actual results. 

So how can you test and learn with more of a conservative mindset? We believe there is a way to strategize calculated risks that allow learning and innovation to take place. Setting out a clear path of KPIs and objectives from the get-go with real measurements is the smarter way to ensure success. There’s no way around it – true innovation today is about results.

How are you thinking about retail innovation? The Current Global is a transformation consultancy driving growth within fashion, luxury and retail. Our mission is to solve challenges and facilitate change. We are thinkers and builders delivering innovative solutions and experiences. Each of the rules referenced above is matched by one of our products and services. Interested in how? Get in touch to learn more.

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Campaigns digital snippets e-commerce product Retail social media sustainability technology

ICYMI: Burberry and Farfetch, Natalie Massenet on exiting BFC, Alibaba’s retail strategy

Cara Delevingne in Burberry latest collection
Cara Delevingne in Burberry’s latest collection

A round-up of everything you might have missed in relevant fashion, retail and tech industry news over the past week.

TOP STORIES
  • Burberry to expand online reach with Farfetch tie-up [Telegraph]
  • For Natalie Massenet, change brings opportunity [BoF]
  • Alibaba invests another $1.3 billion into its offline retail strategy [TechCrunch]
  • Can Marchesa survive in a post-Weinstein world? [Refinery29]
  • NYFW roundup: #MeToo conversations, immersive runways and supersized robots [TCDaily]
TECHNOLOGY
  • In-depth: H&M puts tech at the heart of action plan to turn the brand around [TCDaily]
SUSTAINABILITY
  • When it comes to millennials’ fashion buys, price and convenience trump sustainability [WWD]
  • If you care about ethical fashion, it’s time to stop sleeping on G-Star Raw [Fashionista]
RETAIL & E-COMMERCE
  • Selfridges opens in-store boxing gym in “world first” [RetailGazette]
  • WeWork moves into retail with new partnership with J.Crew [Glossy]
  • Mulberry takes over Spencer House for London Fashion Week 2018 [Campaign]
  • Fewer happy returns in retail land as companies tighten generous return policies [Fung Global Retail Tech]
  • Target will roll out same day delivery in Twin Cities next month as it faces off with Amazon [StarTribune]
  • Google wants to change the way we shop online, beginning with beauty brands [Campaign]
MARKETING
  • How Nike’s “Nothing Beats a Londoner” advert taps into real London culture [HypeBeast]
  • PORTER becomes editorial voice across Net-A-Porter as it goes digital with daily updates [TheIndustry]
SOCIAL MEDIA
  • Inside Vans’ social media strategy [Digiday]
  • Pinterest now lets you archive boards, rearrange pins and more [AdWeek]
PRODUCT
  • This blouse comes with free performance coaching sessions [FastCompany]
  • Macy’s is making history with its new hijab-friendly clothing line [Brit+Co]
  • Customization in beauty is on the rise, but its scalability is uncertain [Glossy]
BUSINESS
  • Blockbuster Gucci continues to boost Kering [BoF]
  • Fashion unicorn Farfetch will soon interview bankers for its New York IPO [CNBC]
  • Richemont uncovers counterfeiters abusing customer service line to copy designs [WWD]
  • The future of luxury: 7 trends reshaping the luxury industry [CBInsights]
Categories
digital snippets e-commerce product social media technology

What you missed: See-now-buy-now, Nicopanda x Amazon, Kering tops sustainability index

Nicopanda spring 2018 will see one-hour delivery from Amazon
Nicopanda spring 2018 will see one-hour delivery from Amazon

A round-up of everything you might have missed in relevant fashion business, digital comms and tech industry news over the past week.


