Wealth Management: Industry Insights - Luxury retail
This podcast delves into the retail and fashion industries, and how these areas have fared during the Coronavirus pandemic. Sian Westerman, a senior advisor of Rothschild & Co’s Global Advisory business and Co-Chair of the British Fashion Council Trust, speaks with Stephanie Phair, founder of The Outnet.com, chair of the British Fashion Council and Chief Customer Officer of luxury online retailer, Farfetch.
Listen to the interview below
As lockdown eases and non-essential shops begin to re-open, many retail brands are now looking to recuperate and offset what has been a damaging period of lost footfall and revenue. The closure of brick-and-mortar retail over the past few months has one of the defining aspects of lockdown, yet many fashion brands have been sustained in varying degrees by their presence and proficiency on online channels. Stephanie speaks about how Farfetch’s business model and infrastructure has come into its own during this time. Having secured a network of luxury fashion boutiques around the world, and established its global distribution infrastructure and customer base, Farfetch has been able to continue operating even as the bricks-and-mortar boutiques had to shut.
Whilst the rise of fashion e-commerce extends beyond this pandemic, Sian questions whether the upshot we have seen in recent months will disappear now shops are slowly re-opening or whether people will be deterred by face masks and social distancing and continue to opt for the convenience and choice of remote online alternatives. Stephanie believes that online business will continue to thrive on the back of the pandemic but also that there is still an important role for offline retail. She predicts that the future of retail will to be a seamless combination of both online and offline experiences. The customer will be at the centre and brands will have to understand that customers are simultaneously on- and offline buyers, not merely one or the other. However, physical retail will have to become more fearless and experiential. Stephanie points to the Farfetch’s partnership with Chanel, where both brands are working together to develop virtual and augmented reality software to enhance the in-store experience and level of personalisation available to the customer, thereby blurring the distinction between offline and online aspects of retail.
Sian reinforces that retail is more than just a transaction. By providing an online platform for independent luxury boutiques, Farfetch is well-positioned to take advantage of another key shift in consumer spending. Many of us are thinking about how and where we are shopping; when we spend, we want to spend well, and put our money where our values are. Stephanie notes how this trend is not merely an outcome of COVID-19 but part of more substantial zeitgeist, where consumers are increasingly motivated to buy locally, ethically and sustainably. Systemic shocks such as this one are often the catalyst that causes people to reconsider the impact and value of their own actions.
The fashion industry has often been a battleground of debate, whether it be the impact of overproduction and wasteful practices on climate change or the selection and treatments of models and the repercussions for inclusivity and diversity. While these are difficult topics, Stephanie believes that the fashion industry is forward-looking and that there are already positive moves toward change. Growth can no longer be purely commercial and economic but will have to also be creative and find new ways to embody ethical and sustainable principles. Policies such as EU Green for Growth Fund, or bank loans based on sustainability criteria, demonstrate that companies need to adapt or risk being left behind.
Representing the consumer and aligning with their values will no longer be a secondary objective but a business necessity. The fashion industry’s preoccupation with new, unique, and contemporary products may appear at odds with sustainable principles of reuse and recycle. However, Stephanie believes there are ways to reconcile the essential ‘newness’ of fashion with the need to produce and consume less. Changing business models is key to this she argues, for example, moving away from wholesale towards synchronised seasonal production, as well as balancing production of new clothing with the reuse and resale of pre-owned products.
Similarly, despite the presumed exclusivity in the industry, there are also significant efforts being made to broaden and diversify the pipeline of talent. The British Fashion Council has several initiatives to introduce young people to the fashion industry, as well as grants to help those unable to afford higher education. In this way, Stephanie believes talent and creativity can be nurtured and increasingly channeled towards the fashion industry. Sian agrees that the industry is clearly in a state of transition and reinvention and while the precise impact of this period on the industry is still unclear, there are clearly powerful and enduring movements towards more socially- and environmentally minded fashion and retail practices.