Is there ever a perfect time to launch anything? Warehouse, the women’s high street brand founded in 1976 by Jeff Banks, is launching menswear this week. The traditional British men’s high-street has been in the doldrums for quite some time since the skinny suit was replaced by the branded tracksuit. So, the question is, does this ambitious new launch signal the start of a potential menswear renaissance or will it be simply too difficult in a segment that has seen other well known high-street brands crash and burn?
Jonathan Munro, Warehouse Menswear designer says, “We feel strongly that there is a gap for a well-designed sustainable brand at a great price point. We wanted to build on the success of the womenswear line, marking a new chapter in the brand’s history and fulfilling what we believe, is a gap in the market.” he says. It is worth noting that this isn’t the first time Warehouse has done menswear. They had menswear in the early days of Warehouse so they are not promoting this as a first.
Left - Warehouse Menswear SS20
The main focus is, the fashion word du jour, sustainable. The new range will be sold online via the Warehouse webstore www.warehouse.co.uk and through host e-tailers and retailers; The Idle Man, Zalando, JohnLewis.com, Next and the Australian retailer Myer. Price points range from £15 for a 100% organic T-shirt, up to £189 for a recycled polyester content suit and £229 for the chrome-free suede jacket.
“The core of the range is made up of high quality wardrobe staples that should last season-after-season, balanced with breathable cottons and linens in a wearable colour palette.” says Munro. “We have a great range of printed shirts, from monochrome geos to abstract hand painted illustrations which are all designed in-house. Key pieces include our heavy twill overshirts and slim utility trousers.” he says.
“Fashion needs to become more sustainable for the good of the planet.” says Munro. “100% of the range includes sustainable fibres such as organic cottons which use less pesticides and therefore less pollutants, recycled polyesters made up from salvaged plastic bottles and eco viscose which is derived from renewable wood sources.”
What will Warehouse Menswear add to the British men’s high-street market? “Sustainable clothing for the modern man who needs his clothes to last and work for him every day.” says Munro. “We know women buy clothes for men and we also know men buy clothes for themselves - it's aimed at whoever wants to buy it.” he says. “We are holding a pop-up store at Protein Studios in Shoreditch, running from the 2nd – 7th March. This is to allow customers to see the range first hand, interacting with the materials and learning more about the sustainability messaging which runs throughout.”
What does the future look like for Warehouse Menswear? “Our main focus will be to continue to research and develop new ways of working with sustainability in mind, supported by the knowledge of what the Warehouse Menswear customer is looking for in a sustainable clothing collection.” says Munro.
Brands such as Whistles and New Look both struggled in the menswear category. Whistles cancelled its menswear range this time last year and New Look removed menswear from its stores in April 2019, going online-only. The rest of the high-street from Topman to River Island to Jigsaw have struggled to compete with Zara and the sports brands. But, things aren’t all doom and gloom, according to a ‘GlobalData’ report ‘The UK Clothing Market 2018 – 2023’, menswear will be the driving force of the clothing sector, forecast to grow by 12.3% over the next five years as greater trend incorporation and newness drives volumes.
A British Fashion Council and Mintel report estimates that consumer spending menswear has grown 5.1% to reach £15.9 billion in 2018. Menswear now accounts for 26% of the total clothing market, whilst womenswear accounts for 51%. Consumer spending on clothing is forecast to rise 25% to £76 billion in the next five years to 2023.
Warehouse’s parent company, the Oasis and Warehouse Group, clearly sees potential in the menswear market having recently purchased online retailer The Idle Man for an undisclosed sum in Sept. 2019.
Right - Warehouse Menswear SS20
So, what do the experts think Warehouse Menswear’s prospects are?
“When this was announced, I’m not going to lie, I was very surprised, to say the least. I understand a lot of people keep on talking about the growth in men’s fashion & grooming, but when we see retailers from New Look to Whistles dropping their menswear offering, it does beg the question, is now the best time to launch a menswear brand extension?
“Additional to this, we have an awful lot of talk on sustainability and buying less but better quality, plus when well known names like TOPMAN are not performing particularly well at the moment, its hard to see a brand not known for their menswear being a success in these difficult, uncertain times. However, maybe this is what the menswear market needs, maybe Warehouse it going to target the ladies buying for their men, but this is an ever increasingly niche demographic. I do wish Warehouse all the luck in the world and hope their Menswear offering is a success, but I won’t be holding my breathe.” says Anthony McGrath, Founder of Clothes-Make-the-Man.com & leading academic.
“It’s certainly a challenging time to launch, but there’s an opportunity for Warehouse where other major high street names are stalling or retracting on menswear. There are multiple challenges for high street retailers; nimble online competition, prohibitive high business rates, persistent economic uncertainty and the fact that many of us no longer choose shopping as a preferable leisure activity. However, in my opinion the current menswear offer from the high street, with a few exceptions, is failing to offer well-made, well priced and exciting product. There’s a proliferation of dull, cheap clothes.