TOP STORIES
  • Three seasons in, see-now-buy-now is going nowhere [Glossy]
  • Amazon tests one-hour catwalk-to-doorstep deliveries at Nicopanda show [Reuters]
  • Kering tops the Dow Jones Sustainability Index once more [FashionUnited]
  • British Fashion Council launches climate change initiative with Vivienne Westwood [BoF]

BUSINESS
  • The trouble with Topshop [BoF]
  • Hermès hits record first-half profit [FT]
  • BFC/Vogue Designer Fashion Fund announces JD.com partnership [The Industry]
  • Giorgio Armani on London fashion week: ‘It’s the only true city where you see the creative turmoil’ [The Guardian]

SOCIAL MEDIA
  • Victoria Beckham takes top spot in digital engagement during NYFW [WWD]
  • How Mario Testino found a new lens through Instagram [Campaign]

MARKETING
  • Mick Rock shoots Rome residents for Gucci campaign [Dazed]
  • Inside Dior’s first micro-influencer campaign [Glossy]
  • Puma signs long-term partnership with Selena Gomez [FashionUnited]

RETAIL & E-COMMERCE
  • Liu Qiangdong, the ‘Jeff Bezos of China’, on making billions with JD.com [FT]
  • eBay moves into luxury with fashion start-up Spring [Racked]

TECHNOLOGY
  • All the tech plans for Tommy Hilfiger’s LFW show [Forbes]

PRODUCT
  • Stone Island’s thermo-sensitive ice knitwear collection changes colour in cold weather [Design Boom]
  • Nike introduces Flyleather, its latest ‘super material’ [BoF]
  • Nike unveils ‘connected’ jersey for NBA partnership [BoF]

START-UPS
  • Fashion start-up wants customers to be able to customise every item they buy [PSFK]
  • Natalie Massenet joins seed funding for hosiery start-up Heist [BoF]
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business e-commerce Editor's pick mobile

Burberry results: Digital and mobile make it a luxury firm in a million

Burberry
Burberry

Burberry’s in the news at the moment. No, wait, Burberry’s always in the news. Just more so at the moment. Only a couple of days after announcing Christopher Bailey would step down as CEO, the company issued a trading update this morning that the news media is jumping all over.

Newspaper and websites largely jumped on the negatives in the announcement and perhaps that’s not a shock given that Burberry has some major challenges ahead (not least among them a new management structure that replaces Christopher Bailey with an external CEO while appearing to give him as much power as ever).

But what’s more interesting than the basic sales figures is its news around digital. Digital grew strongly in all regions during Q1 (no surprise there) and Burberry’s digital growth is being driven by mobile that now approaches 60% of traffic to its site.

Let’s just step back a minute and look at that figure. This is a luxury brand, part of a sector that took virtually a decade to even recognise the existence of the internet. It’s also part of a sector that loves beautifully crafted websites that are seen at their best on large retina screens.

Yet that 60% means Burberry is enjoying the kind of website traffic via mobile that we’d expect to see in the mass-market from brands such as New Look or River Island.

It’s a testament to the investment Burberry has put into digital and a signal to its luxury peers that the ‘M’ in m-commerce can stand for lots of things as well as mobile (Mass, Margins, Momentum, and downright Marvellous, for instance).

Importantly, Burberry has also focused clearly on omnichannel where the stores work with the e-store and the warehouses for a seamless customer experience. The company said this morning that its single pool of inventory model has been further expanded, with about 90 stores now live globally, improving stock availability for all online markets and helping to drive digital/mobile growth further.

Now for the numbers

So, digital aside, what else did we learn this morning? Well, the market is still challenging. Currency-neutral retail revenue was flat in Q1 at £423m, although exchange rates boosted it by 4% in total. But comp sales fell 3%.

There was good news from Asia Pacific as revenues rose and the UK delivered mid single-digit percentage growth, with a rise late in the quarter. But the troubled Hong Kong and Macau markets remain a problem, tourists flows in Japan were down, demand in the US is uneven and mainland Europe is “depressed”, especially France and Italy.

