Posts Tagged "canales"

Amazon introduces new patterns in the Fashion sector. Customer will decide.

The strong bet of Amazon in the Fashion sector is not only based on the powerful introduction of its new own brand 'FIND' for men and women, it is also adding new patterns that are  new for the sector. Some of them will be appreciated by the consumer, others will not. Sometimes they might be replicated in the physical stores and, in other cases, they will have to remain in the online arena.

Dynamic Pricing

It is by far, the area where Amazon incorporates the largest number of novelties for Fashion.

Continuous changes in Prices

For a similar clothing product, Amazon changes prices an average of 9 times during the season, while a department store (eg Macys) just changes 2,1 times per season, and clothing specialists, such as Kohl's, just 1,6 times per season.
Sales period will not be the same ever. Relevant price endings and price points for costumers in brick and mortar won't have the same importance in an online environment.

Different prices at colour level and size for the same model

Amazon doesn't innovate just in time factor. The difference with fashion specialists is that Amazon starts with just one unique sales price for all colors and sizes in the same product and applies its predictive analysis based on sales, stock and availability at size and color level.
Amazon prices by colourAmazon colour and sizes selling price

Thus, it is usual practice in Amazon that, for the same garment they provide different prices based on color and size and always based on customer sales criteria and not original cost prices and mark-up.
It will be difficult to implement these criteria in stores. But, who knows… 3 years ago nobody could imagine 'free delivery' at home just the day after the purchase.Amazon sizes and prices

Consumer ratings

The massive use of user generated content, providing ratings and comments by other costumers, has demonstrated huge effectiveness in other retail sectors where Amazon has a higher weight, like electronics. Fashion is introducing this new pattern that provides confidence in Brands based on other costumers opinions.
The use of costumer ratings is done through filters and relevant segments for each type of product. In addition, Amazon incorporates costumer opinions from other countries where the same product is sold. Amazon manages in a superlative way the popularity of the products by UGC.Amazon consumer ratings

Echo Look

This initiative provides the facility of take pictures of products tested at home by customers. Through a specialised application you can receive recommendations about other products or offers regarding different brands that combine better with costumer preferences. It is like a 'personal' assistant to facilitate the clothing purchases. Amazon Echo Look

Prime Wardrobe. Try before buy

In this case, Amazon provides to their 'Prime' clients the possibility to monthly receive a box with 3 to 10 fashion products selected by customers to be tried at home. The costumer try on it at home and can return the garments they are not interested in.
Based on the number of items that the customer acquires, they receive a 10 to 30 € discount. This service is similar to the 'subscription' model in other sectors. It is an advanced version for home of smart fitting rooms, which its use is now increasing throughout retail chains. Amazon Prime Wardrobe

Prime Service. Shopping consumer networks

The success of the 'Prime Amazon' service (even with an additional charge) it has been an inspiration for the development of other shopping consumer networks services, such as SHOPRUNNER, which allows retail chains provide similar experiences to Amazon but without investing in disproportionate structures for their activity.
Shoprunner

 

 

Other innovative initiatives for fashion

  • Wider development of the size range maintaining same model
  • Incorporate, in a selective way, men products among women items taking advantage of the fact that more than 40% of men products are bought by women
  • Literal description of products evolution to 'tactile' descriptions that compensate the no physical presence of the product
  • Private brand sponsorship, promoting in a simultaneous way incomes from third brands

But not all Amazon initiatives become successful. The Amazon branded 'Style Code Live' TV channel for interactive purchases has been cancelled after one year try out period without good results.

With Amazon new fashion patterns, clients are having the chance to try new experiences in their purchases, some of them will be demanded to other competitors in physical store environments as they will get used to.

MHE, retail consultancy, works for brands and retail chains in strategy and operations in omnichannel environment.