I’d like to see a certain amount of risk taking. Nobody needs another line of neutral, anonymous ‘wardrobe essentials’. Men shop for themselves. It’s not going to work if the strategy is to rely on existing customers.” says Jessica Punter, Stylist & Grooming Consultant, & former GQ Style & Grooming Editor.
“It'll be a tough fight, and depends on their marketing strategy I think. They have a nice campaign video and a pop up shop but is that enough? We'll see. They have an opportunity now to really nail it, to take the market share from the high street brands that don't do it particularly well, but time will tell! I think others failed because they weren't offering a mix of product for different customer groups, so hopefully Warehouse will.
“There isn't a 'good time' to launch I don't think, there's always going to be peaks and troughs in the industry, and right now we're just coming out of a terrible time for retail, so maybe it's a great time! To wait until fashion week or another event is pointless now as we know men don't really shop to seasons or events, they just shop because they need to. I guess it's a good time in the year though, because now is the time for newness, so makes sense from a business point of view.
“Initially, I think it'll be the aimed at the women for sure, because they are the ones going in store and online to buy Warehouse, but if they have a good marketing plan, and get it out to wider audiences, men will slowly show up. Also, I wonder who they are partnering with, if anyone, to wholesale? That'll be really important in pulling in a new menswear customer. It'll be slow, but maybe they might be able to do what others have failed to do!” says Simon Glazin, freelance fashion writer and blogger.
Left - Will it work? Warehouse Menswear SS20
“I think there's space for an affordable, fashion-forward offer now Topman is tussling with Boohoo over cheap sportswear, but Warehouse aren't going to be the ones to provide it. Well, judging from the images I've seen.” says Lee Clatworthy, Fashion Writer.
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If things weren’t getting hard enough for ‘fast-fashion’ retailers along comes ‘Extinction Rebellion’ (XR). Protests the world over are warning of impending doom and trying to ram home and ostracise those who continue to shop at brands and retailers vilified for producing clothing that is deemed to be disposable.
While the traditional high-street has struggled, both here and in the US, Forever 21 filing for Chapter 11 bankruptcy protection, for example, the winners of the fashion internet, such as ASOS and Zalando, appear to be slowing. Recent profit warnings and falling share prices have put a wobble in this bright spark of retail.
Left - An impromptu anti-fashion show in London's Oxford Circus
While ASOS is expected to show an uplift in revenues this week, could this be the peak for these types of retailers? Is the much publicised message of Extinction Rebellion cutting through to the buying public and will this prove to be a tipping point for ‘Fast-Fashion’?
Morgan Stanley recently said the volume of clothes shoppers buy has plateaued, "we suspect it's primarily because consumers are now buying clothing in such large quantities that they get very little marginal 'utility' from any additional items.” they said.
Retailers such as Primark, H&M and Boohoo rely on large volumes with small profit margins. Is this slowing more a result of saturation rather than the start of a boycott of ‘fast-fashion’ brands for environmental concerns?
“There is some very muddled thinking around the debate on how to make the 21st-century world more environmentally-friendly.” says Eric Musgrave, fashion industry commentator and former editor of Drapers. “I am sure the fashion industry is wasteful, but I’d like to know which large-scale industries are not. Who, for example, ever talks about mass-produced furniture, or pots and pans? I am not an apologist for the fashion business, but it is seen largely as a frivolous unnecessary luxury, not a necessity, hence it is an “easy” (or some would argue “legitimate”) target.” he says.
“I see no desire from the mass of the British public to change their buying habits. It would be wrong to confuse problems that may have risen at individual companies like Quiz and ASOS with overall trends.
“Too often overlooked in all this analysis is that the UK is a very troubled economy, with little sign of it improving any time soon. We have had 11 years of austerity and many people do not have much money. Asking them to forgo the pleasures they derive from cheap fast fashion is the epitome of wishful thinking.” he says. “Fast fashion is here to stay for decades to come – within the sector there will always be winners and losers.
And ask yourself, seriously, what lasting impact on fast fashion did the grim Rana Plaza disaster in Dhaka in 2013 have?”
“The fast fashion firms will not adjust their model. If some disappear, others will appear to take their place.” he says. “Finally, I await the explanation from Extinction Rebellion and the like about what all the many millions of people who earn a living in the fashion supply chain will do if it were to shut down tomorrow.”
