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Despite a muted outlook for 2024, the Retail Think Tank outlines key growth opportunities and predictions for next years’ winners and losers

While the retail sector outlook for 2024 is expected to be muted, hampered by ongoing macroeconomic challenges, weakened consumer demand and low economic growth prospects, retailers mustn’t let stagnation stifle innovation and future opportunities, the KPMG/RetailNext Retail Think Tank (RTT), an independent board of retail experts, warns.

With the UK economy set to tread water in 2024, the RTT expects this will impact growth within the retail sector.   Pressures on consumers and firms from high inflation may be easing, but “the economy faces major headwinds from the lagged impact of monetary policy tightening and tight fiscal policy settings,” according to Charles Burton, Director at Oxford Economics.

The RTT’s latest quarterly whitepaper – Retail outlook for 2024: What are the opportunities for retailers in a year of stagnation? – sets out its 2024 retail outlook, and includes key growth predictions, including re-invigorated retail formats and innovation trends, as well as its forecast for category winners and losers and predictions for the year ahead.

2024 Predictions – Key challenges and prospects for retailers

With monetary and fiscal policy remaining a dead weight on the UK economy in 2024, the RTT report highlights several challenges that will impact retailers into 2024.  These include rising cost pressures on their businesses, including National Living Wage and Business Rate rises; weakened consumer demand due to the ongoing squeeze on households through higher interest rate mortgage refixing for homeowners or rising rent costs for renters, wage growth rising against static tax brackets, and household debt servicing costs.

But, despite these challenges, the RTT predicts several growth opportunities in 2024, including: exploring growth models, such as retail media, or adopting platform business models following the success of Next and M&S and reassessing asset classes, such as retail park settings; investment in tech, including Gen AI, as well as innovating across commercial functions and the supply chain; tapping into new growth cohorts of consumers and moving away from a GenZ focus to acquire and retain older, more affluent consumers; and category winners seeing Food, Health & Beauty and Purpose-driven retail outperforming other verticals.

The rise and rise of retail parks

When it came to its property outlook, the RTT expects retail parks to become the standout retail setting in terms of growth, predicted to improve relative to other assets classes, such as High Street and Shopping Centres.  Having already become a resilient retail setting during covid, buoyed by their tenant mix that included ‘essential retail’ supermarkets anchors, this rise and rise of retail parks shows no signs of stopping.

As CEO of JDM Retail, Jonathan De Mello, noted: “More comparison goods retailers want to trade on retail parks.  For Next and M&S, their retail park stores are among their best performing.  With a broadening of the offer away from just bulky goods, and more food and beverage operators seeking to trade on retail parks, they are increasingly providing a real alternative to high streets.”

Outside of retail park success, bricks-and-mortar will see a renaissance in 2024, the RTT predicts, driven in part by consumer demand as well as revenue driving opportunities presented by Retail Media Networks, which retailers including Currys, Tesco and Kingfisher have been swift to invest in.  RTT Co-chair and Head of Sales at RetailNext, Gary Whittemore, noted: “Predictions that online will soon be more than 50% of all retail are problematic given that the rate of growth has been slowing in recent years and also that the cost of trading online is now on a par with stores. While there will still be pressure on the high street and the push to out-of-town, a well-executed omnichannel approach will be the winning formula.”

 GenAI in 2024 – from mainstream hype to dial-moving reality

As part of its Innovation Outlook for 2024, the RTT whitepaper predicts that technology investments will continue to help separate retail’s winners from losers through 2024.  However, the ability or willingness of retail businesses to fund innovation will have a significant impact on where on the performance spectrum retailers sit, as Retail Technology publisher, Miya Knights, pointed out: “Where it may have previously been enough to adopt and deploy technologies that allowed operators to catch up to their competitors, those who genuinely innovate using IT and digital will succeed next year.”

Retailers should also ensure that economic stagnation doesn’t stifle innovation, according to RTT Co-Chair and KPMG’s Head of Retail, Paul Martin: “Even if the economic outlook remains muted, one thing history teaches us is that following a downturn we often experience an upturn, and retailers should be doing everything now to prepare for this.”

The RTT expects 2024 to be the year when generative AI (GenAI) will truly move the dial for retailers.  As retail consultant, Natalie Berg, put it: “2023 was the year that GenAI propelled into the mainstream, 2024 will be the year of integration.”

Food and Health & Beauty among 2024 categories winners, but Home retail expected to struggle

After 2 years of falling volumes in food retailing, the RTT expects a return to volume growth in 2024.  Mike Watkins, Head of Retailer Insight at NIQ, predicts food retail will see headline value growth of +4-5% in 2024, with volumes up around +0.5-1% next year.

