Fashion is an expression of a person’s personality. But why would a consumer buy a new piece of clothing or accessory if they cannot show it off to the outside world? For many fashion retailers, answering this one question sheds new light on the impact of the COVID-19 pandemic and inspires new ways to address it with SAP solutions.
Unlike the surging demand experienced by food grocery chains and do-it-yourself markets, revenue for the fashion retail industry has drastically declined during the COVID-19 pandemic. Brick-and-mortar sales dropped to historical lows. Production and purchase orders had to be canceled. Goods were stored or redirected, and seasonal articles were moved to distribution centers, outlets, or entirely different store formats. Many retailers even had to make the tough choice to close 90% of their stores during the pandemic’s peak.
But on the other hand, online sales are rising for retailers that shifted their brick-and-mortar presence to an online commerce environment. Various brands have benefited from the already growing online sales, which picked up at an exponential pace since the beginning of the pandemic.
Learning this lesson was a pivotal moment for fashion retailers – inspiring a wide variety of online shopping experiences and business models. According to Martin Turner, global vice president and head of Consumer Industries Services at SAP, “While COVID-19 has radically changed demand patterns, fashion retail brands that approached the crisis with a high degree of digitalization are adapting much faster to new situations. For all other competitors, investing in digital capabilities is urgent right now.”
Taking on Rising Online Sales Volumes
Digitalizing shopping activities across social networks brought consumers who may not have known each other before the pandemic together on a platform where “likes” on social media became the best form of grassroots marketing. This movement continues to attract more consumers, opening the door to innovative and profitable potential for any brand that further pursues this digital frontier.
For example, people who may not have been avid online shoppers before the pandemic are now following the brands they love more regularly. This new experience is exposing consumers to more enticing messages, compelling promotions, and productive conversations with fellow shoppers. And in return, consumers are more willing to spend time browsing through these Web shops and comparing prices and assortments while experiencing work-from-home and stay-at-home mandates.
With such exceptional convenience and access, consumers have more than doubled their online demand in various regions during the pandemic, requiring IT systems to adapt immediately to a sudden rise in e-commerce activities. Retailers using SAP solutions can cope and profit from an abrupt surge in incoming online consumer orders with omnichannel services that deliver fully transparent order fulfillment and personalized consumer-specific content – all managed with real-time transparency.
The SAP Customer Activity Repository application with the SAP Commerce Cloud solution, the SAP Marketing Cloud solution, and SAP Omnichannel Promotion Pricing, as well as the omnichannel article availability (OAA) component, can help create a seamless shopping experience. This is the case whether a brand chooses to support in-person or online shopping with omnichannel processes, such as click and collect, split orders, and clienteling.
Fashion retailers can also manage the volumes of Big Data generated by every online transaction by running on the in-memory technology from SAP S/4HANA. With this infrastructure in place, existing omnichannel architectures from SAP can be scaled up with ease. For example, the SAP Commerce Cloud solution is built on modern cloud architecture principles with technologies, such as Kubernetes, to support autoscaling and adjust dynamically to increasing workload requirements.
Access to new and innovative approaches for managing omnichannel architectures – many of which are multi-cloud solutions and available for any hyperscaler environment – presents a level of stability that is making a significant difference for our customers. Such an architecture has proven its value with exceptional performance during peak order events, including annual Black Fridays and Singles’ Days.
Allocating Stock Between Distribution Centers and Stores
Consumers expect products to be available wherever and whenever they want them. But when supply chain processes shut down unexpectedly due to pandemic-induced local, regional, and international lockdowns, order shipments cannot be completed and stock may end up in random locations because it cannot move across borders.
But when businesses run SAP software, the entire online assortment can be marketed across all consumer-facing channels and checked 24/7 for confirmed availability with a promised and timely delivery. The solutions enable remaining stock from the former winter and spring seasons to be sold in the proper location. Simultaneously, the supply chain maintains the integrity and fluidity of its highly interconnected and interdependent processes.
SAP Transportation Management and SAP Extended Warehouse Management and the sourcing network enabled by the SAP Customer Activity Repository application helps fashion retailers fulfill that promise. The software redirects orders to distribute stock from logistics hubs and warehouses to online warehouses and collects assortments that couldn’t be sold in stores to make them available for online sales.
Guiding the Way with a Strong Foundation of Expertise
The importance of omnichannel has never been so fundamental to the success of the fashion industry as it has become now – and retailers are taking notice. Relying on the proven know-how and experience of SAP service experts, our customers are delivering attractive, strategically placed, well-marketed, and easy-to-use online shops that are accessible anytime, anywhere. But more importantly, they are setting the foundation for compelling consumers to spend today – and long after the pandemic that accelerated this trend is over.
Service offerings from SAP can help your fashion retail business seize your edge in an always growing and dynamic omnichannel world. Find out how here.
This is the final piece of the three-part series “The Omnichannel Fashion Retailer.” Check the landing page to read the entire series.
Dirk Dreisbach and Harald Ritter are chief business enterprise consultants for the Business Transformation Services group at SAP Germany, focusing on consumer products and retail industries.