More good news please. OK, fashion apparel and accessories outperformed and the main campaign that launched at the end of May – which was more product focused, featuring the Patchwork bag with new buckle hardware – seemed to be having an effect.

Relative strength in bags was driven by the runway rucksack (as pictured above), while lightweight outerwear performed well, in particular cashmere trench coats and newly-launched menswear styles.

The company also saw an increased number of personal appointments as it boosted its ultra-luxury services and there were more in-store craftsmanship events to enhance customer engagement.

Burberry said the external environment remains challenging and underlying cost inflation pressures persist. Since May, its outlook for wholesale revenue, particularly in the US, is more cautious for both the first and second halves of the year, in fashion and beauty.

The company now expects currency-neutral wholesale revenue to fall more than 10% in the first half to September 30, while retail revenue should be up in the low single-digits.

Thought for the day

But as we digest these figures, we have to remember that Burberry isn’t alone in this. The entire luxury sector is seeing challenges at present and all of those negative listed above can apply just as much to most of the world’s most desirable brands as to Burberry.

What Burberry is almost alone in though is its almost-obsessive focus on digital. And that’s something that can only help it in the tough times ahead.

This post first appeared on Trendwalk.net, a style-meets-business blog by journalist, trends specialist and business analyst, Sandra Halliday

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social media

New Look: Social media and the globalisation of trends

New Look

There was one particularly interesting bit about New Look’s results announcement yesterday, and that surrounded how global trends now travel thanks to social media.

As its profits surged 17%, the value fashion retailer’s CEO Anders Kristiansen said that “fashion is becoming more and more the same around the world”.

Now that may seem like a no-brainer but until now, it hasn’t been. Having worked in fashion for more decades than I care to remember, I’ve often been surprised about how slowly or how little trends do play out around the world. And I’ve seen more than one ‘global’ retailer exit certain markets because the product designed in country X just doesn’t resonate in country Y.

The arrival of the internet itself didn’t necessarily change this, it just made it more noticeable.

But now it’s social media that’s calling the shots and that has made a huge difference. Trends are travelling fast and exposure to those trends is rubbing away at the differences in taste between countries.

“We used to see a big difference in different countries, but because of social media, trends are the same,” Anders added. “A massive trend in the UK — like bomber jackets at the moment — is the same in Beijing and Bordeaux.”

Which must be good news for New Look as it’s earmarked £100m worth of investment to expand into Germany and grow its existing stores in China. It’s targeting 75 German stores within five years (from the current single concession store there) and plans to open 50 more Chinese stores for a total of 142.

This post first appeared on Trendwalk.net, a style-meets-business blog by journalist, trends specialist and business analyst, Sandra Halliday

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business

Burberry’s brave new world: Think digital, think bags, think scarves

burberry_scarfbar

Given the tough time being faced by the luxury sector at present, predictions around Burberry’s results for the year to March 31 ranged from bad to downright awful. So now that the figures are out, what did we actually get?

Well, not bad in the circumstances, with plenty of focus on the future, ranging from a simplified product offer, to a greater focus on accessories and moves to increase its clear lead in digital.

First, let’s get the boring bits over. Pre-tax profit fell 6.5% to £416m with underlying adjusted pre-tax profit down 10% to £421m. Sales only fell 1% on a comparable basis, but the larger profits dip isn’t good news as luxury shoppers in general tighten their expensive purse strings and the all-important Chinese and Russian shoppers react to circumstances at home and tighten them even more.


Ch-ch-ch-changes

What was more interesting was Burberry’s plan to answer the challenges it’s facing. For a start, it’s going to look at its product offer (which is wider than that of many peers) and simplify it. It will also “give greater visibility to fashion and newness, while tailoring [the] offer more effectively for local needs”.

That means fundamentally changing its ways of working “by introducing end-to-end category management for key products, from design to retail sell-out. Delivering narrower and better balanced assortments, more centrally-directed, improving both global consistency and local relevance. And rebalancing marketing from brand towards key products”.