Health, Beauty & Wellness is also tipped to be a category winner in 2024, as consumers favour the small luxuries in life and focus on wellness, according to James Sawley, Head of Retail & Leisure at HSBC.

Purposeful brands and those with strong sustainability heritage will enjoy good growth in 2024, albeit from a low base, Sawley suggests.  This will prompt pre-loved and circular retail seeing success.  “The pre-loved movement will continue to gain momentum, fuelled by the desire or need for value [and] we’ll see greater demand for durability, traceability and more transparency in retailers’ circularity efforts,” Berg added.

On the flip side, the RTT expects Home retail to face a challenging 2024, with retail consultant, Maureen Hinton, suggesting that a slow housing market, and the pandemic boom for home-related big-ticket items and technology delaying the replacement cycle, will make it more competitive for home-related sectors next year.

To download the RTT’s quarterly whitepaper, which includes wide-ranging insight from its members, analysis and exclusive data, visit: Retail outlook for 2024: What are the opportunities for retailers in a year of stagnation?


ESW Named As Shopware Gold Technology Partner

Global direct-to-consumer (DTC) ecommerce leader, ESW, today announces its official technology partnership with Shopware, a leading open source ecommerce platform, enabling Shopware’s retailer ecosystem to rapidly activate DTC and cross-border commerce experiences in more than 200 global markets.

The partnership gives ecommerce brands built on Shopware access to ESW’s suite of solutions to enable all aspects of DTC cross-border expansion, including compliance, data security, fraud protection, taxes and tariffs to checkout, delivery, returns, customer service and demand generation, in as little as four weeks.

Already the leading ecommerce platform in the DACH region, Shopware is continuing to expand internationally following funding from investment firm, Carlyle, and PayPal.  It is trusted by the largest mid-to-enterprise brands and multinational market leaders including Philips, Jägermeister and Aston Martin. Every Shopware partner undergoes a rigorous evaluation process, investing significant time and effort to meet Shopware’s rigorous standards. This guarantees that merchants can confidently select a partner who meets the highest quality criteria.

Stefan Hamann, Shopware CEO, commented: “We’re very happy to have ESW on board as a partner sharing the same mission to create unforgettable shopping experiences to help merchants achieve their goals and reap the benefits of a wider margin and increased revenue powered by new DTC and global trading opportunities.”

“We are delighted to announce our partnership with Shopware to offer their merchants direct access to ESW’s quick-to-market ecommerce solution that cost-effectively supports any stage of a company’s DTC development.  Providing a fully localised shopping experience – from pricing to payments, compliance, duties and taxes and logistics for consumers in over 200 markets with 100% carbon neutral shipping – ESW enables retailers to quickly expand their global consumer base and grow top-line revenue through an asset-light strategy,” commented Martim Avillez Oliveira, Chief Revenue Officer at ESW.

ESW, whose brand partners include Victoria’s Secret, Michael Malul London and Movado, supports Shopware merchants at every stage of their global growth.  The company leverages its deep understanding of local markets to create unique DTC opportunities that drive customer lifetime value.  Brands maintain control over every aspect of their experience, from their data and the look and feel of their ecommerce sites to their content, catalogue, payments, fulfilment, and delivery and returns experience.


Retail industry’s annual tech investment gap could top £22bn, creating an innovation vacuum that risks sector health – Retail Think Tank

Annually, retail faces a potential sector-wide tech investment gap of up to £22billion, warns the KPMG/RetailNext Retail Think Tank (RTT), an independent board of retail experts.

This blackhole of tech investment is creating an innovation vacuum which not only threatens retail performance, but also risks long term sector health and business survival, according to the RTT’s latest quarterly whitepaper.

The RTT whitepaper – ‘Change Or Fail: Why Innovation Is The Business Survival Issue Retailers Can’t Ignore’ – suggests omnichannel retailers should be spending between 4-8% of their revenue on technology per annum.  However, currently most retailers only spend between 1.5-3%, leaving an estimated best-case of a 5% investment gap based on annual turnover.

With retail sector revenues in 2022 reaching £441billion according to RetailEconomics, the RTT estimates that this could see the potential annual tech investment gap topping £22billion.  This leaves retailers significantly underinvested in the innovation they need to underpin their business and secure long-term prosperity and health.

Whilst retailers face budgetary pressures and rising costs across their operations, the RTT warns that this perennial underinvestment in technology comes at a time when retail industry health is being called into question.

