2020 is the year that changed everything. Last year three quarters of companies in the world have lost a substantial part of their revenues and consumers have profoundly changed their buying habits, the attention towards the products to buy has changed, often the economic availability has decreased (also as a result of employment losses, a trend unfortunately destined to grow).
HOW CONSUMERS CHANGE
The question therefore posed by Maria Errobidarte, Senior Consultant WGSN Mindset, during Expo Riva Show’s first meeting session – The Shoe Connection, organised by Expo Riva Schuh – Gardabags, is easy to formulate, even if the answer to be found is complex: how is it possible to optimise one’s sales processes in a moment so full of changes and that is destined to last throughout 2021 and maybe even in 2022?
Before hunting for answers, Maria Errobidarte analyses the current developments in the world of consumption, taking into consideration the effects that Covid-19 has produced.
The shift to Buying Local
The drastic decline in tourism has reduced the pool of foreigners who supported the purchase of fashion goods. In addition, the various lockdown experiences have strengthened the life of local communities, solidarity towards smaller businesses in the area.
Considering only the United Kingdom, by way of example, there is an 81% decline in the influx of consumers into retail stores; a 67% increase of buyers who preferred to rely on small local shops for their purchases. Obviously, e-commerce benefited from the situation. According to John Lewis, the forced closure of many stores also led to an e-commerce growth rate of around 70% (30 points more than in 2019).
The growth of Generation Z
If digital has made a leap forward of 5 years in just one year, Covid-19 aside, it is also thanks to Generation Z that is increasingly impacting the world of consumption.
In 2025, the generation that today is between 7 and 22 years old, will represent a third of the market value with a purchasing power that will be around 143 million dollars.
A very compassionate generation, attentive not only to the product, but also to the messages and the impact that companies have on the community. Who mainly bases its purchase decisions on social networks.
An unquestionable domain is what digitisation is stating. For a third of entrepreneurs digital represents the most important opportunity to be seized in 2021. Especially for those in the fashion sector, if it is true as it is true that a quarter of digital purchases rewards exactly the fashion and clothing industry.
Digital, which has grown tremendously in both Europe and Asia, evolving rapidly over the past year due to the pandemic, will continue to benefit from a situation that will see many consumers reluctant to visit stores for a long time to come.
The evolution of physical stores
A theme that will inevitably lead to the transformation of physical stores. Many will close, as already happened in 2020, many will change their skin, in support of the omnichannel model, of services on the territory favouring deliveries of online purchases…
Rental / Used
In the UK, the Resale phenomenon has grown by 404% since 2018. An enormously growing trend that is not just heading into the declining purchasing power, but is also perceived as a more sustainable approach to fashion. A way of buying that also meets the changing mentality of Generation Z we were talking about earlier, as highlights.
To all these factors must be added the macro-economic predictions that, to date, imagine a very polarised future situation: on the one hand, companies and citizens able to obtain a total and fast recovery and, on the other, a good part that will fall into deep suffering.
All these facts lead to a scenario where clear consumer trends will develop:
– Services ever more available to consumers without leaving home
– Attention to the values of justice expressed by the brands that you decide to trust by buying their products
– Entertainment. Being forced into their homes for a long time leads consumers to ask for increasingly more different forms of entertainment. A trend that inevitably will also be reflected on physical stores
– Attention to the environment and health
– A strengthened sense of local community to keep in mind.
CASE HISTORY: BATA’S INITIATIVES FOR THE NEW CONSUMER
The changes we talked about so far have had and will have extreme high practical impacts on the field. Together with Isabelle Sakai, Chief Marketing Officer of Bata Group, we analyse in detail how an important and international brand has faced the Covid-19 situation and which concrete initiatives it has put in place.
Bata, which boasts a presence in over 70 countries with 5,800 stores, a workforce of 35,000 employees, and a production of 180 million pairs a year made in 22 shoe factories, has responded to the pandemic crisis with various actions on different fronts, intercepting new consumption trends.
It has strengthened its line of comfortable, both sneaker and home, shoes starting that trend that, even before Covid, was in pole position.
It aimed to improve the product by creating more captivating and lighter models, realising product lines wearable all day and proposing much more variety of styles. It has given much more space to home lines, giving life to lines that meet the new needs related to remote working and accentuating the comfort of some of its models with innovative technical construction solutions.
Since Covid generated a major concern in consumers with respect to their mental and physical health, Bata immediately decided to take and strengthen all those concrete and communication initiatives that would lead to the protection of its customers: encourage physical distancing, safeguard in-store experience and develop product lines with antibacterial materials or washable collections.