Following the successful relaunch of its heritage trench coat and cashmere scarves, the next area of focus is bags, where it refers to itself as under-penetrated compared to its peers.

So it’s introducing the new category management approach, “reinventing” the collection around a new pillar and shape strategy, cutting the number of options, and targeting marketing around the patchwork and banner bags and the rucksack ahead of major new product launches in FY 2018.

With retail now accounting for 73% of group revenue, it’s focusing on this area in a big way. Omnichannel is obviously key but Burberry is also putting a greater focus on local customers than before: “driving loyalty by leveraging our customer insight capabilities, with investment prioritised in selected cities. Improving sales densities, conversion and customer retention will be among the key measures of success”.

It’s developing an improved digital selling tool for sales associates too and increasing by 20% the number of private client sales associates, whose productivity is significantly above-average.


Digital diva

And digital will continue to be a major focus, of course. “We plan to ensure that digital remains the clear point of differentiation for Burberry but have scope to be even more ambitious commercially. We will grow Burberry.com through increasing conversion, especially on mobile, driving the penetration of e-commerce particularly in Asia, while integrating and improving customer experiences across online and offline,” it said.

The company also wants to actively grow with third party digital players, while always retaining control over the brand. The majority of e-commerce growth for the sector is expected to come from these physical retailers, pure play e-tailers and, increasingly, new channels such as social commerce.

So expect to see a relaunched Burberry.com, the introduction of a customer app (facilitating among other things mobile checkout and customer connectivity), and further investment in localisation of sites in Asia, following the China relaunch in April 2016.


That’s the future, now the past…

Back with those annual results: sales were £2.5bn in total (so while sales dipped, it’s not as if people are actually shunning Burberry goods), and on a comparable basis they would have been up 3% if Hong Kong and Macau were taken out of the mix. Those two weren’t the only troublesome markets as mainland Europe also had a tough time on the back of fears over terrorist attacks and general economic uncertainty.

It’s no surprise then that Burberry is promising cost savings (of around £100m), and has raised the dividend it pays to shareholders to keep them sweet.

“While we expect the challenging environment for the luxury sector to continue in the near term, we are firmly committed to making the changes needed to drive Burberry’s future outperformance, underpinned by strong brand and business fundamentals,” CEO and creative supremo, Christopher Bailey, said.

The company said demand slowed in many markets for both cyclical and structural reasons but against this backdrop, “brand momentum remained strong and innovation around product, digital and marketing continued”.

It continued to partner with digital big-hitters, including Google, Apple and DreamWorks for interactive and personalised marketing campaigns over the past year, and it created bespoke content for its social media platforms, including shooting and publishing the SS16 main advertising campaign live through Snapchat. These activities supported an increase of about 30% in its followers globally to over 40m across all its social media platforms.

No surprise then that digital outperformed during the year, delivering growth in all regions. In the second half, it rolled out the single pool of inventory model, tested in China in FY 2015, to stores across the US and EMEA. This allows digital transactions in all 44 online countries to draw on inventory in regional distribution centres and then store networks, with 75 stores now live. The rollout of this fulfillment approach has improved stock availability by around 5% and also contributed to digital growth.

The Scarf Bar initiative that launched both online and in-store in September 2015 helped scarves outperform other accessories, with double-digit percentage growth.

In beauty, it continued to focus on building its fragrance pillars, including product extensions for My Burberry throughout the year. Only last month it launched Mr Burberry, a new male fragrance, with the marketing campaign also highlighting men’s tailoring and outerwear. The halo effect from this alignment of fashion and beauty marketing was a key driver for bringing beauty in-house, Burberry said.


Luxury in focus

Burberry’s results also gave us some interesting insights into just what’s been happening in luxury generally and what it means for future growth.

The company said that since 2010, the personal luxury goods market has grown on average by about 7% per annum at constant exchange rates, largely driven by the emergence of the Chinese luxury consumer, space growth and price increases.