Data from RetailNext showed that in Q3 footfall, a key indicator of High Street health, remained resilient, up +0.7% year-on-year.  However the latest RTT Retail Health Index predicts sector health will dip for a seventh consecutive quarter, with the index dropping -1 point in Q4 to 68 points, which is -7 points lower than Q2 2020 when the UK went into lockdown and non-essential retail was forced to close.

While the retail industry and the market it operates in undergoes a state of constant and rapid change, the whitepaper points to the irony that many retailers are slow to adapt, with widespread evidence including Wilko’s collapse, the demise of Debenhams, Topshop/Arcadia Group, Made.com and Joules, to name a few.

It suggests the market is now in a more or less permanent state of flux and retailers unable to adapt in terms of their culture, staff roles and contracts and investment in technology, will go out of business.  The RTT whitepaper predicts that the retail industry will see some more major failures in the next couple of years.

UK Head of Retail at KPMG and co-chair of the RTT, Paul Martin, commented:

“Those retail businesses that are around now have a runway for the next 3-5years, but if they stand still and fail to innovate, they won’t have a runway past 3-5years.  Innovation is, of course, a broad topic and is often associated with technology and data, with Generative AI currently the latest hype.  Overall though innovation should be seen as much broader than that.  It is critical for the survival and prosperity of the sector, whilst at the same time innovating for the sake of doing something ‘new’ is not a recipe for success.”

Gary Whittemore, co-chair of the RTT and Head of Sales EMEA & APAC at RetailNext, added:

“Innovation is a state of mind that should be instilled within the culture of an organisation from the very top. However, there are plenty of retailers that talk about the need for innovation but then fail to see it through to actual implementation. The reasons are manifold – politics, siloed thinking and management, and a lack of investment in people and tech.  Specifically, retailers need to innovate in the skills and technology that will enable them to understand their customers better in terms of how they shop across multiple channels, more so because in tough times, multichannel retailers tend to fare better than pureplays.”

To download the RTT’s quarterly whitepaper, which includes wide-ranging insight from its board members, contextual analysis and exclusive data, visit: ‘Change Or Fail: Why Innovation Is The Business Survival Issue Retailers Can’t Ignore


Interest rate misery risks sinking sector health to lowest level since Lockdown 2 – Retail Think Tank

Retail performance faces a tipping point in Q3 2023, according to the KPMG/RetailNext Retail Think Tank (RTT), an independent board of retail experts, as the threat of further interest rate hikes and spiralling mortgage payments hits household spend, undermining retail sector health and requiring the industry to respond with investment and its hallmark ingenuity.

The latest data from the RTT Retail Health Index, the industry’s only comprehensive, sector-level quarterly benchmark of retail performance, predicts retail health will dip -1 index point in Q3 to 69 points.  This represents the lowest point since Q3 2020 when the UK was in the midst of tiered lockdown restrictions and about to enter Lockdown 2, and -23 points lower than Q3 2008, at the start of the Financial Crisis and the beginning of the Credit Crunch.

This is expected to mark a significant tipping point, with consumer confidence and the resilience seen in Q2, starting to crumble, as retailers and consumers face a ‘third wave’ of disruption as a result of higher interest rates, spiralling mortgage costs and their impact on customers’ spending power.  Even before the Bank of England raised interest rates to a 15-year high of 5.25% on Thursday, it was already predicting 1million UK homeowners will be paying £500 more in mortgage payment each month by 2026, with ‘millions’ of renters being squeezed by record rent increases as landlords pass on mortgage costs to tenants.

James Sawley, RTT member and Head of Retail & Leisure at HSBC UK, commented:

“To date, we have been surprised by the resilience of consumer spending underpinned by the labour market, wages, savings, and improved household balance sheets post-covid.  However, it now looks like we are in for a long slog of high and sticky inflation and interest rates.”

While former GlobalData director and retail consultant, Maureen Hinton, suggests the spending squeeze will become wider felt, hitting new cohorts: “The poorest have been hit the hardest so far, but the rise in the bank interest rates will spread the pain into new income groups,” she said.

Already in July, this step change is starting to play out.  Data from RetailNext’s footfall index, which captures billions of store visits globally each year, showed that even though shopper traffic – a key yardstick of High Street health – remained +2% up year-on-year in Q2, it dipped by  -5.2 percentage points quarter-on-quarter.  UK consumer confidence also took a dramatic six-point dip in the GfK’s July Consumer Confidence Index, prompting warnings that shopper resilience is starting to collapse as the economic reality of stubbornly high inflation and mounting interest rates sets in.