Fast-fashion retailer Quiz, a fast growing newcomer to the market, recently announced lower sales in the first half of the year in the face of a “very challenging” high street. The retailer said its stores and concessions had suffered weaker-than-expected sales over the six months to September after a slump in footfall. Quiz reported that total group revenues slipped 5% to £63.3 million during the period, as online growth (7%) failed to offset its high street decline.
The entire fashion industry seems quite content to push all the heat onto these ‘fast-fashion’ retailers. Now public enemy No.1, ‘fast-fashion’ has become a scapegoat for the fashion industry in general. Arguably, all fashion is fast and in its nature it is disposable. People are being forced to question their purchases and asking themselves if they really need it, but is it significantly changing behaviour?
As part of Extinction Rebellion’s #XR52 weeks of direct action, they are urging people to #BOYCOTTFASHION for a whole year, in order to disrupt business-as-usual and send a message to government, industry and public alike that enough is enough.
Olly Rzysko CMO + Retail Advisor, says, “It will take something big for there to be a significant shift, eg the ‘blue planet’ plastic straw moment.”
Kathryn Bishop, Deputy editor - LS:N Global, says, “On Question Time last week, an audience member said David Attenborough spoke to her more than XR activity did. Sadly…”
It appears people are still buying clothes in volume, but we reached a peak a few years back. Kantar data suggests consumers in the UK are buying 50 items of clothing a year, up from 20 items in the 1990s but down from 52 three years ago. In the US the figure is estimated to be as high as 65 items a year, compared with between 40 and 50 in the 1990s and almost 70 in 2005.
"Put simply, consumers would rather spend their marginal dollar on, say, going out for a meal, than on buying a 60th item of clothing in a year,” Morgan Stanley analysts Geoff Ruddell, Kimberly Greenberger and Maki Shinozaki said in their report.
"It is our contention, therefore, that the apparel markets in many developed countries may now be entering a lengthy period of structural decline.” they said. The main catalyst for increased consumption was falling prices. "If clothing volumes are plateauing in developed countries, the only way the apparel markets there can grow is if clothing prices go up," the report said. "But (potential US tariff impacts aside) we think it more likely that they will continue to fall ... as production continues to shift from China to lower-cost countries in the region (such as Vietnam and Bangladesh)," it said.
US clothing prices have fallen by 0.8 per cent a year since 2001, while UK prices fell for 13 consecutive years until 2010. Volumes in the UK have more than doubled since 1998 and US volumes have grown almost 50 per cent since 2001, driving 28 per cent market growth. "Expecting consumers to buy clothing in ever-larger volumes, in response to ever-lower prices, was never likely to be sustained in the very long term," the Morgan Stanley report said. The allure of buying has also gone with consumers already own so many clothes that each new item they purchase doesn't spark happiness the report also said.
Personal stylist Elsa Boutaric with a focus on sustainable fashion and helping people build a sustainable wardrobe, and spend less, says with regards to the #ExtinctionRebellion movement, “I think it is definitely raising awareness of the issues surrounding fast-fashion, and putting it into the minds of the consumer. Publishing reports, stats and figures of the actual effect that the message is having has the potential to be more valuable in driving change.” she says
Is this the tipping point for fast-fashion?
“Consumer behaviour patterns are changing and though we still live in a generation of convenience, consumers are looking for more sustainable and ethical options than a cheap pair of jeans and shoes.” says Boutaric. “People shop on ASOS because it is a viable option compared to other online shops, so when their customer base moves away to look for sustainable alternatives, they don’t have anything to fall back on.
“ASOS is middle market, combined with high street and doesn’t really have a place in the future of fashion unless it learns to adapt, and this is what it is going to have to prove it can to do both its customers and its investors in order to secure its future.” she says.
“The disadvantage they (fast-fashion retailers) have is that they deliver huge volumes on low margins, so would need to change their business model drastically. This isn’t easy to do when you have developed a position in a market place and it would mean working with new designers and increase their prices. This not only has the potential to reflect badly on their own brand, but also the designers that they work with." she says.
Right - Are you ready to boycott fashion for a year? #ExtinctionRebellion
“They would need to introduce charitable angles or work with ethical designers without damaging their reputation or losing their market. Also, they would need to manage their stock and not have so much go to waste sitting in warehouses waiting to be sold. This could mean a change in manufacturers and distributors which could prove costly and time consuming. There are several factors that businesses would need to consider, and not all of them will survive.” she says.
“There has certainly been a shift, and it is being driven by consumers and some brands are struggling to keep up, but others are adapting and thriving.” says Boutaric. “I don’t think it’s a case of reducing their consumption, it’s more consumers buying more ethical options. More people are only buying what they need, or shopping charity shops, or attending clothes swaps. Buying new seems to be a new slur, unless it’s from ethical brands and designers.” she says.