Looking forward for the next five years, the luxury market is expected to grow on average by a low single-digit percentage annually at constant exchange rates, with accessories marginally outperforming apparel and beauty and continued double-digit percentage growth in e-commerce.

Most sector growth is expected to come from new and existing Chinese consumers, both when travelling and, increasingly, at home.

Luxury customer behaviours are also changing, Burberry said, as shoppers seek experiences, newness, greater authenticity and storytelling, while desiring more service-driven personalised contact with greater use of technology, particularly mobile.

Burberry feels it can answer all these new luxury shopper’s needs saying: “Our brand strength is driven by a blend of heritage and innovation. We have over 40m followers on social media, demonstrating the extent of our brand reach, [and] based on customer research, Burberry is among the top five luxury brands globally for unaided awareness.”

“For the Chinese consumer, our research shows brand recognition and desirability entirely consistent with our core luxury peers,” it continued. “Looking ahead, we see opportunity to enhance this existing brand strength through greater consistency and clarity across customer groups and markets, including, for example, the United States.”

This post first appeared on Trendwalk.net, a style-meets-business blog by journalist, trends specialist and business analyst, Sandra Halliday

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e-commerce Editor's pick social media

Prada dumps the digital dunce’s cap and gets the online message

Prada-SS16_campaign

Following hugely disappointing results posted last week, Prada promised some ideas about how it would turn itself around at a conference call on Monday. The key outcome? It has finally got the digital message, it seems.

And it really needed to. One of the most forward-looking brands on the style front, Prada has long been in the corner of the classroom with a dunce’s cap on as far as digital is concerned (if you’re too young to get that analogy, look it up here).

The company was heavily criticised last year for its digital dunce status in reports by ContactLab and by L2, a position it now seems to realise isn’t good enough.

Chairman Carlo Mazzi started by saying he isn’t seeing any change in consumer behaviour, adding fairly cryptically “especially the new generations”. It can only be assumed this means the brand just isn’t getting through to younger consumers who see digital as key.

Hopefully that won’t be the case for long as head of strategic marketing, Stefano Cantino, said Prada now has a target of doubling e-tail revenues in two years. On the assumption that Prada group e-revenues aren’t currently that big, that may not be too ambitious, but for a brand that has lagged on the digital front, it’s a sign that it has really woken up.

A photo posted by Prada (@prada) on

Multibrand e-stores

Interestingly, it’s not going to feel about in the dark as it aims to boost said e-tail, rather work with experienced partners like Yoox Net-A-Porter. So get ready for more of its product being available in multi brand e-stores. It will also boost its social media efforts and will be on Snapchat by October. While Burberry isn’t likely to be quaking in its very expensive boots just yet, it’s all heading in the right direction, albeit slowly.

The company’s growth should be achieved by adding categories online, such as shoes. But it seems we won’t be seeing clothing for sale online. It really is all about accessories for Prada and in this area it’s also promised lower prices and value for money.

Where does this digital focus and pricing strategy leave physical stores? Directly-operated stores were Prada’s holy grail during the last decade. It opened them at breakneck speed and at very high cost on the world’s key shopping streets. It won’t stop opening stores, but it’ll close some too and aims to boost productivity of each one at the same time. That includes boosting customer service. “Since we have fewer customers coming to our stores we have to treat them very well,” Cantino said.

This post first appeared on Trendwalk.net, a style-meets-business blog by journalist, trends specialist and business analyst, Sandra Halliday

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business e-commerce mobile

Yoox Net-a-Porter: Native apps, m-commerce and surging sales

Netaporter

How has the combined Yoox and Net-a-Porter online fashion giant been faring since the Italian and UK businesses linked-up? Pretty well actually with global growth in the double-digits and m-commerce sales growing fast – very fast.