In its report, the RTT predicts that the disruption caused by an inflationary-driven downturn could take the industry up to three years to recover based on historical parallels.  And it suggests this interest rate-driven ‘third wave’ of disruption will have an arguably more significant, deeper felt and longer-tail impact on customer spending than covid and the cost-of-living crisis combined.

UK Head of Retail at KPMG and co-chair of the RTT, Paul Martin, commented:

“Looking ahead to the next 12 months we expect trading conditions for the retail sector to remain challenging. Inflationary driven downturns are usually much lengthier than other financial shocks to unwind, normally three to five years. Inflation and its impact on our economy isn’t going to be a short blip, it is going to be a lot more long-winded.”

Gary Whittemore, co-chair of the RTT and Head of Sales EMEA & APAC at RetailNext, added:

“This isn’t the first storm retailers have had to weather, but the long-term nature of this economic shock means the response needs to be both fast and radical.  Retailers need to be sharp in focus, understand their customers better, and get cost and business models right, otherwise failure beckons.  To manage these disruptions, retailers will need to know their customers, differentiate themselves from rivals, communicate a strong and meaningful purpose, and execute very well, notably with greater assistance from technology.”

To download the RTT’s latest Retail Health Index, including wide-ranging insight form its board members, contextual analysis and exclusive data on key performance metrics, visit: RTT Retail Health Index.


RetailNext and KPMG to co-chair Retail Think Tank’s quarterly Retail Health Index

RetailNext, the leading analytics solution for bricks-and-mortar retailers, today announced that it will partner with the Retail Think Tank to produce its quarterly Retail Health Index, alongside existing co-chair and global consultant, KPMG.

First established in 2006 by KPMG and market research leader, Ipsos, the Retail Health Index is the industry’s only comprehensive, sector-level benchmark of retail performance.  With almost three decades of data, encompassing pivotal moments that defined and redefined retail – from the 2008 Financial Crash and ensuing ‘Credit Crunch’ to Brexit, Covid-19, the post-pandemic recovery and, most recently, the cost-of-living crisis – the Retail Health Index assesses the sector’s key performance indicators, including demand, margin and cost.

Each quarter, it is independently scored by Retail Think Tank members – an elite advisory board comprising industry experts, thought leaders and analysts, including Nick Bubb, former-GlobalData Director Maureen Hinton, and NielsenIQ’s Mike Watkins – to benchmark retail health for the past three months, and predict how performance will evolve in the next quarter.  This year author and Retail Technology Magazine publisher, Miya Knights, and retail consultant and author, Natalie Berg, will join the panel as new members, bringing fresh insight and perspective to the wealth of expertise and industry know-how of the Retail Think Tank advisory board.

Following RetailNext’s acquisition of Ipsos’ people-counting and footfall solution, Retail Performance, in November 2022, which had formerly co-produced the Retail Health Index, RetailNext will now produce the quarterly index in collaboration with co-chair, KPMG.

Paul Martin, UK Head of Retail at KPMG, commented: “From its very inception back in 2006, the Retail Health Index has been a formative resource for retail businesses and leaders, aiming to quantify the knowledge of the Retail Think Tank members in a systematic way, whilst also providing an assessment of the overall retail health, for which there was traditionally no ‘official’ data.”

“Having been the voice reporting on retail health for almost three decades, we’re excited to welcome RetailNext as our co-chair for the Retail Health Index, and through the partnership we look forward to continuing to help retailers set a course for success as they navigate the multifaceted pressures, challenges and opportunities the market continues to present,” he added.

Gary Whittemore, Head of Sales, EMEA & APAC at RetailNext, commented: “With the fast-moving and multi-dimensional challenges facing retailers, impacting every area and function of their businesses, the Retail Health Index is not just a valuable indication of sector health.  Crucially, it also dissects and contextualises the key factors impacting performance, drawing on the extensive knowledge and expertise of the Retail Think Tank membership.  This results in a quarterly playbook for retailers, which outlines actionable insights and strategies to create competitive advantage in the context of the market, to drive retail businesses forward and readdress the balance of health back in the retailer’s favour.”

As well as being available online, a digest of the results of the Retail Health Index, including wide-ranging insight, contextual analysis and exclusive data-sets on key performance metrics, is available in a quarterly report, which is free for retailers to download.

To sign up to receive the Retail Think Tank’s Retail Health Index, including its quarterly insight reports featuring insight, analysis and exclusive data, here.