We are constantly told that young people are the most engaged in these types of environmental movements and it’s their future we are ruining, but they are also fast-fashion’s target demographic and consumers. There’s a big disconnect here.
There could be a perfect storm brewing for fast-fashion with XR. If it connects with young people’s behaviour it could be significant. A swing away from this type of consumption could be detrimental to these giants of fashion.
Fast-fashion retailers are starting to make green noises with second hand stores - Read more here - popping up and others like H&M and Next moving into selling other brands to off-set the malaise in their own - Read more here - but investors think long term and will need to feel confident that these retailers will continue to grow and be profitable. One thing is certain, brands and retailers will want to distance themselves from the term 'fast-fashion' and its negative connotations. There needs to be a groundswell from the people passionately protesting at Extinction Rebellion to the average British consumer.
'Fast-Fashion' is the OxyContin of the fashion industry. Going cold turkey could have some serious side effects.
Read more expert ChicGeek Comments here
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To be a retailer today you need many fingers in many pies. Think a centipede Paul Hollywood and you’re getting some idea. So, it was with interest to hear the latest announcement from the world’s second largest fashion retailer, H&M. They’ve decided to start a pilot selling products from external brands.
While they have sold third party brands in some of their more premium chains before, it’s a first for the mother brand. H&M’s main, eponymous brand has been neglected and struggled as the company’s strategy was to roll out retail chains such as Arket, Weekday and &Other Stories.
The bottom end of the market is tough with margins continually squeezed. H&M’s huge undersold inventory, an undeveloped online offering and falling profits - for the eighth quarter in a row the Swedish fashion chain reported a decreasing profit, despite having recently achieved turnover growth - has taken its toll on this retail behemoth.
Left - Swedish fast-fashion giant is piloting a new strategy
It needs a new strategy and has clearly been watching the likes of ASOS and Zalando be all things to all people and expand rapidly.
A company spokesman said “The H&M brand will now develop our offer of external brands. The purpose is to complement our offer with external brands to add excitement and energy and we see great opportunities for growth and to find new customers,”.
You can charge more for branded product without the need to hold large amounts of stock. It also widens you target market, especially amongst men who still like branded items. While it’s not clear which brands will be sold, it’s likely to be dominated by sportswear. This is an area that has seen huge growth with the likes of JD Sports smashing their earnings. JD Sports’ last half-year revenues jumped 47% to £2.7 billion on the back of a 10% surge in like-for-like sales. Sportswear has higher margins and appeals to more age demographics.
One of the more traditional high-street retailers to make this third party brand strategy work is Next. Its ‘LABEL’ concept is now turning over £350 million in yearly sales with huge growth seen over the last few years. Brands such as River Island, adidas, Boss, Superdry and Fat Face sit alongside beauty and home. It’s the contemporary department store.
In their latest financial statement, they say they “continue to develop the business through the addition of new brands, increasing the breadth of offer with existing brands and (from early this year) offering items stocked in our partners’ warehouses through Platform Plus"
"‘Platform Plus’ allows our customers to order un-stocked items directly from our partners’ warehouses to be delivered through our network.
“In March this year we started selling items in this way with three of our partner brands. These items are offered to customers on a 48-hour delivery promise. Items are injected into our warehouse and then delivered through our courier and store network. For example, a Platform Plus item ordered on a Monday, is transferred to our warehouse by Tuesday and delivered to the customer on Wednesday.” they say.
“When customers order Platform Plus items with other items stocked in a Next warehouse (available in 24 hours) they can choose to receive one consolidated delivery, offered in 48 hours. Alternatively, customers can choose to split their delivery and have stocked items delivered in 24 hours. There is no additional charge for the split delivery. Currently, 50% are choosing to consolidate their order.”
Next says Platform Plus is more than a marketplace. “Platform Plus differs from many marketplaces because, rather than despatching parcels directly to consumers from third-party warehouses, items are inducted into our distribution network. The advantages of operating in this way are: We can consolidate orders into one delivery which can materially reduce distribution costs. Items can be delivered through stores which currently receive 50% of all our Online orders and we have visibility and control of all orders through our own trusted networks and tracking systems. This allows us to ensure quality of service and in the event of any delivery issues or queries, customers have one point of contact.
It seems to be working for Next with full price LABEL sales in the first half of this year up +26% and total sales (including markdown sales) up +29%. They expect full price sales in the second half top 2019 to be up around +13%, more in line with their original full year estimate of +15%. The expected slowdown in growth in the second half is mainly due to errors and stock shortages in their Lipsy - owned by Next - ranges which they believe will slowly be corrected.
For the full year, full price LABEL sales are forecast to be up +19%. Total sales (including markdown sales) are forecast to be up +21% with net margins, after central overheads, forecast to be around 15%.