More info: carlos.dominguez@mheconsumer.com

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Amazon confirms strong bet on Fashion sector while launching the new private label FIND in 5 european countries (including Spain) during this AW 2017

Amazon surtido vestidos FIND

  • After 5 years selling external clothing Brands Amazon and testing around 7-10 different private labels targeted to specific Market segments has officially launched this Autumn-Winter a full women/men collection under the private band 'FIND'.
  • MHE, retail consultancy, has analysed in a detailed way using the proprietary benchmarking tool 'Market Mapping' the FIND women clothing product assortment vs the main clothing specialist chains in Spain such as Zara, H&M, Mango and Primark. The scope has been the assortment width, product mix, price architecture and colour architecture. In addition an objective end use and fashion style position segmentation has been elaborated. This report contains the main conclusions when comparing FIND with Zara, H&M, Mango and Primark.

Assortment Width

  • Amazon-FIND position in terms of number of options and average selling price is very close to the Market leader ZARAWidth and price assortment Amazon

 

Pricing

  • It is not the case that FIND only offers basic product at entry prices. FIND proposition is FASHION (not only commodity clothing) and a price range equivalent to the one in H&M

 

total price architecture Amazon FIND MHE MM

 

  • Tshirts is one of the strategic product category where FIND covers the full range of selling prices.
  • In terms of number of different price points, FIND has the highest number among the analysed competitors.Tshirts Amazon

Product Mix

  • Product mix offer proposed by FIND makes a higher emphasis on Dresses and Tshirts vs other retail chains
  • Top/bottom ratio is substantially higher in FIND vs total market taking advantage of better suitability to sell online these product categoriesProduct Miix Amazon

 

Colour Architecture

  • Only 25% of FIND options are represented in 'fashion' colours. In this way, fashion risk is mitigated and it plays fashion image perception against reality game. By far, black (with 30% of the total options) is the most frequent colour
  • This colour architecture matches the policy implemented by other global players (Zara, H&M and Mango)Colour Architecture Amazon

End Use and Fashion Style position Segmentation

  • MHE has defined and objective visual images grid segmenting end use and fashion style positions. The it has been applied to the assortment online of the different retail operators analysed.
  • Amazon-FIND assortment is clearly concentrated on casual and soft casual segment and updated style position in a much higher proportion that the other operators.
  • In this way FIND avoids dilution and impact when discarding other market segments while concentrating on a reduced number of segments.E Fashion Style segmentation Amazon

Importance of design/style/taste and other qualitative attributes. Centralization

Zara Madrid Noviembre 017

  • To have a good strategy and assortment planning is an important step but not enough to succeed. Operational centralizations of companies such as Amazon may face some difficulties to adapt, specially women fashion, a single design and managed European assortment to such a different local tastes of countries like United Kingdom and Spain.
  • This difficulty is not unique for Amazon, in fact other global clothing specialists have gone already through this process.
  • Taking into account that Amazon gets the best results in new products/services after a period of 5-7 years of activity from the start we forecast that FIND has come to remain in the Market. This will continue…

MHE, retail consultancy, works for major Brands and Retailers in commercial strategy and operations in an Omnichannel environment.

More Info: carlos.dominguez@mheconsumer.com

 

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Continous increase of e-Commerce sales participation in all retail sectors than comes with an slight Ebitda reduction during the last five years

restoration-hardware

Restoration Hardware

  • Tell me in which retail sector you are and I will tell you what percentage of your sales should come from eCommerce (from 4% in mass market sector up to 22% in leisure/technology . Also what growth perspective you should have.
  • MHE, retail consultancy, has analysed the results and eCommerce performance in 55 retail chains representatives of major sectors such as fashion, leisure/technology, home, health and beauty and mass market formats in USA during the last five years (2016-12). This market provides good and consistent data and available to the public. 

 

 

e-Commerce participation  as a % of total salesTarget-electronics-Interior

  • e-Commerce already represents 9% of total sales in the whole group of retail chains selected
  • Leisure/technology sector keeps on heading the group (22 %) without any surprise in the sales
  • Starting point was not very similar depending on which sector you are but as time goes on, a convergence of major retail sectors can be perceived. Home sector, with an outstanding +23% eCommerce CAGR sales growth is catching up quickly
  • Health & Beauty are coming closer and closer in many aspects and eCommerce is not an exception for this merging trend.