Bata has also revised or strengthened some of its values by choosing, for example, to focus on the essential, reduce its assortments (-30%), strengthen and push best-sellers for more responsible and optimised stock policies, introduce more affordable price ranges, reward consumer loyalty with discounts.
If, already 3 years ago, Bata had decisively invested in digital, 2020 saw a further doubling of efforts to penetrate the market even better giving its customers the opportunity to buy from home.
Also focusing on innovative solutions such as the Chat Shop which offered the possibility of maintaining direct contact with the sales staff, especially in favour of those who still remain doubtful or have issues in facing the digital buying process.
Bata’s commitment is also strong on the Social side through the involvement of influencers and innovative platforms such as Tik Tok: to be there where the customer is.
ATTENTION TO THE ENVIRONMENT
Bata pays a lot of attention to the growing development of sustainable strategies that respect the environment. Starting from energy savings related to production sites, up to the choice of recycled materials for some products, such as recycled PVC boots, or for packaging.
SENSE OF COMMUNITY
Given the decline of trust in governments and institutions, there is room for brands to show transparent and honest communication, to support the communities where Bata is present with many initiatives aimed at its partners and communities in the area.
NO MORE ASPIRATION, BUT INSPIRATION
Emanuela Prandelli, MAFED Director (Fashion, Design, and Experience Management Master) at SDA Bocconi agrees with most of the consumer analyses seen so far.
“A new business model linked to the growth of Gen Z is ready – she says – which gives much more space and weight to the role of Experience”.
For Emanuela Prandelli, new consumers consider less important owning an exclusive object, while it is much more important to them living meaningful experiences.
They want to be able to access products that have a high value when they want and need and do not necessarily want to possess them “forever” and keep them locked in the closet.
A trend that crosses all market segments and price ranges. This way of interpreting consumption, leads to the success of the buying model linked to rental rather than long-term ownerships. A success strengthened by the idea that resale or rental favour sustainability by allowing to produce less extending the life cycle of a product.
“Since our lives are now pervaded by social media that ask for a frequent change of one’s look, while the the general purchasing power is decreasing, by increasing attention to sustainability the rental concept becomes a clear winner”.
According to Emanuela Prandelli it will also be very hard to return to collections guided by seasonality, while collections guided by the need to amaze their consumers with interesting news and stories will increasingly catch on. But how can we combine this desire for always new projects with the sustainability that the consumer is so much looking for?
“The growing digitisation – suggests Prandelli – will allow us to collect a lot of detailed data on consumers, and if we are able to analyse them, we will be able to create many more special projects based on consumer expectations, consequently producing less and targeting consumers’ wishes more precisely. Producing almost without fail with consequent benefits for the environment”.
Emanuela Prandelli also highlights the importance of grounding one’s activities on strong values:
“It is no longer important to just own an excellent product and a strong and well-known brand. You also need to have a valuable story to tell. You can no longer just be aspirational, but you must become an inspiration for your consumers on a value level. The current consumer wants to know the values a brand is fighting for. Transparency in this sense can certainly expose you to lose some customers, but the alternative could be the risk of losing them all. The values a brand believes in are the story that consumers want to hear today”.
THE NUMBERS THAT SUPPORT THEORIES
Is it just a theory what has been developed up to now regarding the evolution of consumers? Absolutely not, if you evaluate the numbers provided by Antonio Altomonte, Head of Supplier Payments Global Commercial Services American Express Italia.
Amex, a company founded in 1850, is undoubtedly an excellent mirror of what is happening in the world today, since it can count on data collected by analysing the transactions of more than 112 million cards spread in more than 130 countries for a turnover of around 1.1 billion dollars.
Should anyone doubt about the prodigious advance of digital in the hearts of consumers, they will convince themselves by witnessing, in 2021, the overtaking of digital payments against paper money, the by now ‘old’ cash.
The progress of online purchases is also certified by data regarding Millennials, who for 47% of their total purchases of luxury goods (Amex caters on average to a high profile clientele) rely on digital. From 2014 to 2019, the number of online consumers also increased by 11 percentage points (from 7 to 18%), with a spending growth from 3% to 12%.
One last figure provided by American Express gives clear indications about who are high-value customers: neither those who just buy online, nor those who only rely on digital, but those who maintain a fluid behaviour between one and the other channel. In short, the omnichannel model is a winner even for those who work in the world of payment methods and services.