In this retail environment this is very impressive. Sales are a combination of wholesale and commission, and although they make lower net margins on commission sales, they encourage their partners to adopt this model because they believe it generates higher sales growth. In the first half of this year commission sales grew by +32% compared to wholesale which grew by +18.5%. It's also less risky.
As of August 2019, they have four clothing brands operating on Platform Plus and plan to add at least ten more later this year, with more to follow in 2020.
Last month they also agreed a licensing deal with Ted Baker to create and sell Ted Baker children’s products. They intend to launch the first collection in Spring 2020.
Right - Next's Label sales over the last four years
Next, thanks to its Directory, has fine-tuned its delivery and database over many years and is trusted by its customers. H&M, on the other hand, doesn’t quite have the online reputation, but, being able to return to store could be a massive positive for consumers.
It will be interesting to see how fast and big they go with this concept and the brands they decide to stock. Third party branded goods allows for a faster turnover of brands and product, less risk, especially under this commission model, and the subsequent cool and elevation that can rub off on a tired umbrella brand.
Consumers are addicted to newness and H&M needs to try something new. This idea has the potential to work, though it is getting increasingly competitive, it just needs to judge when the sportswear trend will finally end, which brands connect with their customer and what the next big trend will be.
When New Look announced, at the beginning of this month, its menswear was going online only, it solidified what we already knew; high-street fashion is struggling, badly. It was only a few years ago, when the ‘dapper’ three-piece skinny suit was at its zenith and pocket squares were furnishing top pockets, that the good times were rolling and Britain’s high-street menswear retailers were expanding.
Left - Momager Kris Jenner loving an adidas tracksuit but with a Gucci bag or Fendi keyring
Back in 2016, New Look was busy rolling out menswear stores in university towns, appealing to those on a budget wanting fast fashion. New Look was fairly late to the menswear party, following in the footsteps of brands like Topman, River Island and Moss Bros, but it had lofty ambitions. They opened 22 menswear stores in places such as Shrewsbury, Exeter, Maidstone, Derby and Nottingham. They are all now closed, wth New Look saying in a recent statement, “New Look is removing menswear from its UK and Ireland stores but will continue to sell the range online and on third party platforms,” such as ASOS and Zalando.
So, what happened? Sportswear happened. Branded sportswear has been the main fashion story for the past few years. From trainers to tracksuits, sportswear is everywhere and on everybody.
Recent results from sportswear behemoth, JD Sports, illustrates its growth and dominance. JD Sports, which is now more than three times bigger than arch rival Sports Direct, almost-doubled revenue in its latest results for the 52 weeks to February 2, 2019. Revenue was up an incredible 49.2 percent to £4.7 billion for the period compared to the year before, with profit before tax increasing by 15.4 percent to £339.9 million pounds.
JD Sports’ results includes its acquisition of the Finish Line business in America. The brand was bought for around £400 million in June 2018, and saw JD Sports take ownership of Finish Line’s 600 stores in the US.
JD Sports executive chairman, Peter Cowgill, said in a statement: "We believe that our acquisition of the Finish Line business in the United States, the largest market for sport lifestyle footwear and apparel and the home to many of the global sportswear brands, will have positive consequences for our long-term brand engagement whilst significantly extending the group's global reach. We maintain our belief that Finish Line is capable of delivering improved levels of profitability.” JD Sports said it stayed clear of reactive discounting while offering a point of difference in the goods it sold.
This American dominance, particularly of the internet and social media channels, has helped grow this market. When American football is coming to Wembley and there’s even talk of baseball making inroads into this country, then you know the power of the American online world we now live in. When you see Kris Jenner wearing a full adidas tracksuit on multiple episodes of the Kardashians, instead of the luxury labels she used to be wearing, it really illustrates how far this trend has come and it’s global.
JD Sports is now in 10 countries in mainland Europe with its first store in Austria at Mariahilfer Strasse in Vienna opening in the next few months. The JD fascia saw a net increase of 39 stores in the period with new stores in all of the retailer’s existing territories as well as its first two stores in Finland. In Asia, JD Sports has opened its first stores in Singapore, Thailand and South Korea with its local partner Shoemarker Inc, and now has 16 JD stores, including 14 conversions of the multibrand Hot-T fascia which was acquired in the previous year.
New Look recently closed all of their stores in China, Belgium and Poland, 85 stores in the UK and, potentially, those in France and Portugal too. It has returned to profit after its underlying operating profit came in at £38.5 million to Dec 2018, compared to an underlying operating loss of £5.1 million for the same year-to-date period the year prior, but like-for-like sales are still falling, they’ve just slowed.
