Fashion Now, Retail Week’s new report with Barclaycard and Rakuten Marketing, looks into what retailers can learn from the turbulent past 12 months in the sector.
Seasonal sale periods have almost become a thing of the past in fashion retail and shoppers have been inundated with promotions over the past three or so years.
Despite many retailers fighting to protect full price sales through reducing the number of days they are on sale, data from WGSN INStock shows the percentage of markdown stock in the UK clothing, footwear and accessories market increased from 46% in 2015 to 48% in 2016.
The traditional January sales period unsurprisingly still sees the highest level of markdowns, with the UK high street having offered 55% of its stock at a discounted price in January 2016.
“The womenswear market is rife for discounting, with retailers not able to rely on this sector for strong margins”
However, WGSN INStock data also indicates that markdowns were rife throughout the rest of the year, with the total market offering at least 44% of its stock at a discount in any given month throughout the year.
The womenswear market is rife for discounting, with retailers not able to rely on this sector for strong margins and instead having to drive full price revenue through additional categories, such as homewares, gifting and beauty.
Just under half of the womenswear clothing, accessories and footwear market went into markdown during 2016 at 49%, rising one percentage point year on year.
Menswear markdowns has also risen, from 43% of products in 2015 to 45% of products in 2016.
Hot or Not?
Throughout 2016 female shoppers embraced products with enhanced features, specifically in tailoring and ruffled blouses, pleated skirts and duster coats. These were among the most popular subcategories in the second half of 2016.
Multi-functional and trans-seasonal products were also popular as consumers sought greater value in their purchases.
Fitness leggings, padded jackets and casual sweaters all performed strongly during this period.
Conversely, subcategories that did not offer as much opportunity for wear, including gilets, capes and fitness shorts, drove the highest percentage of markdown throughout the six-month period.
Product trends and newness
Our research has found that women shop more frequently than men for fashion, and it is therefore important to ensure product newness to fulfil consumer interest in the womenswear market.
Over the past two years, the dress category was considered a key area of sales growth for retailers. In fact, the dresses contributed the highest level of newness across the year.
“The level of newness declined in [the tops] category throughout 2016 as retailers became more experimental in tailoring, offering fashion trends through increased styling in shirts and blouses”
This was particularly evident during the first half of 2016 as the percentage of dresses within new apparel increased by 1.3 percentage points year on year.
At the same time, the presence of jumpsuits and playsuits throughout the sector grew in 2016, which has allowed retailers to negotiate lower cost prices when ordering higher volumes.
Therefore, consumers benefited from lower retail prices within this category during 2016, with average retail prices across the market down by 10%.
Over the year, 40% of this category cost the consumer under £30 in 2016 compared with 38% of products in 2015.
Meanwhile, the tops category continues to play a key role in the product mix in womenswear, representing the second highest number of options after dresses.
However, the level of newness declined in this category throughout 2016 as retailers became more experimental in tailoring, offering fashion trends through increased styling in shirts and blouses.
As a result, newness in the shirts and blouses category increased by 1.2 percentage points during the first half of 2016 year on year – representing 6% of the product mix.
Following an increased focus on this product category, design aesthetics were heightened in shirts and blouses, with manufacturing prices edging up as a result.
This resulted in increased retail prices in the category – up 12% on average in 2016 – to protect retailers’ margins.
Changing buying cycles
As consumers’ shopping habits have evolved, retailers have responded by adapting their buying patterns.
Furthermore, unseasonable weather has suppressed traditional buying cycles and modification has been required as a result.
The change is most noticeable within the mid-to-premium markets, where the product mix for heavy winter items, such as jackets and coats, has reduced throughout 2016.
With this, retailers have also moved product launch dates to accommodate for the reduction in heavy winter items, with the percentage of new knitwear options introduced throughout the latter half of 2016 increasing year on year, compared with a reduction in newness during the first half of the year.
Therefore, as more retailers embrace non-traditional buying cycles, product newness will become more reactive towards consumer behaviour in order to reduce markdown and drive full-price sales.