What Is The Future Of Fashion Retail Stores?

The disruption caused by COVID-19 has been devastating for the retail industry, raising crucial questions about the future of brick-and-mortar stores.

As the pandemic forced many retail giants to close hundreds—if not thousands—of locations globally, the question arises: What is the future of the retail industry?

Experts suggest that the key to survival lies in the integration of offline and online technology, ultra-fast delivery, digital dressing rooms, and providing bespoke customer experiences.

Major retailers like Target, Walmart, and Amazon are already adopting these strategies to maintain relevance and ensure sustainability in a rapidly changing landscape.

Many retailers are optimistic about a post-COVID recovery, spurred by pent-up demand from consumers who were forced into isolation and lockdown. For instance, luxury brand Hermes reported an astounding $2.7 million in sales on its first day of reopening in Guangzhou, China.

However, this positive outlook may not be feasible for all brands. With strict social distancing regulations in place across the globe, many retailers are struggling to meet their pre-COVID sales figures. For example, in Germany, the government has mandated a 1.5-metre distance between shoppers, which limits foot traffic and, by extension, profitability.

In China, luxury stores are allowed to admit only a limited number of customers at a time. While necessary, such measures hinder store footfall, ultimately affecting revenue. Retailers now face the dilemma of whether to keep stores open amidst high rent and lower sales, leading some to close or downsize their physical locations.

Consumer pessimism, particularly in the fashion sector, will further challenge the retail industry. The loss of millions of jobs, a global economic downturn, and consumers' reluctance to spend on non-essential purchases are expected to significantly impact retailers.

Even when stores in Germany were finally allowed to reopen, retailers were surprised to see far fewer customers than anticipated. People chose to stay home and save for uncertain times ahead.

This consumer behaviour shift, driven in part by the fear of infection, has given a massive boost to e-commerce. Online shopping, which was already a major threat to physical stores, now presents an even greater challenge.

Consumers are demanding contactless home delivery, online orders ahead of store visits, and curbside pick-up services more than ever before.

Despite these challenges, the future of retail lies in the integration of e-commerce and in-store experiences. Successful retailers will combine both online and offline worlds to create a seamless, omnichannel commerce system.

Major brands are already bridging the gap between physical stores and a digital-first market environment, offering innovative and engaging experiences for consumers.

Retail stores are not dead, however. In countries like the US and China, the majority of transactions (85% in the US and 80% in China) still take place in physical locations. The future of physical retail stores will involve immersive, interactive, and experiential shopping environments.

Brands like Nike and Gucci are already experimenting with concept stores that feature Instagram-worthy interiors and integrate advanced technology to provide exceptional shopping experiences.

The use of big data to understand customer behaviour is helping retailers create bespoke shopping experiences. Consumers today are no longer satisfied with the traditional assortment of products. They are looking for tailored services and are willing to pay a premium for them.

In-store-only sales, exclusive events, and interactive experiences are becoming essential for meeting the expectations of today’s consumer. A notable example of success is high-street retailer Rebecca Minkoff, who tripled sales through the use of interactive touch screens that allow customers to send products directly to their dressing rooms.

The integrated digital mirrors in these rooms enabled shoppers to view different colours, sizes, and styles of the same item, enhancing the overall experience.

Luxury retailers are also innovating by incorporating driverless cars to transport their high-end customers, while some are introducing digital dressing rooms within their apps and websites to entice shoppers.

These digital features leverage a customer’s purchase history to provide personalised recommendations, further enhancing the retail experience.

In the post-COVID world, the integration of technology—both online and in-store—is crucial for the survival of the retail ecosystem. It is no longer a matter of physical stores versus online shopping; retailers must adopt an omnichannel approach.

Experts believe that future stores will focus more on fostering customer relationships rather than solely on sales. Pop-up installations, already popular with younger generations, will become an even bigger trend.

Brands like Revolve have successfully created a buzz with pop-up events at major festivals like Coachella, and such installations will likely play a larger role in engaging consumers and providing convenience.

Ultimately, the survival of the retail industry depends on its ability to adapt to the needs of the modern consumer. Customer-centricity, technological integration, and customisation will be key drivers in the industry’s future success.