These woes aren't just restricted to New Look. The fall in the value of these high-street companies is illustrated by Arcadia recently buying a 25 per cent stake in retailers Topshop and Topman back from US investor Leonard Green for $1 or 76p. It was rumoured the US private equity firm bought the 25 per cent stake from Sir Philip Green’s Arcadia in 2012 for £350 million. That’s some devaluation.
Another British high-street brand suffering from the dominance of sportswear is Moss Bros. The menswear retailer recorded a £4.2 million loss for the 52-week period ending January 26, 2019, compared to a profit of £6.7 million the year prior. Revenues were down 2.1 per cent to £129 million and like-for-like sales dropped 4.3 per cent. Interestingly, full-year figures showed that like-for-like hire sales plummeted by 9.3 per cent. People aren’t even renting formalwear now?! Moss Bros chief executive, Brian Brick, said it was an “extremely challenging” year. “We suffered from a combination of a significant stock shortage and extremes of weather, alongside sporting distraction in the first half, which impacted footfall into our stores,” he said. That “sporting distraction” was the World Cup with people no doubt wearing yet more sportswear.
“Looking forward, in common with many UK retailers, we continue to anticipate an extremely challenging retail landscape, particularly within our physical stores, as a result of reduced footfall and rising costs.” he said.
This sportswear as a fashion trend is slowing, but sportswear is beyond a trend, now, and it’s a lifestyle and ease of dressing that is resonating around the world and to every age group. These once dominant British high-street stars are contracting and they are cutting off limbs (menswear) to save the vital organs. Karl Lagerfeld once said, “Sweatpants are a sign of defeat. You lost control of your life so you bought some sweatpants.” He couldn't be more wrong.
Returns cost money, lots of money. Free delivery and no quibble returns are starting to become a strain on online retailers and it seems ASOS has had enough. The British fast-fashion giant recently announced it was cracking down on ‘serial returners’. An extension in its returns policy - items can be returned up to 45 days after purchase with a cash refund up to 28 days and credit thereafter - was also issued with a threat to investigate and ‘take action’ if it notices anything unusual with people returning more items than usual. If it suspects someone is wearing and returning goods, or ordering and returning ‘loads’, it may deactivate the account.
Left - ASOS' returns are costing them dearly
ASOS is one of the world’s largest online retailers, particularly amongst younger demographics, and its ease of ordering and returning is, arguably, part of the their success and growth story.
Becky, 29, says “I think it’s against the whole nature of online shopping. When you go into a shop you can take 10 items into the changing room and not like any of them, e-retailers need to expect the same thing to happen with their sites and customers should be able to return the items they don’t want.
"I buy a lot from ASOS and return a lot simply because it doesn’t fit right or because it doesn’t look how I expected it to when I bought it.” she says. “If it starts impacting how quickly refunds come through – or if I start having refund requests declined – then it definitely would discourage me. I love ASOS though – majority of my wardrobe is from ASOS, now, where they host so many brands – so I’m intrigued to see what happens!”
This issue is experienced by many retailers. Research conducted by resource planning platform Brightpearl, who surveyed 200 retailers across the UK, found more than a third of shops have seen an increase in serial returns over the last year. As a result, 45 per cent of retailers, including ASOS and Harrods, said they were planning to blacklist repeat offenders. It can cost double the amount for a product to be returned into the supply chain as it does to deliver it and in the UK, it can pass through seven pairs of hands before it is listed for resale. This all takes time and money.
Meli, 26, says “I’m glad that this prevents people returning used items as I’ve had something sent to me from ASOS before that was definitely used. However I’d hate to be blacklisted for genuinely returning items that don’t fit/I don’t like!
“I often order in bulk with multiple options and different sizes then do a try on at home to see what I like best, and return the rest. I think the real problem is sizing as ASOS stocks so many different brands, it’s hard to rely on standard sizing to be the same across all.” she says. “If I was blacklisted then it would certainly drive me to other online retailers or just shop directly with the brands that ASOS stocks. For now, it will make me think more carefully about exactly what I’d be likely to keep if it did fit.” says Meli.
Earlier this year, Zalando started a trial in which it would attach very big clothing labels to items to make it more difficult to ‘wear and return’ or post on Instagram. That label reads: “Dear customer, feel free to fit this article and try it, but if this label is removed, it will not to be accepted as a return by Zalando.”
Retailers have somewhat encouraged some of this behaviour with their ‘try-before-you-buy’ options. Consumers can order what they like and then just pay for what they keep. This encourages over ordering and a large number of returns. Amazon currently restricts this service to between 3 and 8 items.
Research from Barclaycard found that almost 1 in 10 UK shoppers have bought clothes online with the intent to wear them for social media and then return them. Surprisingly, it was the older demographic, men and women aged 35 to 44, with 17 per cent, revealing that they are guilty of shopping only for their #OOTD. The research also found that is was men who were more inclined to shop and return as they are more ‘socially self-conscious’ than women - with 12 per cent admitting to posting a clothing or accessory item on social media and returning it to the retailer afterwards.