NRF 2023 – Beyond bricks: How LEGO is creating the building blocks for omnichannel success

The digital acceleration of the pandemic had already left some retailers questioning the effectiveness of their store estates in their channel mix.  Will footfall return?  Can stores run profitably?  Is bricks-and-mortar relevant in shoppers’ increasingly digital buying journeys?  Add to this the explosion in digital sales channels – not least the rise and rise of social commerce, new online marketplace formats and the vast, but so far untapped or merely surface-scratched, opportunity of the Metaverse – as a prompt for even more head scratching about the future role of the store in retail.

But far from the Irish Exit many predicted, the store isn’t slipping away quietly.

Quite the opposite, in fact, if the latest peak trading figures are anything to go by. The store’s resurgence was evidenced in many retailers’ recent 2022 Christmas trading results.  Fashion retailer White Stuff reported store sales jumped 25% year on year in December, while Seasalt said store sales in the five weeks to 31 December 2022 were up +24% in-store, but down -2% online. And, with Sensormatic research showing the store will top consumers’ main shopping channel in 2023 for 71% of UK shoppers, bricks-and-mortar is by no means ready to leave the building.

Famed for its brand-immersive stores that put ‘retail-tainment’ and experience at the heart of its store offer, LEGO is a firm believer in the flagship role of the store in its omnichannel strategy, as Martin Urrutia, Global Head of Retail Experience at The LEGO told audiences at NRF’s Retail’s Big Show over in New York this week.

Transcending beyond bricks-and-mortar

Speaking on the Twilio Feature stages session, he described how for LEGO retailing in-store transcends beyond the bricks-and-mortar of the store itself – it is not just a transactional hub, but it is its own customer communication and engagement channel.  It’s where guests come to immerse themselves in the brand, to hang out and to socialise and get to know and interact with the product. Brand story telling remains paramount in store, and LEGO sees the store as the mechanism to “take people into different places” and deliver a journey of imagination and discovery.  Far from stepping back from the store, in 2023 LEGO will build on its existing retail footprint.

Martin described the store as an opportunity for LEGO to engage with it customers and gain their feedback which influences the future of their store offerings and products that they sell as part of their forthcoming collections, sets and products/services.

LEGO doesn’t differentiate between its on- and off-line sales channels, but rather looks to blend the physical and digital buying journeys – but only when it makes sense to do so.  Martin acknowledged that they see that the two channels need to be executed differently, but “the common denominator centres around building LEGO experiences.”  In many cases, LEGO felt digital-only experiences didn’t make sense for its brand, but when digital was layered over IRL store, it did added extra value to customers and made their shopping visit with LEGO even more memorable.

“People won’t remember that they bought from us by – or interacted with – a mobile device in-store, but they will remember that time they came into a LEGO store and they were a ninja for a second,” Urrutia said, which is why encouraging imagination and letting children play in their store spaces is so important in LEGO’s customer engagement journey and physical retail remains “the lighthouse of the brand.”

“If we want people to come and engage with our brand in the store, we need to think how they want to spend their time with us, from family time and mom’s coming in with strollers and their children for playdates to LEGO lates, which are sessions for adults that tap into their ‘passion points’ and offer experiential and social gatherings in the evening that turn the store into a community and social space.”

Building a flagship ecommerce experience

Of course, like many brands, LEGO saw an acceleration to digital over the course of the pandemic, which meant it had to evolve its online presence further – but the key to creating compelling online experiences for the toy brand was to ensure that the brand experience was consistent with the immersive brand-led in-store environment.

And that meant not just through the design – unifying colours, navigation and shopping journeys – but also keeping the same mindset and personality on lego.com as it could deliver in its stores.  “We need to create a ecommerce flagship experience,” Martin added, taking the best of in-store and building it online.  It added services including livestreaming and store associates demonstrating products or set builds into its digital shopping journeys to translate the personal interaction available in-store translated in its ecommerce world.

Without innovation, stores can become ‘legacy’ too

Often, we talk about legacy in terms of old or out-dated technology that has run its course, and no longer fits the new needs of the business.  Martin warns that, without innovation and keeping things ‘fresh’ in-store, bricks-and-mortar can just as quickly become legacy if retailers aren’t willing to adapt and evolve their offer to keep shoppers engaged and providing them with a reason to visit.

