40% of consumers are planning to increase online spend on apparel: Facebook-BCG Report

During 2015-2019, the apparel industry grew at a CAGR of 13%, with 90% of sales being driven via the unorganized sector.
40% of consumers are planning to increase online spend on apparel: Facebook-BCG Report

The COVID-19 pandemic has created multiple fundamental changes in consumer behavior, some short term while some longer lasting than others. In order to equip businesses with the necessary knowledge to build for new path-to-purchase journeys,Facebook along with Boston Consulting Group (BCG) came out with a consumer sentiment survey, titled ‘Turn the Tide’, which aims to serve as a reference point on consumer insights, trends, and guidance for the industry, brands, and agencies as they begin to negotiate the commencement of operations. Now, Facebook and BCG have delved into how the spending sentiment is translating differently across categories, and provides recommendations for businesses to build for new path-to-purchase journeys.

Apparel, a popular product category has witnessed weaker consumer spending sentiment due to the financial uncertainty amid COVID-19. According to the report, Apparel is one of the ‘shrinking’ categories as consumers facing or expecting a crunch in their income increasingly prioritize essential goods and services. Additionally, the survey conducted by Facebook and BCG has noted that as consumers are not stepping out of their homes as often, it is bound to have an impact on social occasion clothing requirements.

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Here are the key highlights:

The COVID-19 pandemic has impacted the socio-economic fabric of India in the following ways:

  • Focus on health & safety (a 120% spike in online searches on health and immunity in India. 49% consumers intend to buy more vitamins, herbs, health supplements, etc. in the coming days)
  • Social distancing and restrictions on movement
  • Income uncertainty leading to weak demand
  • Re-calibration of consumer priorities leading to weaker consumer spending sentiment for discretionary categories like apparel

7 consumer trends will have an impact on the Apparel category:

  • Reversal of Past Trends (Trends that might be seen as temporary)
    1. Trading down and bargain hunting: 32% consumers are planning to trade down while 40% consumers are expecting discounts/ promotions during apparel shopping
    2. Shopping for utility: The number of consumers who shop due to functional reasons are expected to rise significantly
  • Acceleration of Existing Trends (High-potential permanent shifts in behavior)
    1. Embracing digital services & experiences: Digital influence in apparel sales to go up to60-65%
    2. Accelerated adoption of e-commerce and O2O: 40%of consumers are planning to increase online spend on apparel
    3. Strive for health and wellness: 1.4xrise in time spent on fitness apps, and an increase indemand for active wear/athleisure
  • New Habits (Stickiness of change is yet to be determined)
    1. Remote way of living: 79% consumers are unwilling to go out of their homes, except for work, negatively impacting the social occasion clothing requirement
    2. Superior hygiene and clean living – a new norm: Consumers want retailer to focus on high standards of store hygiene post the pandemic (57% globally) 

In the pre-pandemic scenario, the Apparel category in India was growing steadily and consistently. During 2015-2019, the apparel industry grew at a CAGR of 13%, with 90% of sales being driven via the unorganized sector. 67% of shopping was done through modern trade channels, as compared to just 7% via online channels. Although small, the online channel is growing fast, the online channel grew at a CAGR of 34% from 2015-19.

The new consumer path-to-purchase is dynamic, and filled with opportunities:

Pre-Purchase

Purchase

Post-Purchase

Digital Proliferation with more functional shopping

Expectation of delivering core shopping experience while meeting changing needs

Opportunity to strengthen advocacy to build aspiration

 

The Facebook-Boston Consulting Group recommendations to help brands recover and win through the new normal include:

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Pre-purchase

  1. Leverage digital capabilities: Nike brought alive its digital capabilities by live streaming workout videos,training programs and expert tips from trainers
  2. Build social connect via influencer engagement
  3. Create personalised engagement through seasonal/promotion led campaigns
  4. Drive digital retargeting
  5. Prop up right proposition in messaging: Recognizing consumer needs, formal wear brand Fable Street pivoted to no stain clothing toindicate longer duration clothing

Purchase

  1. Win online by reimagining pathways and selling models
  2. Bring alive experiences withassisted shopping: Luxury fashion house Burberry leveraged AR/VR for virtual try on and purchase
  3. Replicate in-person experiences: Prada used sales associates drivenassisted shopping for product recommendations
  4. Re-vamp in-store experiences and institute hygiene &safety measures
  5. Optimize portfolio for value creation
  6. Relook at the Media Mix Model by aligning with the changing landscape to build efficiency in acquisition

Post-purchase

  1. Strengthen consumer engagement through loyalty programs, incentivizing social peer recommendation: Shoppers Stop delivered e-Gift voucher allowing consumersto engage with their loved ones
  2. Drive value by repeat purchase and consumer up trade, re-target existing consumers: Lime Road directly offered gold membership with a certainamount of purchase
     

 

 

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