Right - Zalando taking on the 'Serial Returners'' with their large tags
Lois Spencer-Tracey, fashion blogger, says, “Must confess, I'm a bit annoyed by this. I probably send back 80-100% of an order I receive purely because of their sizing and my body shape. Nothing to do with my Instagram or blog.”
Last year, Next announced it would start to charge customers a £1 fee for returns they make through a courier or through a Hermes Parcel Shop. The collection charge will be applied for each collection, regardless of the number of items collected. Returning items at any of Next’s retail or clearance stores in the UK remains free.
ASOS are playing the fashion police by admitting had resorted to checking people’s social media accounts in a bid to catch out consumers who wear clothes before sending them back, and falsely claim they have not received items bought online.
“I’m a massive online shopper. I find it so much easier to just order clothes in and try them on at home because then you can try on a full outfit, matching with the shoes and accessories you want. It’s so much easier to do in your own home rather than in a squished changing room. And usually returns are easy with things like collect+ which is much better than working out when you’ll next be in town to take clothes back to a store.” says Becky.
This is a difficult line for online brands to tread. On the one hand they don’t want to discourage consumers from ordering or being frightened to return things, and, on the other hand, they need to let excessive returners or people who are wearing things and returning them, know they are being monitored. It's definitely easier to return something into a faceless plastic bag than been quizzed by a sales assistant. This is probably an empty threat from ASOS, but does illustrate how serious this issue is becoming for fashion e-tailers. Rather than look at the volume of returns, maybe look at the conversion percentages of sales from shoppers. You don’t want to alienate active and engaged consumers, but neither do you want to service those costing the company dearly.
Read more ChicGeek expert comments - here
We reached ‘Peak Backpack’ a while back, so it’s really hard to find something that doesn’t just blur into the crowd. The expensive fashion ones, that you can’t fit anything into, or are more form over function, quickly become an irritant and are discarded on the bedroom floor.
The technical ones, on the other hand, make it look like you’re about to climb Kilimanjaro and don’t really blend into the urban environment. You want something stylish, technical and flexible in how much it can handle.
I’ve been recently introduced to Chrome Industries. Founded in Boulder, Colorado - I’m already sold on the name! - over 20 years ago by a couple of skaters and bike messengers, Chrome Industries started when they took an old Juki sewing machine, a few yards of ballistic nylon, added military grade truck tarpaulin and salvaged seatbelt buckles when they couldn’t find anything in the market that met their expectations.
This 'Urban Ex Gas Can 22L Backpack', in lightweight nylon, features reflective details, a removable laptop sleeve fitting a 15” MacBook Pro and velcro fastening inside and is fully waterproof with stylish taped zips. When empty, it folds flat, but, when full, it transforms into an attractive and very rigid looking rectangular tube.
This feels like the type of backpack that can be anything you want it to be. From meetings around town to a rainy trek in the country, it'll do its job without breaking a sweat. It's the type of backpack you’ll enjoy using and reach for first.
Left & Below - Chrome Industries - Urban Ex Gas Can 22L Backpack - £149.99 from Zalando.co.uk
Youth, beautiful youth, seems to sum up the scene at Zalando HQ. Everywhere you look, young people: sitting outside in the sun on bench tables chatting, inside large, open-plan offices developing new product and organising deliveries and logistics and vast teams styling and producing the content for the website in cavernous studio spaces.
Left - One of Zalando's many buildings based around East Berlin
Zalando feels like a microcosm of hipster Berlin: the youth of Europe drawn together over the passion of creativity, fashion and design in a mix of tattoos, coloured hair and piercings. But, these young people aren’t restricted to simply the creation side of the business, they run all the way through to senior management and is a reflection of the company’s age having only started in 2008.
In the space of 7 years Zalando has gone from speculative start-up to a billion dollar business. The biggest fashion e-tailer that nobody, well, those of us in the UK anyway, has heard of, it has grown to be the biggest fashion platform in Europe with sales of over €2.2 billion, last year. Just to give it some context, ASOS turned over £975 million in 2014.
While British brands such as ASOS and Topshop looked towards America, Australia and China for growth, Zalando was quietly focusing itself and expanding into 15 European countries and tailoring its offering accordingly.
Right - For the recent Berlin Fashion Week, Zalando opened a 'Fashion House' to showcase product, hold talks and celebrate Berlin as a fashion centre
Based in Berlin, business is conducted in English, so as to unify all 15 markets, making Zalando feel more like a international business based in Berlin rather than a German fashion company. It now sells over 1500 brands with a staggering 150,000 products in markets ranging from Austria to the UK.
