The Fashion Industry

One of last year’s best performing omnichannel industries must see themselves beaten by three industries.

However, the fashion industry is still performing above average.

DOES OMNICHANNEL LEAD TO GOOD FINANCIAL PERFORMANCE?

This year, Danske Bank has provided a financial analysis of the Omnichannel Index’s industries to get a deeper understanding of each industry’s terms.

Presented in collaboration with

Solid financial performance

fashion
EBIT is under pressure

The fashion industry faces difficult conditions. Danske Bank has conducted an extensive analysis of the companies’ performance in Denmark, Sweden, and Norway based on public records.

Here, they have accounted for the revenue from 2016 to 2018 and the associated growth rate. Revenue growth is stable, but EBIT-margins are under pressure.

48

Average score of the Fashion industry

vs.
53

Average score of the best performing industry

In addition, marketplaces and large groups of pure players create an extremely competitive environment for the retailers and brands.

The industry accounts for 18% of private consumption. It is one of the three industries that customers have bought more from during the COVID-19 crisis compared to before, and 34% of customers expect to buy even more online post-crisis.

The results across nations

Awareness

DK: 64
SE: 54
NO: 57

Evaluation

DK: 48
SE: 49
NO: 52

purchase

DK: 52
SE: 48
NO: 49

Service

DK: 35
SE: 29
NO: 35

Loyalty

DK: 50
SE: 45
NO: 50

Half of the retailers and brands in the industry have a decent starting point with both solid financial standing and an omnichannel score above average. This is something they must take advantage of.

The other half must really reconsider their approach and introduce omnichannel as a natural element in their development strategies, because when this is the case, online sales go only one way – up.

In addition, marketplaces and large groups of pure players create an extremely competitive environment for the retailers and brands. The industry accounts for 18% of private consumption. It is one of the three industries that customers have bought more from during the COVID-19 crisis compared to before, and 34% of customers expect to buy even more online post-crisis.

Learn from the best

The fashion industry is one of the industries with most online purchases, according to the Danish E-commerce Association’s, FDIH, yearly e-commerce analysis.

This reinforces omnichannel as a do-or-die concept. Retailers and brands must differentiate themselves from pure players such as Zalando and Boozt and take advantage of what omnichannel has to offer. A solid online experience is a must-have.

Since the customers are used to experiences at a Zalando-level, they have really high expectation of everyone else in the industry. Retailers and brands have a lot to learn from the best pure players and must become more of a source of inspiration

Kasper HolstCEO of IMPACT

Kasper highlights features such as ‘shop the look’ and a picture/size guide to different body types which offer something that has previously been reserved for physical stores; it gives the customers the opportunity to style outfits and confirm the fitting.

Brands vs. retailers

One thing is certain. The industry would rank higher if it was not for the brands. Many international fashion consumer brands, with exception of H&M, are struggling to compete with the omnichannel level of fashion retailers.

Many brands need a reality check. Even though they are not under the same financial pressure as retailers, omnichannel is important to avoid marketplaces from overtaking all sales.

Kasper HolstCEO of IMPACT

Kasper recommends consumer brands to look at H&M and their omnichannel efforts.

The H&M group’s transformational work continues to bear fruit. Increased full-price sales and decreased markdowns contributed to an improved profit for the full year and in the fourth quarter, where we achieved a 25 percent increase in operating profit while maintaining a high level of activity in our transformational work.

Karl-Johan PerssonChief executive of H&M Group

He continues:

“It is clear from our well-received collections and increased market share that customers appreciate the initiatives we have taken.”

Their average place in the Omnichannel index 2020 underline that their current digital transformation works.

Annual accounts analysed on 434 retail companies across the Nordics with turner above EUR 5m. The result can thus be a little skewed towards larger companies.