LEGO’s strategy for avoiding cruise control in-store is one of constant evolution, in which it builds in ‘retail-tainment’ – experiential and immersive in-store experiences, services and activities, to keep finding new ways to emotionally connect with shoppers and engage with their passion points.  For example, as mindfulness and wellness came to the fore in customers’ psyches during the pandemic, LEGO offered workshop sessions within the store that allowed customers to interact and play with the products in the store and focus on mindful activities.

In a bid to continually shake up the store’s status quo, LEGO also runs its BrickLab – an innovation hub that looks at tech across its physical and digital store estates and continually trials and tests ways to improve  the customer journey.

Let customers shape the products and experiences of the future

It also religiously builds customer feedback not only into shopping journeys and the buying experiences it offers, but also through to the product itself.

Store associates are a key customer listening tool in capturing customer feedback and new ideas that their customers tell them about in-store.

Digitally, it has also set up ideas.lego.com, an online community hub which allows customers to create new products or sets that they would like to see in the future.  Those gaining 10,000 votes or more will go to a LEGO Committee who will discuss whether they will then produce the ideas or products moving forwards, meaning that both the customers and the in-house product team at LEGO are creating the future ranges together collaboratively.  And this has prompted some of their best-selling recent ranges, including the LEGO Yellow Submarine and its Sesame Street collection.

Making an iconic plastic brick-brand more sustainable

And, as a brand that’s product centres around manufacturing plastic bricks, you’d be forgiven for thinking that sustainability isn’t part of LEGO’s play.  But, to the contrary, LEGO isn’t shying away from building sustainability into its business.

By 2032, LEGO will mark its 100-year anniversary and it has already set itself several sustainability milestones as it heads towards its centenary.  Small steps it has already implemented include using greener energy resources within its manufacturing base, as well as swapping out plastic packaging to paper bags to house the product within its boxes of LEGO sets.

However, bigger step-changes are afoot, and last year LEGO created its 1st LEGO brick created out of recycled materials but that still meets the rigorous safety and product quality controls for the brands bricks that need to withstand years of play.

LEGO is also looking towards circular retail – as a brand that already enjoys a long ‘play-life’, with many of its customers keeping their childhood LEGO sets and passing them down to their children and grandchildren, last year LEGO donated 300kilos of used LEGO bricks to be reused, and spells a further opportunity to look at news ways to further lengthen the product lifespan through re-sale and reuse in the future.

As part of its wider ESG commitments, LEGO is also ensuring their products reflect better representation across gender and abilities.  It now ensures traditionally ‘male-oriented’ LEGO sets, such as their scientists or astronaut ranges have female representation in their LEGO characters, as well as bringing more diversity across its LEGO characters, so children from background or of any ability can see themselves in these roles during play and imagine what and where they want to be when they grow up.


Millennial fashion shoppers dip their digital toes into the Metaverse, with 21% having bought fashion NFTs

Millennials and Gen Z are driving the demand for Metaverse fashion with a fifth having already made a Non Fungible Token (NFT) fashion purchase, the latest research from Centra, the headless commerce platform for fashion and lifestyle brands, reveals.

Original research of over 2,000 UK shoppers in Centra’s latest report – How your brand can capture its full potential globally – showed that while just 9% of UK shoppers across all age demographics have bought fashion in the Metaverse, Millennials and Gen Z are leading the way when it comes to buying fashion in retail’s next dimension.  A fifth (21%) of Millennials and a further 19% of Gen Z consumers said they had already bought an NFT or digital fashion asset, with men twice as likely than women to have bought fashion in the Metaverse.

Trying digital fashion on for size

Almost two fifths (38%) of those who had bought a fashion NFT had done so because they believed it would be an investment, rising to 46% of Gen Z shoppers.  The novelty of owning a digital asset also ranked highly among the shoppers polled, with a third (31%) motivated by it being a new digital form of owning something from a brand they liked and 28% said they liked the idea of owning something in a virtual world.  However, 34% said they didn’t want to own fashion digitally, preferring physical fashion garments.

Martin Jensen, CEO and Co-Founder of Centra, commented:

“The Metaverse is still evolving – and you could say that it is still shapeshifting as retailers and brands try and get their heads around the opportunities this next dimension of retail offers.  And whilst the Metaverse isn’t here in its final guise yet, it’s certainly real for consumers who are already showing demand and adoption when it comes to owning fashion digitally.”

Avatars – digitally dressed for success

Meanwhile, 31% of Gen Z shoppers said they wanted to dress their digital avatars as the main reason for purchasing NFTs, with a further 23% saying they wanted to be just as well dressed digitally as they were in the real world.  And, as the Metaverse becomes a reality, 39% of UK shoppers across all age groups believed digital avatars will become the norm within the next two years, while 44% said this would take longer to normalise, saying widespread adoption would happen in 5 years.