Selling luxury diffusion lines, high-street brands and now, a whole collection of own labels, developed for specific customer categories, Zalando is aiming to have everything covered.
I’m here, during Berlin Fashion Week, to see inside the company and how it has developed. I first experienced Zalando’s website a few years ago, and it felt, at the time, like just another European website selling third party brands in not a particularly inspiring way. Fast forward a few years and, now, Zalando is the one of the most important European customers to some of Britain's best and biggest brands and the entry to markets many don’t have retail outlets in or websites directed to.
Dressed, today, in American Apparel T-shirt, Element cuffed trousers and Nike trainers, Florian Jodl, VP Menswear, is in charge of the menswear side of Zalando.
“When I joined - 3 years ago - Zalando was making the transition from start-up to large company. We’re, now, the largest fashion platform in Europe and we cover pretty much the whole of Europe”.
Left - Florian Jodl, VP Menswear, Zalando
What’s made Zalando so successful in what is a tough market to crack?
“Our founding team believed in the e-commerce trend at the right point in time. The drivers of the company that made it successful was the marketing, the logistics proposition - free and easy returns, we have more than 20 different payment methods, large assortment and strong relationships with some of the best brands in the world”. he says.
“How those things came together allowed the company to grow so fast. We focused on the fashion market and invested in our fashion proposition from a content perspective. The main part of the business is being a fashion retailer, but we are adding more and more additional services to the consumer and to the brands we work with. For example, we recently launched, ‘Zalon’, which is a curated shopping service: a stylist picks a selection, then you get a package and keep what you like. We don’t run it in-house, we’ve created a platform where stylists can log on to and work independently on a commission basis.”
Where many international retailers have found appealing to so many different markets difficult, and have often come unstuck, Zalando seems to have flourished.
“We have a very strong localisation mindset. For example, in Italy you have to have cash on delivery payments, in Germany, you have to allow for invoice payments. We have been successful in all these different markets by tweaking our brand marketing and efficient end structures, but, if you over emphasise it you have an extremely complex system”, says Jodl.
The most popular men’s brands are currently Nike, adidas, Converse, Reebok and Levi’s.
“Some men are still very focussed on brands, and there is a group of consumers that just want to be inspired. So, outfits work quite well, for us, particularly for men. We have a function, now, where you can buy everything the model is wearing.
“We see the men’s business accelerating even faster than the rest. When you think of buying fashion, online, it is an attractive proposition for the stereotypical, average guy. You don’t have to go downtown, be in a crowded store, you can order a nice selection of stuff and what you like, you keep. It just took men longer to take the step and try and, now, they’ve tried it, you can see it really picking up,” says Jodl.
Right - Each individual item is shot and physically moved along the creative line to be retouched, described and uploaded onto the Zalando site
I’m taken inside an old factory building in East Berlin that houses the studio where Zalando shoots all the images for the website. Not allowed to take pictures, it is the modern e-tailer factory: a conveyor belt of styling, shooting, retouching, describing and uploading.
Zalando has recently developed its own range of labels seeing gaps in the market and also higher margins. Menswear features in labels such ‘Kiomi', ‘Your Turn’, ‘Pier One’, ‘Brooklyn’s Own’ and unisex shoe brand called ‘Zign'. The own brands are currently expanding as a percentage of the business with many collections, now, running into hundreds of pieces.
Zalando, while having shipped to the UK for many years, is now turning its attention to us, and particularly menswear, seeing a fashion hungry and lucrative market.
“One key thing we need to do is build a more focussed assortment as the UK is a very developed and strong fashion market, in the past we probably missed some of the key local brands”, he says.
For Berlin Fashion Week, Zalando curated a ‘Fashion House’ in the centre of Berlin to not only display their product but to inspire and put the flag in the ground for Berlin as a fashion capital and authority. (Zalando recently bought the fashion trade show Bread & Butter, which up until a few seasons ago was one of the biggest street and casual wear trade shows in the world).
Left - Inside Zalando's 'Fashion House', a pop-up in Mitte during the recent Berlin Fashion Week
They understand that they have to make Berlin relevant in order for them to be taken seriously as a fashion authority. The key to Zalando’s success is its expertise in the markets it operates in. While not only appealing to its customers, it also appeals to other retailers and brands that want the ‘in’ to these potentially lucrative European markets.
As different parts of Europe come out of recession, Zalando will only increase its dominance and it wouldn’t surprise me if it wasn’t snapped up by somebody like Amazon, or anybody who wants a large and developed slice of the European fashion market.
Online retailers understand that its their own product which will offer a USP and also better returns. It will be interesting to see whether Zalando's own menswear brands will be picked up by the British male in what is a very competitive and price sensitive market. Watch this space.