NEW FORMS OF SOCIALITY
The brief speech held by Anna Soghoyan, CEO of Tareno, Armenian distributor, highlights once again how digital is at the centre of the strategies of almost all companies in the world: “In 2020 we have invested heavily in digital, expanding the contents produced for Social Media”. All to maintain close contact with customers. These include unusual initiatives, such as adding a bar of chocolate to shoe boxes delivered at home, to make customers smile.
The new forms of sociality that are developing among consumers are very interesting: “Today, who wants to buy a pair of shoes engages digitally with friends, but does not give up asking the family or even one’s neighbour for advice”. Digital yes, therefore, but also new (or ancient) forms of sociality that are back in vogue.
CRM BECOMES CRUCIAL
The (still digital) tool of Customer Relationship Management has now become a very critical aspect for companies, at this time, according to Federico Favero, of Altitudo Gold Partner Microsoft.
“Today, the involvement of a customer is increasingly critical, because the parameters in which consumers move have changed. They get much more information thanks to information technology and can quickly change their minds and have valid alternatives available. Information about customers is, therefore, increasingly vital to be quick in providing assistance and offering them the right products to meet their expectations”.
According to Favero, exploiting a CRM today does not just mean knowing the name of a customer, or the history of his purchases, but also collecting and analysing much more information related to consumer habits, behaviours and moods. “If a few years ago having a CRM was more a matter of fashion and the focus was on sales, today CRM is useful and essential in order to provide personalised assistance to each customer. The focus is no longer on sales, but on service.
Not having this information, or being slow finding it, does not only mean losing a customer, but also making an enemy of him/her”.
Artificial Intelligence, capable of analysing the large amount of data that a company is able to collect today by analysing consumer behaviours on private sites, e-commerce, social media, interactions with customer care, and physical stores, is undoubtedly among the most important technologies to implement in ones processes and to combine to CRM systems.
Senior Consultant WGSN Mindset
Through a methodical in-depth analysis of the market, María Errobidarte identifies new business opportunities for brands. Co-leader of the team of trend researchers across the EMEA division (Europe, Middle East and Africa), Errobidarte collects and analyses the main drivers of change for brands, building strong relationships with her clients allowing them to promote long term opportunities and success. She has been a speaker at trade fairs and major corporate events and a consultant for companies related to the fashion, beauty and interior sectors.
Chief Marketing Officer Bata Group
Isabelle Sakai is a leader in business and marketing with over 20 years of experience in consumer goods and retail industries in developing and established markets. She joined Bata in April 2019 as Chief Marketing Officer for the Bata Group, with the main task of supporting the company’s growth plan and helping to accelerate its strategic transformation anchored to the consumer. Previously, Sakai held a wide range of leadership roles during her 17 years at Procter & Gamble and 5 years at Mondelez International. She has a successful record career as a brand-builder, innovator and organisational leader.
MAFED Director (Fashion, Design, and Experience Management Master)
Emanuela Prandelli LVMH Associate Professor of Fashion & Luxury Management at the Department of Management and Technology of Bocconi University. She holds a PhD in Management & Business Administration from Bocconi University and worked as Research Assistant at the University of St. Gallen and at the Centre for Research in Technology, Innovation and eCommerce of the Kellogg School of Management, Northwestern University. She is the project manager of Master in Fashion, Design, & Experience Management (MAFED) at SDA Bocconi School of Management.
Head of Supplier Payments Global Commercial Services American Express Italia
Degree in Economics and subsequent MBA. He has more than 20 years of sales experience and has been working at American Express for 10 years. Antonio Altomonte currently holds the role of Head of Supplier Payments in the B2B world and manages a team of WCO Sales specialists nationwide. By virtue of his role, he identifies and maximises new business opportunities in the context of optimising working capital in the Italian market, both with potential customers and with the portfolio of existing SME customers.
Altitudo Gold Partner Microsoft
Founder and CEO of Altitudo, Federico Favero has a long experience in the evolution of business solutions using Microsoft technologies. In the dual role of consultant and technology innovation enthusiast, he works with the aim of translating the most recent and visionary technological innovations into concrete applications that can be used by companies. At Altitudo (www.altitudo.com), a Microsoft Gold Certified Partner where artificial intelligence is used to support process improvement.
WHITE shoes & accessories
Founders and owners
Anna Soghoyan, 32, has been working in the retail sector for 10 years and is the founder of the fashion brand WHITE – footwear and accessories. After 7 years of activity, the brand boasts 5 stores in Yerevan, Armenia. The new lines of bags and clothing have been added to shoes and accessories.