“Consumers are demanding more and more immersive experiences online to the extent that they want to replicate their personality and appear ‘in person’ in the digital world,” Jensen continued.  “This presents an significant opportunity for brands to get closer to their customers to understand what they want and how they want it, but that needs to be delivered alongside a Metaverse offer that is compelling and that stands the test of time, so it doesn’t just become flash in the fashion pan.”

Mistrust and the Metaverse

While a quarter (27%) believed NFTs to be the future of fashion, there remains an element of mistrust about the longevity of fashion sold within the Metaverse among UK shoppers.  29% said they thought fashion NFTs were a fad that would pass, while 25% didn’t trust NFTs.  A further quarter (24%) thought NFTs were simply a gimmick used by fashion brands to sell more ‘things’ to shoppers.


Nudie Jeans radically re-routes ecommerce for greater sustainability

Sustainable denim brand, Nudie Jeans has partnered with headless commerce platform Centra to develop a unique Ship-from-Store solution that enables its customers to receive their orders from the nearest store as quickly and sustainably as possible.

The new solution enables Nudie to provide a service that will give manufacturer brands and their bricks-and-mortar retailers a competitive advantage over Amazon and other giant ecommerce marketplaces.

Nudie Jeans wanted to prevent its bricks-and-mortar retail partners being side-lined as online sales picked up speed, and to continue to offer a compelling service instore from store runners who are experts in curating and presenting brands, knowing the products and talking about them with conviction.

The Ship-from-Store model complements Nudie Jeans’s long-held commitment to sustainable practices, explains Nudie Jeans Tech Lead, Melker Lindstrom:

“As a brand we really strive to be sustainable in all areas and the existing system was just not a sustainable way to work.  We wanted to present the brand in the way we wanted and develop that front-end with our partners.”

The company shared Centra’s view that conventional ecommerce was not sustainable. “Ecommerce was built for online multi-brand retailers shipping from a few huge warehouses. It was not designed for brands with an existing and complex retail network of wholly owned stores, franchises and wholesale partners. It was also logistically absurd and environmentally negligent,” explained Centra CEO, Martin Jensen.

Nudie Jeans partnered with Centra to build an ecommerce business that integrated all sales channels, ultimately creating a new kind of fulfilment ecosystem where a customer can order online but have it picked, packed and delivered from a local bricks-and-mortar store. And returned there, if needed.  As back-up, the item is reserved from the main warehouse if no local stores can fulfil the order – so the customer gets what they want far more quickly and delivered in a far more sustainable way.

This operating model creates a healthier, more holistic business that does not feed on itself in an act of commercial cannibalisation, and also delivers a huge service and sustainability win.

“How can it be that you order a pair of jeans that might actually be in stock in a store a five-minute cycle away,” says Jensen, “but end up being delivered, by air, from a completely different country? And if they don’t fit, they get shipped right back. It’s bad for the environment and you have to wait longer for the product to arrive.”

Centra and Nudie began by rolling out a workable version, starting with wholly owned stores before connecting wholesale partners and franchisees.

In order to connect hundreds of wholesale customers into the new system, Centra had to work across and around many different point-of-sale (PoS) systems and ensure that it was easy to understand and use. It also incorporated multiple local taxes and customs capabilities as well as many different last-mile logistics.


Did we just all get too excited about BNPL?

Buy Now Pay Later (BNPL) is just another consumer credit option amongst many and now looks as if it will complement rather than displace other methods. As the hype fades along with the eye-watering valuations, it is perhaps time to realise that the emperor was not wearing any clothes.

I never bought now to pay later and, with the obvious exception of my mortgage, I never will. I didn’t  like the idea and I never believed in it – although I was lucky enough to take a few quid off Klarna in the early days when they were looking for help to build market share with merchants. It was all smoke and mirrors of course, but I was seduced by the energy and the belief that it was going to change payments forever.

Maybe it’s my age or maybe it’s my wealth, but I never want to have to admit that I can’t afford something so I simply react by not buying it. Of course I understand that not everyone has the same luxury, although I entirely agree with money saving expert, Martin Lewis, if you can’t afford to order a meal through Deliveroo and pay for it there and then, then really you should go without. That seems like the right kind of behaviour in a period of austerity that we’re all having to embrace in different ways, whether it’s turning down the thermostat, or turning the heating off altogether, or investigating meals that simply don’t cost so much to buy and cook.

