Customer loyalty is key as modern customers demand personalised experiences and expect to build strong relationships with brands instead of just buying products. Many brands, as a result, are already moving towards omni-channel strategies, on-demand services, and safe and frictionless shopping experiences amid the evolving market dynamics, especially since the Covid-19 outbreak.
Listed below are the key consumer trends impacting customer loyalty in apparel, as identified by GlobalData.
Despite several advantages that online retailers and marketplaces have, they are still striving hard to overcome their primary hurdle – last mile delivery. This entails logistical complications, issues with third-party delivery partners, and requires a range of data analytics tools to make delivery as efficient as possible.
However, for loyal consumers, with respect to a frictionless experience, fulfilment comes down to three core aspects: the cost of delivery, the speed of delivery, and the flexibility of both. While still in trial stages, retailers are exploring automated vehicles, drones, and robots to fulfil orders to meet high consumer expectations.
One of the most important concerns for apparel retailers is offering frictionless payments to shoppers, allowing for better convenience and speed of completion of the shopping process. For retailers, it lowers the possibility of a purchase being abandoned midway during the payment process.
Global online fashion retailer ASOS has extended its partnership with payments provider Klarna to offer a new payment method. ASOS now offers UK customers the option to pay in three monthly instalments, interest and fee-free. This adds to the existing Pay Later in 30 days option, which was first introduced in 2017.
Maintaining the security of transactions and user data remains a prime area of concern for retailers. However, retailers are constantly improving security for all payment processing systems, such as integrating the latest anti-malware, firewalls and real-time monitoring and analytics tools that can detect any anomalies and prevent fraudulent transactions.
Shift away from physical formats
The Covid-19 pandemic has impacted all physical store formats, especially large stores such as department stores, and accelerated the shift towards online platforms, leading marketplaces/retailers to think about how they can build trust and meaningful engagement without the aid of stores. Access to a wide range of products/ brands along with the ease of home delivery and price comparison options makes online an attractive channel for browsing and purchasing.
Consumers have become accustomed to purchasing online during Covid-19 and some remain apprehensive about returning to physical stores; this has posed both opportunities and challenges for online retailers, as they have had to ensure the availability of sufficient stock to meet the surge in demand. The delivery options available to consumers have greatly increased over the last decade, with the rise of Amazon Prime and the popularity of next day delivery significantly reducing the need for shoppers to visit stores for fast fulfilment.
In Germany and the UK, for instance, ASOS offers a delivery saver scheme in which customers can pay a one-off annual fee in return for unlimited next day deliveries, driving shopper loyalty. Customers registered with loyalty programmes also look for other offers and benefits on their purchases.
Environmental, Social, and Governance (ESG)
One of the key aspects of customer loyalty is when customers associate themselves with a brand’s ideals and values. Younger generations are more aware of issues such as climate change and how industrial production processes are affecting the environment through water wastage, toxic chemical use, and industrial waste discharge. Therefore, there has been a sudden spike in sustainable offerings by retailers in recent years to appeal to millennials.
In October 2021, American fashion retailer Revolve partnered with Recover, a leading producer of recycled cotton fibre to launch a new sustainable denim collection under its “Lovers and Friends” brand. Recover has gained traction among renowned apparel brands such as Wrangler, H&M, Tommy Hilfiger, G-Star and The North Face, among others. Recover also recently partnered with Primark to launch a sustainable leisurewear collection. Similarly, German online fashion retailer Zalando announced plans to trial a repair service for its customers in Berlin and Duesseldorf to promote more sustainable practices in the fashion industry.
Online luxury fashion retail platform Farfetch also launched a sustainability calculator which helps shoppers understand the environmental impact of the products they purchase. Additionally, Amazon’s $2bn internal venture capital fund, the Climate Change Fund, will be used for companies across several industries including transportation, manufacturing and food and agriculture to help Amazon and other companies reach the net zero goal by 2040. Meanwhile, retail firm Walmart partnered online with thredUP, a resale platform, to encourage customers buy women’s and children’s clothing, accessories, footwear, and handbags from an online assortment of nearly 750,000 pre-owned items.
This is an edited extract from the Customer Loyalty in Apparel – Thematic Research report produced by GlobalData Thematic Research.