Retailers Hold Their Breath as Q4 Sales Emerge

In this episode, “Retailers Hold Their Breath as Q4 Sales Emerge,” we discuss the importance of strong sales numbers needed to overcome a turbulent year, and the innovations that will likely carry over into 2021 as retailers rebuild. 

Joshua Williams: 2020 has been a year like no other. Fashion retailers were hit especially hard early on by the Covid-19 pandemic.  Since then, they have been racing, fighting even, to adapt, evolve and innovate fast enough to save their businesses. Changes that were once part of a long-term strategic plan had to be implemented immediately, often remotely and with less staff. In some cases, this acceleration of change helped to stave overall losses. For some, it even provided an opportunity for brand growth and scaling. But for many it was an acceleration towards insolvency and bankruptcy.

For those who made it pass these initial hurdles, the focus turned to the fourth quarter, the most important season for fashion retailers in terms of overall sales. For most retailers, this meant putting more emphasis on e-commerce, restructuring promotional timelines and realigning direct-to-consumer distribution strategies. For others, this included more drastic measures, such as reconfiguring physical stores to be pick-up only locations, or even “dark stores” or warehouses. 

Now, as we near the end of the fourth quarter, retail executives are hoping to see that their efforts have paid off and will provide a foundation with which to rebuild their businesses in the short term, post-pandemic.  

So, what is the verdict leading into the holidays? How have retail expectations held up?

Massimo Volpe: Well, it's a very interesting, but also complex question, because we have to speak about different geographies. 

Joshua Williams: That’s Massimo Volpe, Co-Founder of the Retail Hub, and Founder of Global Retail Alliance, an association that connects leading global retailers. He continues: 

Massimo Volpe: We've seen an increase in Q4, especially in the US market, is going up almost to double digits. We definitely have seen a higher double digit in the Asian market with China in a leading spot. And we're still struggling in Europe. We had a “rebounce” all over Europe, but because of the last, and current wave in specific areas like France, UK, Italy and now Germany as well, we're seeing that the people have kind of slowing down a lot, so It depends a lot by the geography you're talking about.

Joshua Williams: While that might sound positive at first glance, at least for China and the US, these double-digit number increases are still below overall expectations and below year-on-year growth. But in a turbulent year, executives have had to be more sanguine than usual. Here’s Massimo again. 

Massimo Volpe: I would say that beginning of next year, we weren't expecting to see an increase; we're probably not going to match the forecast that we made. We probably have to wait until spring to see a decent "coming back" of the fashion system.

Joshua Williams: But there are silver linings. One of the key accelerations that have led to overall positive growth in the retail industry is a more strategic focus on e-commerce, and its position within an omni-channel retail structure.  

Massimo Volpe:  We have a number most of the companies have declared that says four zero. So, 40% higher in the e-com. So, it's a big shift.  

Joshua Williams: When asked if these increases will continue post-pandemic, he states:

Massimo Volpe:  Probably, after this situation, it’s going to go down to 20, 25%, but still it's a huge increase compared to the last year when for  most of the companies was 10, 12%, if not lower. Funny as it seems, so many companies, they didn't really have a decent e-commerce. So, the fact that now almost everyone has e-commerce is something that will stay, not going to go away anymore.  

Joshua Williams: In fact, Massimo emphasizes that many of the adaptations and innovations retailers will continue to employ post-pandemic are related to personalization, a focus on the customer experience. 

Massimo Volpe:  For the most innovative ones, or the ones that already had an e-commerce working, innovations like virtual shopping with the sales assistant, can create this omnichannel situation, when you can have a direct relationship with your store, with a person that you trust, eventually you know, in a comfortable situation like home, on your phone and in a safer situation. So, I think that probably is one of the small innovations that will stay with us.

Joshua Williams: Additionally, Massimo believes that there are key tools and technologies that will become more front and center in 2021. 

Massimo Volpe: I’ve been studying smart speakers for a long time. It was increasing before the COVID; it’s continuing to do that, even in the videogames world; a very interesting substitute to typing on our laptop, on ourkeyboard. I always like to mention an example, the fact that now we have smart speakers also in our cars, because you don't do shopping when you drive, now with the smart speakers, you can. 

Joshua Williams: Of course, launching new technologies in a meaningful way is a real investment, financially and operationally. And with money as tight as it is leading into 2021, retailers must be careful to focus on tools that have the most customer impact. While the recent foray of luxury retailers, such as Burberry and Balenciaga, into Twitch and gaming make for very provocative titles and social media posts, these technologies aren’t probably going to be a part of most retailer’s short-term strategies. Massimo stresses:

Massimo Volpe: I think that it is more marketing than real sales. But probably, I'm not in the right generation to judge it. I will say this is definitely my personal opinion. 

Joshua Williams: After all, he says, the fashion industry is changing quickly and companies need to be ready and agile during this moment of compulsory evolution.