A Happy Meal for four at MacDonald’s will cost you £22-28, or in my world, 3 meals a day for 3-4 days. Something has gone horribly wrong when I can buy burgers on credit, which seems like a reward for bad behaviour. Of course, this is the worst end of BNPL, when it is mostly used for purchases that simply cannot be made in full there and then by more and more people. But the tide is clearly turning against it.

Multi-billion $ valuations were never going to pay off

Now, of course I can’t help enjoying a moment of schadenfreude, as I discover that last year Klarna had reached a valuation of $45.6 billion only to see it collapse to today’s figure of around $6.7 billion, which is maybe a more realistic valuation based on where BNPL fits as a payment method alongside all the others that are available. And it may be a better option in terms of cost and convenience than credit cards, but I’m pretty sure that none of the credit card companies feel remotely under threat from this method of payment.

Of course, as a writer on and supporter of retail, I should support BNPL, because of course as everyone knows the retailer gets paid upfront, so anything that helps the cash flow is all good. However, it’s worrying to hear about BNPL’s little secret, which I hadn’t been aware of, which is that it encourages returns. Reported in the Sunday Times, one fashion retailer did some research and discovered that shoppers buying everything on interest free credit returned about 30% of everything they received, whereas those who put down a deposit returned only 12%, all of which results in lower margins for retailers that offer this method of paying.

Welcome to business as usual

It has been suggested that the BNPL companies will simply adapt their offer in order to grow, but the danger now exists that retailers stop offering it as a service, particularly as the media is very much against it, as it reports more and more stories of consumers getting themselves into difficulties with debt.

What is most likely to happen is that BNPL will survive, because it works well for certain types of retailer, but that there is simply not enough room for all the players. More consolidation is coming and future valuations will be based more on revenue, and that is as it should be.


The growing conscience of the fashion-conscious: Sustainability and authenticity become key considerations for UK fashion shoppers

UK consumers are increasingly rating sustainability and brand authenticity as key consideration factors in their fashion buying decisions, the latest research from Centra, the headless commerce platform for fashion and lifestyle brands, reveals.

Original research of over 2,000 UK shoppers in Centra’s latest report How your brand can capture its full potential globally showed that while the product itself rated was the top consideration for 50% of consumers, key brand values, including fashion companies’ green credentials and how true the company is to its brand meaning, are emerging as growing consideration factors in consumers’ paths to purchase.

Almost a third (29%) said sustainability was a key consideration when shopping apparel, saying that to win their custom a brand needed to care about the planet as well as profit, rising to 36% of 18-24 year-olds.  Meanwhile, a further quarter (25%) of UK fashion shoppers said that authenticity, where the brand lives up to what it stands for, would also impact their buying decision, rising to 30% of 25-34 year-olds.

Two thirds (65%) of shoppers say fashion brands need to ‘hard bake’ sustainability into their brand values and 70% say retailers should do more to bring their environmentally friendly values to life across their sales channels and touchpoints.  With eco-fashion demands growing, 45% of shoppers say they would buy more from fashion brands who shout about their green efforts and a further 58% said they would buy more frequently from those retailers who commit to protecting the planet.

However 72% say sustainability claims must be backed up by meaningful action by a brand before they would consider changing their buying behaviours or switching their loyalty to a retailer, and 51% said that if they perceived a retailer to be ‘greenwashing’ it would give them a negative view of the brand.  And while the CMA is already cracking down on greenwashing amongst fashion retailers, with ASOS, Boohoo and ASDA the latest brands being investigated by the regulator, recent research showed fashion businesses account for a quarter of all greenwashing complaints.

When it comes to authenticity, two thirds (64%) of shoppers now want the online experience to live up to the brand’s personality and values, which proved particularly important to younger consumers demographics of consumers, rising to 71% of 18-24 year-olds and 72% of 25-34 year-olds respectively.   Over two fifths (42%) said that if a retailer’s online shopping experience didn’t embody the brand’s values, it would make them question their purchasing decision, while 39% said it would put their long-term loyalty to a brand in doubt.

Martin Jensen, CEO and Co-Founder of Centra, commented: “Fashion shoppers now quite literally wear their hearts – and their values – on their sleeves, and they are conspicuously consuming those brands whom mirror and shout about their own values and beliefs.   So, when it comes to fashion, that means online experiences need to be at least as amazing as the products themselves and the brand storytelling needs to be consistent and authentic across each and every touchpoint.  That way the retail can remain relevant and true to the core values of its own brand as well as those of its customer-base to drive sales and long-term customer lifetime value.”


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