Covid-19 has radically changed consumer behaviour in all aspects. From the acceleration of digital adoption to overall consumption pattern, the lockdown has evidently impacted how people live.
With the biggest spending season of the year fast approaching, brands and retailers are faced with uncertainties as they plan for the holidays with little to no historical data to rely on. According to Sam Iosevich, the chief analytics officer of The Parker Avery Group, historical data and lessons learned from the past holiday seasons won’t be of much use this year.
The online shopping pace is predicted to be different than last year. While typically concentrated in the week leading up to Black Friday and Cyber Monday, this year’s holiday shopping is expected to be longer. Amazon Prime Day’s delay (October 5 is the placeholder date) and the growing popularity of Singles’ Day in November are expected to be the leading events of the holiday sale.
While many businesses have resumed operations in early Q3, the rising coronavirus cases in the UK and US continue to remind both retailers and consumers to remain cautious.
With holiday retail planning in full swing, it is highly important for brands to consider additional factors, such as the changing consumer behaviours and demand, and how they can prepare to meet these needs.
This report aims to guide brands in ways to strategise and win consumers this holiday season.
Over 300,000 data points were screened from January to August 2020 across womenswear and menswear categories on Asos, Boohoo, H&M, Zara and PrettyLittleThing in the UK.
All data used in this report comes from products retailing online as tracked by Omnilytics, unless otherwise mentioned.
An optimised assortment should be prioritised to not only ensure consumer needs are met, but also protect margins by maximising full price sales. Consumer spending has shifted due to the pandemic, and a demand-driven strategy is the best way for brands to navigate through the change.
Traditionally, brands would be focusing on partywear or going-out assortment for the holiday season. This year, The Collected Group’s Chief Executive and Chief Creative Officer, James Miller, advised brands to be conservative and rely on core offering instead. This includes loungewear and activewear, which contributed largely to consumers’ preference for comfort dressing.
Loungewear, a trend that rose from the peak of the pandemic showed no signs of waning. The style remains on the uptrend across most core apparel categories (Chart 1). Items in relaxed silhouettes continued to be in demand and were able to drive full price sales (Chart 2). Many brands, including Everlane, Equipment and Current/Elliott have seen success from the surge in demand for timeless basics, such as T-Shirts and Jumpers.
With a strong focus on comfort, brands can promote existing relaxed pieces for the holiday season, as it will continue to be favoured in this ‘next normal’ period. In addition, highly versatile pieces that can be worn from Zoom meetings to small social gatherings also fare better, as consumers seek value for their money.
Extravagant partywear or going-out pieces seem irrelevant with the continuation of remote working and the need for social distancing. Cottagecore, which has emerged as one of the most commercial themes this year, has given rise to the popularity of the house dress. Its traditionally-feminine aesthetic combined with the effortless ‘throw-on’ ability makes it a popular dressier alternative to loungewear.
The buzz around Lirika Mitoshi’s strawberry dress on social media has further propelled the success of house dresses. Smock dresses, with similar flowy and roomy silhouette, saw a massive 136% increase in sell-out from April to May. The sell-out performance continued to be on an upward trajectory, before dipping slightly in August.
Florals was the leading pattern for smock dresses, accounting for 33% of total dresses sell-out contribution. Micro and ditsy florals were the most commercial patterns, followed by checks and animal prints.
Feminine shapes and details commanded the bestsellers, in line with the Cottagecore aesthetic. These include milkmaid necklines, puff sleeves, elasticated shoulders, ruffles, tiered detailing and midi lengths.
The smock dresses style was led by Asos, followed by Boohoo and H&M. Boohoo, commonly known for its partywear and bodycon dresses, has shifted its strategy to accommodate to this demand for comfortable dresses.
The core colours of black and white dominated the trend with 40% contribution in sell-out. Meanwhile, blue and pink commanded the fashion colours, which were mostly in lighter hues.
Over the years, brands have started earlier to build the anticipation towards the Black Friday weekend. Boohoo started 11 days earlier, calling it a ‘Black Friday Warm Up’ by offering a 25% off sitewide sale. Meanwhile, H&M used a loyalty tactic among its members by giving an early access to Black Friday, with a 20% off sitewide. Brands typically executed a sitewide sale, communicating on deeper discounts to drive traffic.
However, brands do not need to resort to deep discounting. Based on 2019’s holiday markdown performance, the 20-39% off discount range registered the highest sell-out despite offering 80% off sitewide.
To avoid inventory glut in the holiday season, brands should take a proactive approach in managing product lifecycles. Looking at ageing analysis helps brands to spot slow-sellers, consequently triggering brands for immediate action.
In a staggered markdown approach, the depth and timing of markdowns are determined by the length of time the products remain in stock. Brands should first aim to sell inventories that are 3-4 months old at full price to maximise profit.
Based on Chart 6, PrettyLittleThing had a considerable amount of ageing inventory from over a year ago. Digging into the categories revealed Tops, Dresses and Swimwear & Beachwear to be the top three slow-sellers.