OK, for three-quarters of the period covered, Yoox and NaP continued to operate separately (their ‘merger’ was announced in March and completed in early October) but if we pretend the business was one big happy family from January 1, the figures do look good.

The business released its sales figures for 2015 on Monday and we heard none of the complaints about unseasonably warm or cold weather denting sales. Instead, it saw a rise of a bigger-than-expected 31%. And in Q4, when the weather was particularly challenging and lots of fashion retailers suffered, the business still managed a sales rise of 27.8%.

Some of that was down to the weak euro that made its sales look better. But even with positive currency effects factored-out, the rise for the full-year was 21% to €1.7bn. While a lot of that was about Yoox selling goods at a discount, full-price sales were also key. Revenue at its online flagships (for brands such as Dolce & Gabbana and Marni) rose 19.2% for the year, and 20.8% in Q4.

And the company said it saw an “excellent performance” at the Net-a-porter and Mr Porter’s sites. In fact, last year’s ‘In-Season’ business line (ie NaP itself, Mr Porter, plus Yoox’s Thecorner and Shoescribe sites) saw pro-forma revenues of €893.3m, up just short of 37%.

What also characterised last year was the fact that more and more sales came via m-commerce as smartphone and tablet shopping made as much of an impact on luxury as it did on the mass-market. That’s a wake-up call for high-end brands still unconvinced by the smartphone shopping revolution.

Mobile accounted for as much as 40% of Yoox-NaP’s sales last year, boosted by native apps, which surged an astonishing 180%. It’ll be interesting to see what those percentages stand at this time next year.

Also important was the group’s expansion internationally with some markets being standout performers. While it grew in double-digits across the world, particularly impressive was the 37.3% UK rise, the 43.3% North American rise and the 36.9% Asia-Pacific rise.

The company had 27.1m average monthly unique visitors last year, up from 23.6m in 2014, and saw 7.1m orders, up from 5.8m. It had 2.5m active customers, up from 2.1m and the average order value was a healthy €352.

Some analysts doubt it will be able to maintain this level of growth – let’s face it, there has to be a slowdown at some point. Will 2016 be the year that happens? We know that luxury shoppers are worried about falling share prices and aren’t getting so much cash through from their oil wells, while aspirational shoppers are concerned about talk of a possible global recession.

But the Yoox arm of Yoox-NaP in particular has shown itself well able to grow in bad economic times as well as good. I’ll be interested to see whether it can make the NaP part of the business turn in healthy profits though. Whatever happens, it will definitely be an interesting year for this business.

This post first appeared on Trendwalk.net, a style-meets-business blog by journalist, trends specialist and business analyst, Sandra Halliday

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data e-commerce Editor's pick mobile

Cyber Monday, Black Friday: Big numbers and bigger questions

dollar-bills

The intense focus on numbers at this time of year can be rather wearing, not to say confusing. Every day it seems we hear about percentage sales that have gone up or down and billions of dollars or pounds spent in stores, online or via smartphones.

However, what matters as much as the numbers themselves is the story behind them and what it all means for understanding the evolving consumer, for quarterly profits and for future strategy.

Take Adobe Digital Index’s final Cyber Monday tally, which includes some really big numbers. US shoppers, it seems spent 16% more this Cyber Monday than last and sales hit $3.07bn, the first time the day broke through the $3bn barrier in the US.

Discounts, smartphones and stock problems

What drove those numbers? Deeper-than-ever discounts, according to Adobe. Whether that’s good news or bad will become clear when November same-store sales reports and Q4 earnings reports are released. For a fashion industry trying to get consumers used to paying full price, discount-driven higher sales could be a double-edged sword that boosts revenue but also slices through margins. We’ll have to wait and see on that one.

Smartphones also helped make the numbers bigger. A lot of browsing was done via mobile and Adobe said 26% of actual transactions were via mobile devices.

