The Future of Fashion Retail

AnjaAndElise

Anja Overdiek & Elise van der Laan

Mission Zero has developed solid knowledge of (fashion) retail through the projects “From pop-up to local hero" and Future Proof Retail, between 2017-2020. This expertise will be built on, through a new Raak MKB project that recently got funded by SiA, called Next Fashion Retail. This project will start in September 2021 and will run until August 2023. We speak with the leaders of both retail projects to learn more about the future of fashion retail. 

Anja Overdiek, an associate professor at Mission Zero, has a background in sociology. She has been collaborating with design researchers and students for the past decade to investigate innovation environments and networks. Anja’s early research focused on temporary and pop-up stores to investigate the workings of new business models, consumer and citizen needs and motivations in regard to new services and their prototyping. Since 2017, Anja has been a part of a national network called the Retail Agenda, which aims to help transition retailers to more digital, social, and sustainable practices and business models. From 2018-2020, Anja led the Future-Proof Retail program which worked with retailers, branch organisations, municipalities, tech providers and other universities to co-create innovation environments and tools to support this goal. One of these is a Circularity Lab where a shopping street would be branded as a “Circular Quarter” and small entrepreneurs work together to make their shops, products, and services more sustainable, with the help of local students. 

Elise van der Laan has a PhD in cultural sociology, a strong interest in aesthetics and a great passion for second hand and sustainable clothes. Since early 2020, Elise works for a Dutch sustainable fashion label, in production and on the shop floor, learning about sustainable shopping behaviour through direct experience. Elise will coordinate the Next Fashion Retail project, starting in September. Together with TMO Fashion Business School, she will develop tools for fashion retailers which will help them sell their sustainable clothing. This project will involve students, who will research the retailers’ current and future customers, and how they can be tempted to buy more sustainable clothing. The tools will then be developed to be tested on shop floors of eight retail partners. 

Anja and Elise discuss the past, current challenges, and future of fashion retail. 

Can you paint a picture of what fashion retail looked like in the past? And how is this different today?

Anja: 
“Until 5 years ago, retailing was predominantly about making maximum profit per square meter of the shop. That means that retailers aimed to buy and sell as many fashion items as possible, striving for a good margin. Big retailers and so-called fast-fashion retailers like Zara and H&M, but also a department store like De Bijenkorf, where better positioned to do this than small retailers, because they had more purchasing power and could demand lower prices. Also, retailers like Zara were much more able to react flexibly to customers’ demand and could for example reorder trendy items. That was when the demise of the small retailer started. With the growing online business in clothing, small retailers were also confronted with “dumping” prices, as online retailers did not have the cost of real-estate. So many small physical retailers just could not compete. Unfortunately, it is often the small retailers which make city centers unique and create distinguishing and fun social environments which disappear and leave vacancies behind. This problem has slightly changed today, as many small retailers disappeared and shopping areas became apartments or they learned to curate their shops to specific local tastes, so-called niche markets. With the Future Proof Retail program, we could support many small retailers to reconsider their business model and learn about new skills.”

What are the current challenges in fashion retail today?

Elise: 
“The pandemic has hit the retail sector hard. Expectations are that struggling retailers that have failed to cash in on the online market, will not survive, resulting in city centres with high vacancy rates. Traditional retailers will need to transform to survive, rethinking their value proposition, switching to omni-channel, combining functions or focusing on physical stores that truly have added value for today’s demanding customer. Moreover, governments and consumers have become much more conscious about the sustainability of clothing.”

What still needs to change in the retail environment?

Elise: 
“One of the challenges is the need to incorporate sustainability in every business strategy and to make a sustainable strategy a profitable one. Customers are becoming more knowledgeable and demand transparency and responsibility from retailers. While more than half of customers say that they are really interested in sustainability, this does not transfer to sales figures for sustainable clothing. In Next Fashion Retail we are diving deep into this issue: how can retailers sell their sustainable offering better? How can they improve the design of online and offline spaces, how can they inform and enthuse customers to make more sustainable decisions?”

What are the opportunities for the future of fashion retail?

Elise: 
“One is deep customer engagement, really connecting with customers, sharing values, building strong relationships, also with customer communities. Stores can become spaces for engagement and community building where people would buy fashion items also as a sign of their belonging.

Another is new business models, for example resale models: the market for “previously owned clothing”. We are already seeing a strong upsurge in brands entering the resale market. The resale market is predicted to grow 25 times as fast as the regular fashion retail market . 
Finally, there are many new technologies that are revolutionizing the consumer shopping experience and will set new expectations for the future shopping experience.”

Anja: 
“For small so-called “multi-brand” retailers it will be also important to collaborate with other retailers and service providers in their street to carry the investment in new technologies, like solar panels or shopping centre apps.” 

What does the future of fashion retail look like? 

Elise: 
“Social and green! We believe to be future-proof is to have a sustainable vision on retail and to create multiple values for your customers, the local community and society as a whole.”