As new online research finds online fashion shoppers’ rarely look beyond three favourite stores, with youthful shoppers least likely to shop around, retailers must look beyond price – to deliver a highly relevant, tailored experience.
Conventional wisdom tells us that the internet is where consumers go to look for bargains. It’s where they shop around looking for a better price. Small wonder, that the so many retailers focus so heavily on price promotions in the battle for online growth.
But the Apptus Fashion Monitor, a study of fashion shopping behaviour in the UK, suggests that this approach is unlikely to deliver long term results – only sales spikes tainted by eroded margin.
Strategies for long term growth have to look beyond simply attracting more customers – they must keep them coming back for more, and crucially, coming back without a ‘sales’ mindset.
The Apptus research, however, suggests this may be easier said than done, and that’s down to a number of things.
First, and most surprisingly, we found that fashion shoppers hardly ever shop around. On the contrary, they tend to buy again and again from a small group of favourite fashion retailers online.
Overall, 62 per cent of UK fashion shoppers buy from the same core group of favourite online retail stores. What’s more, the trend is towards further narrowing. Younger shoppers are more likely to stick to a small selection of sites – 78 per cent of 18-24 year olds, and 70 per cent of 25-34s.
There is clearly an opportunity here – the retailers that can tap into this loyalty could be big winners. Equally, however, that narrowing focus amongst younger consumers suggests that reacting to the trend is becoming urgent.
The rule of three
Another big challenge is posed by the extraordinary extent to which consumers narrow down their choices. Rather than welcoming the wealth of choice offered by thousands of online fashion retailers, they filter extensively.
In fact, the average online fashion buyer shops in just three online stores most of the time – 63 per cent of those favouring a few sites have three or fewer in their core group.
On top of that, chances to break into the ‘circle of trust’ are few and far between. The vast majority of shoppers only buy outside of their favourites somewhere between once every other month and twice a year – 46 per cent compared with, for instance, the four per cent who do so once a fortnight.
Clearly, this is not good news for fashion retailers seeking to offset sluggish in-store sales with big growth online – on the face of it winning new, loyal customers online – not just those seeking a one-off bargain – is going to be very tough.
It’s going to require a different approach – and a move away from purely manual approaches to merchandising online.
Quick buck or long term growth?
In my view, these trends make it clear that fashion retailers seeking to grow online must move away from pure price competition. They must instead implement longer term strategies based on building loyalty – by delivering relevant and tailored experiences.
Again, the figures tend to back up that view.
OK, when we asked how fashion sites could break into their select favourites, two-thirds of consumers said ‘offer value for money’.
But let’s not confuse value for money with cut-price and let’s also bear in mind that 66 per cent is actually surprisingly low if one starts from a position of assuming consumers are primarily price-motivated.
Based on the research, I am pretty comfortable arguing that the retail experience is becoming just as important as price. For instance, asked what retailers could do to break into their group of favourites, almost half (48 per cent) say they value websites that make it easy to find products they are looking for, and almost a quarter (22 per cent) want a website that is tailored to their tastes.
Relevance is everything
It’s clear to me that the three or so websites that consumers tend to default to when buying fashion online are simply more relevant – they feel tailored to each buyers’ tastes and display products they are more likely to be interested in.
In fact, across the spectrum of consumers relevance is a key dividing line between sites that become favourites and those that do not. Asked how good fashion sites are at displaying relevant products, consumers made the importance of relevance all the more clear:
Three quarters (76 per cent) said their core favourites are at least fairly relevant – compared with 45 per cent for other fashion sites
Sites outside consumers’ core group are more than twice as likely to display products that are not relevant (43 per cent compared with 18 per cent for favourite sites).
Not just retail basics
On the face of it, it’s easy to simply say these are ‘retail basics’ – stock the right products and merchandise them properly.
But online the rules of the game are very different.
Product ranges running to the thousands, and covering a diverse range of styles and tastes, open up a vast array of possibilities when it comes to actually displaying them on screen.
Right now that selection, what we call the ‘product exposure strategy’ is driven by a combination of intuition and historical sales data – top sellers and sales spikes more often than not.
That’s fine, but can this kind of approach really respond to a consumer base that narrows down buying choices based on an increasingly exacting demand for relevance?
The answer is plainly ‘No’. It is clearly impossible to deliver tailored, relevant experiences for each and every visitor. That would have to be based on their historical behaviour, ‘in the moment’ intent and real time data around shopping trends – a volume of data, and speed of action that merchandisers alone simply cannot cope with.
Man versus machine?
I believe that delivering that kind of custom experience for each visitor is going to require a new approach to online merchandising – an approach that is already beginning to take shape.
Remember that this vast analytics and automation job is this is exactly what computers are built for – and it becomes clear exactly why forward thinking brands like very.co.uk are adding artificial intelligence capabilities to their merchandising operations.
But it’s not a case of man or machine. Rather it’s man and machine. These brands are relying on machine learning and AI to do the heavy lifting associated with delivering tailored experiences, which leaves merchandisers free to focus on strategic, longer term activities, like delivering a frictionless customer experience.
This is not science fiction. AI is already well established in the financial markets, where computers are trusted to cope with unimaginable volumes of data to make real time trading decisions on which rest billions of pounds.
So, it’s not so hard to imagine similar capabilities applied to online retail, where the problem is similar and the stakes are lower – and, as I’ve pointed out, it is already happening.
Given the way consumer behaviour is changing, I think it’s beyond question that the AI first movers will gain a significant advantage. The real question is how long it will take for everyone else to follow suit…
Andrew Fowler is UK country manager at Apptus