But one factor that didn’t drive sales was the huge out-of-stock problem. I’ve already reported news that 15 out of every 100 products returned ‘unavailable’ messages on Monday. That’s no surprise given that, at 17%, US online sales between Thursday and Sunday outpaced Cyber Monday’s 16%. Americans spent around $8.03bn on those four days with the average order worth over $135 leaving many virtual shelves empty by end-of-play on Sunday.

Physical stores

OK, we know online sales exploded. How did that affect trips to physical stores? Store visits in the US were, unsurprisingly, down 10.4% on Cyber Monday, ShopperTrak said, falling to (an albeit huge) $20.43bn.

And a shift in the balance towards online was a key a characteristic of the whole shopping weekend. Over 103m people in the US shopped online over the four-day weekend but under 102m shopped in-store, the National Retail Federation said.

Obviously, lots of people are still shopping in physical stores but with the numbers going down, we could see some major rethinks in retailer initiatives next year.

What did they buy?

Back with that $3.07bn Cyber Monday number, key product categories were dominated by electronics and toys, aided by average discounts a little over 20%. Fashion certainly wasn’t the top priority and I’ve seen some contradictory reports about how the category performed Thursday-through-Monday either in stores or online. But there were some interesting stats released this morning.

We’ve already highlighted figures from Lyst on this site showing that where people were buying clothes and accessories, the big success story wasn’t partywear as might be expected, but loungewear. Consumers snapped up those comfortable pieces that they could buy any time of year but that came with hefty discounts attached. Not convinced? Lyst data showed 13% more purchases of slippers than stilettos, 43% more sweatpants than miniskirts, and three hoodies bought for every blouse.

The report also cited a focus on luxe loungewear with cashmere socks, luxury pyjama styles, high-end onesies and blanket scarves all popular. Apparently, Acne’s oversized Canada scarf sold out in minutes across all of Lyst’s global retail partners.

What does this mean for partywear? With many prices now back to ‘normal’ levels after the Black Friday/Cyber Monday frenzy, stores must be hoping that shoppers won’t delay their party purchases too long or panic discounting could hit closer to Christmas.

Future focus

Analysts at the moment don’t seem to be worried about the high level of discounting with NPD’s Marshal Cohen saying “businesses fared better this year because they planned it out better.”

But there’s no denying that for November/December 2016, they’ll need to up their game again and plan even better still. What are the factors to take into account?

  • Sales via smartphone are going through the roof but with sales of tablets at both ends of the price scale (iPad minis and Amazon Fire) surging over the four-day weekend, shopping apps still need to be tablet-friendly.
  • Laptop and desktop shopping has stayed popular and was key for higher value transactions.
  • Consumers are increasingly happy to shop at unsociable hours and this should be encouraged given the amount of website outages at busier times later in the day. Thanksgiving evening and midnight to 07:00 on Black Friday and Cyber Monday are key.
  • In Britain, Black Friday is not seen as a must-do-it day to shop in-store but Saturday is. All the special events retailers lay on won’t necessarily encourage Brits to take the day off when they can head down to the mall for the same bargains just 24 hours later.
  • In-store sales are falling on both sides of the Atlantic but are still high. Retailers need to lay on special events but timing is crucial as such initiatives alone won’t lure people to stores (see point above).
  • E-tailers need to do just what they thought they’d done after last year – work harder to ensure websites don’t crash.
  • They also need to manage inventory more carefully so that fewer goods are out of stock on Cyber Monday.
  • We need answers to the question of how long the Black Friday/Cyber Monday ‘season’ really is. We’ve heard talk of Black Friday Fortnight and Cyber Week. Planning how far in advance to kick off discounts and how long to continue them is crucial.
  • And of course, retailers must get to grips with the problem of maximising full price sales. Eternal discounting may work for some retail giants but for most businesses, margin protection is what’s key.

This post first appeared on Trendwalk.net, a style-meets-business blog by journalist, trends specialist and business analyst, Sandra Halliday