Guide to Growth: Navigating the new challenges of today

Down but not out, the fashion industry is striving to get back on solid footing after two years of turbulence. Bruises from the pandemic remain for many businesses, and the sector is bracing itself for an onslaught of new challenges – among them rising costs across the supply chain, a sudden squeeze on consumer spending and shopping habits reshaped by Covid.

When Drapers first partnered with retail logistics expert Clipper to launch the Guide to Growth in 2019, the fashion industry – and the world – was a different place: then prime minister Theresa May was battling to agree a Brexit deal, coronavirus was an unknown and the prospect of war in Europe seemed remote. Although retail is always challenging, today’s headwinds are both stronger and stormier than ever before.

“Over the last two years, the retail industry has been turned on its head,” says Tony Mannix, group chief executive officer of Clipper. “The pandemic accelerated trends that were already on their way to becoming cemented in society and forced businesses to pivot in order to survive. For retailers, the need to be omnipresent has never been more important. So the need for a robust, resilient and responsive supply chain is business critical.”

Of the myriad new challenges, which issues should be top of retail’s agenda in 2022 and beyond as they strive for growth?

Changing shopping habits

Although many hallmarks of the pandemic – such as masks and social distancing – are gone, the crisis has left its mark: the way consumers shop has changed, and so have the ways fashion retailers need to set themselves up for success.

“The pandemic caused an accelerated shift towards online. It forced consumers to change behaviour,” argues Mannix. “Consumers have increased their use of both digital and omnichannel services, including contactless payments, social commerce, virtual consultations and click and collect. It is imperative for brands and retailers to have a simple-to-use, consistent, personalised omnichannel experience that keeps customers connected while leveraging customer insight in order to continually adapt.”

Shopping however and whenever they like is a prerequisite for today’s consumers, and fashion retailers must focus on creating strong omnichannel experiences.

“The seamless integration of online and offline has become ever more important,” asserts Mannix. He also believes that brands and retailers will need to perpetually adapt to new technologies to survive in the near future: “The importance of technology, automation and robotics is continuing to gain momentum in retail, as it provides an opportunity to boost productivity and minimise risk.”

Rising costs

Retail had been crossing its fingers for a blockbuster 2022 at the start of the year, as lingering restrictions were lifted, and consumers geared up for the return of holidays and large social occasions.

However, the UK’s cost of living crisis is already starting to bite, putting paid to any post-pandemic “revenge spending” some brands and retailers were betting on. Price rises, increased taxation and interest rate hikes have severely shaken consumer confidence, and caused British retail sales to slump sharply in April, figures from the Confederation of British Industry show.

The need for a robust, resilient and responsive supply chain is business critical – Tony Mannix, Clipper

Fashion is hurt by rising costs in more ways than one. As well as battling dwindling discretionary spend, retailers too are being stung by higher costs. George Weston, CEO of Primark owner Associated British Foods, said in April that, despite cost-saving measures, the chain was no longer able to absorb inflationary costs and would be forced to raise some prices this autumn.

“The shockwaves of Covid now mean that businesses are at the stage where they can no longer afford to absorb costs they are experiencing further up the supply chain,” says Paul Alger, retail expert and director of international business at the UK Fashion and Textile Association. “With the perfect storm of a new post-pandemic reality, labour shortages, rising costs and the cost of Brexit, retailers are having to consider which bits of their business can be profitable.”

The brain drain

Attracting – and equally importantly, retaining – the right talent has never been more important. Brands and retailers looking for growth are reliant on the best talent across their entire businesses, from shop floors and distribution centres to the board room, and competition is fierce.

“Retail, particularly independent retail, has traditionally been good at retaining talent and building employee loyalty, but it is becoming increasingly difficult,” argues Andrew Goodacre, chief executive officer of the British Independent Retailers Association.

“The industry needs people with the right technology skills and those skills are increasingly sought after – it is incredibly competitive. Retail is competing with the big tech companies for the same skills.”

The pandemic has accelerated the adoption of new technologies and many businesses have overhauled their digital operations, resulting in a need for new skills across many sectors.

Figures published in May by the British Computer Society found there were more than 64,000 vacancies for UK tech jobs in the third quarter of last year, up by 191% on the same period in 2020.

Clipper’s Mannix argues that investing in talent is essential for fashion retailers and brands looking to take their businesses to the next level: “Winning businesses will prioritise investment in hiring the right talent, implementing the right technology and in the future of their supply chains.”

There is no question that the horizon for fashion retail is cloudy. Brands and retailers must prioritise technology, talent and building strong supply chains if they are to remain relevant.

Sustainability

Businesses are also under increasing scrutiny. Consumers now take sustainability as a given and expect retailers to be taking decisive action to secure the future of our planet. Many of the most pressing sustainability challenges fashion faces are too big to be solved alone, making industry-wide collaboration essential. This will be one of the biggest challenges – and opportunities – for businesses in the coming years.

Whatever the issues you are facing, help is at hand. The Drapers Guide to Growth, in partnership with Clipper, helps retailers and brands navigate growing pains with expert advice from leading entrepreneurs and industry experts. Since 2019, the Guide to Growth has helped answer the most pressing questions and issues from retailers keen to grow their businesses, no matter how big or small.

If you would like us to investigate an issue, or answer a question you are facing as you scale your business or strive for the next stage in your growth journey, please email us at graeme.moran@emap.com.