 

 

e-Commerce CAGR sales growth  per retail sector in period 2016-12 

Yearly growth rates across sectors can be grouped in three bands:

  • Home goods with 23% CAGR
  • Leisure/technology with 16% CAGR
  • Fashion, heath and beauty and mass market with 11-12% CAGR

 

Impact on Ebitda

  • Ebitda has suffered an small erosion during the period 2016-12 reaching 6% of sales in year 2016
  • Negative correlation is shown below between eCommerce sales share and achieved Ebitda. This reduction can be caused by several factors including lower prices, higher operation costs (certainly at the incipient eCommerce phase) and potential store sales productivity linked to eCommerce cannibalization

 

“Winners” segment

  • We have identified a group of retail chains (winners) that are over performing in the period of 2016-12 to check how eCommerce is doing in these organisationsulta-beauty
  • e-Commerce sales mix (15%) in 2016 is much higher than the average for the whole companies group (9%)
  • Winners are enjoying a higher substantial CAGR in sales over the period (2016-12). What really makes “winners” different is the CAGR sales growth for their physical stores 12%. Therefore, it is clear that their good performance is not only based upon eCommerce activity but improving significantly also their stores productivity
  • On the other hand, Ebitda has suffered during the same period from 19% on sales to 16% in year 2016

Future developments in the retail sector will not be purely eCommerce based, spite of its continuous sales growth. The transformation should include as well a clear physical store improvement task.

The main challenge ahead in a growth mood will be to sustain the current Ebitda (as % of sales) and satisfying at the same time new Omnichannel customer expectations.

 

MHE retail consultancy, works for major brands and retail chains to improve strategy and operations in an Omnichannel environment.

More info: carlos.dominguez@mheconsumer.com

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Wholesale's channel reduces participation due to eCommerce push

The limits for Brands between the different channels are becoming more diffuse and their convergence is a reality: customer wants it and current Omnichannel environment – now reality – allows it. This convergence makes it increasingly difficult to accurately attribute the weight of each channel, and often the results of Retail + eCommerce are grouped under the same roof to hide possible decreases in productivity in physical stores.Wholesale evolution

 

The analysis performed by MHE of 20 relevant Brands (with presence in Wholesale / Retail / eCommerce channels) in the fashion sector (USA) reveals that wholesale channel's evolution in the last 5 years has been negative, losing participation steadily (-6 pp) due to the unstoppable boom of eCommerce which represents a significant weight of 10% of sales. Retail channel managed to maintain its weight (35%) in the same period through a constant evolution and improvement of the shopping experience in the physical stores.

EBITDA's evolution (for all channels) in the same 5-year period has been slightly negative.EBITDA evolution

Brands with better results have managed to improve and increase Retail channel's weight

For the Brands with better results, we note that the reduction of the wholesale channel weight is even greater. On the other hand, it outstands that they have achieved a greater participation of their physical stores and at the same time a spectacular growth of eCommerce (CAGR of + 34%).

Traditionally, Wholesale has been a refuge with high ROI for brands, as it does not require the same level of investment as the retail channel and allows rapid and accessible expansion into new international markets.Winners wholesale evolution

Ecommerce growth winners

 

 

Wholesale compulsory reconversion

The decline of the department store format, a privileged environment for wholesale is not making things easy to avoid the drop of this channel. Best retailers become a solid destination for the accessible luxury segment.

Traditional multi-brand stores have a difficult reconversion, except for those cases where they achieve a specialization – differentiation.

Brands have the task ahead, not always easy, to maintain a consistency in: product, pricing, display and experience in this variety of different formats and channels. Management in third-party environments requires better planning / selection of the assortment and an effective merchandising logistics.

Nike

New hybrid formats with eCommerce

Due to this new environment, there are new hybrid 'Wholesale' formats that are appearing strongly:

  • Shop in shop in eCommerce operators (Asos, Zalando)
  • Design/products teams of the Brands that act as real implants – embedded- within eCommerce operators to develop and manage their collections of their products.
  • 'Direct To Consumer' (DTC) through Amazon. Recent case with Nike

Nikestore_Amazon

 

Everything indicates that the Brands will continue their transformation in order to continue being closer to the final consumer.

Pay attention to your partner… This dance continues!

 

MHE helps Brands and Retailers to optimize distribution channels productivity

More info: carlos.dominguez@mheconsumer.com

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