On February 27, 2020, the 34th season of the largest in Eastern Europe exhibition of ready-to-wear, lingerie and accessories CPM - Collection Premiere Moscow ended.
The expanded business program of the exhibition was in the center of attention of the visitors of the 34th season of CPM. From 24 to 26 February, the 24th international economic forum of innovations and technologies of fashion retail Russian Fashion Retail Forum was held with the organizational support of Retail.ru, Fashion Consulting Group and the publishing house PROfashion.
FCG experts (Anna Lebsak-Kleimans, Natalya Chinenova, Galina Kravchenko, Elena Stolyarskaya), as well as Olga Shteinberg, director of projects at Buman Media, author of the Fashion is business telegram channel, took part in strategic sessions and seminars on February 25; Anton Alfer, Chairman of the RAEC / Fashion Tech Business Cluster; Konstantin Bandorin, Development Director of the Innovative Research and Production Center for Textile and Light Industry, etc. The second day of the forum, organized by Fashion Consulting Group, was completely devoted to the Digitalization of retail.
Anna Lebsak-Kleimans: “Despite the fact that today 85% of Russian clothing / footwear buyers prefer to see and test goods before purchasing, in 10 years about 50% of traditional stores will close their doors”.
Anna Lebsak-Kleimans, CEO of Fashion Consulting Group (FCG), presented the key trends of the Russian fashion market in 2019, and also talked about the transformation and digitalization of the market.
According to Rosstat, the share of cash incomes directed to savings in 2019 amounted to 3.4% (in 2018 - 3.7%). This indicator was worse only in 1998, when 2.5% of income was spent on savings. In 2019, 69% of Russians did not have the opportunity to make savings at all. Positive factors in 2019 are: stabilization of the ruble exchange rate, low inflation and growth in real disposable income (+0.8 according to Rosstat). Despite this, according to the results of 2019, purchasing activity is declining.
Russians have adapted to the decline in the quality of life, the perception of the boundaries of quality has changed. The service life of durable goods has increased. For example, if earlier shoes were bought for 1-2 seasons, now for 2-3 seasons. Thus, the majority of Russians (67%) buy new winter shoes only when the old one is worn out, on average once every 2-3 years. Quality is to a lesser extent associated with the concepts of fashion and relevance, the criteria of universality, wear and utility are of increasing importance.
The most important purchase motivator was the discount: the majority of Russians (93%) are sensitive to discounts and sales - they adjust their purchases to them, or pay attention already in the search process (Deloitte). In the first quarter of 2019, the share of discount purchases exceeded 2/3 of all clothing purchases (69%) (Ipsos Comcon). The popularity of various formats of sales at reduced prices is growing.
There is a growing interest in trademarks of Russian manufacturers. According to RBC, 45% of surveyed buyers are satisfied with the quality of Russian clothing (in 2018, there were 40% of them). Increase in the number of local brands in the shopping center. In 2019, shopping center operators doubled the number of local designer stores. An increase in the number of local brands on the Internet (on marketplaces). For example, in two years Aizel doubled the presence of Russian brands on the platform to 150.
The growth of the Russian fashion e-commerce market at the end of 2019 is estimated at 26-27%. According to research by SBERBANK and AKIT, the entire internal online trading market (in all categories) has grown by 30%. At the same time, the fashion segment occupies 20-23% in the local market and more than 30% in the cross-border one. In the Russian Federation, the share of online sales in the fashion segment is about 12%. Taking into account the turnover of the "gray" market, the share of online trade can be estimated at 9-10%. This is much higher than the average online sales for the retail market as a whole (6-7%).
While maintaining this rate of growth online, in 2025 50% of apparel sales will be via the Internet. Despite the fact that today 85% of Russian clothing / footwear buyers prefer to see and test the product before purchasing, in 10 years about 50% of traditional stores will close their doors.
Online stores and marketplaces have already become a common “traditional format”. The number of orders for Ozon in the category "clothing, footwear and accessories" in 2018 amounted to 1.2 million, showing an increase of 82% by 2017. Ozon expects sales of apparel and footwear to grow tenfold. Growth rates of Wildberries.ru 2019 to 2018 turnover in rubles: + 88% to 223.5 billion rubles. (the share of clothes, shoes and accessories is 67%). In 2020, the retailer plans to double its turnover, to 440 billion rubles. Revenue of the company LaMod in the III quarter. 2019 compared to Q3 2018 increased by 22.8% to 8 billion rubles. The monthly audience of the service exceeded 14 million people.
Anton Alfer: “For the implementation of digital technologies, all processes, objects and materials are subject to digitization, i.e. the entire chain from product to consumer. Fashion Tech education is the main trend of 2020. Everyone needs to learn throughout their lives.”
Anton Alfer, Chairman of the RAEC / Fashion Tech Business Cluster, explained what is the difference between digitalization and digital transformation, and also spoke about the need to work towards the introduction of digital twins of products and consumers.
Digitalization is the introduction of digital technologies into the business models of companies. Digital transformation is about revolutionizing business models. Fashion Tech education is the main trend of 2020. Education will also be one of the main topics for industry, with a focus on digitalization. Tech companies look to clothing, but not necessarily fashion. Small and medium-sized companies are the backbone, lungs and heart of the economy, and they will grow in 2020.
Gartner named Digital Twins as one of the strategic directions for technology development back in 2019. Digital twins are digital representations of real objects or systems. Analysts believe that in a couple of years, billions of digital twins will be created in the world, at first simple, and then more and more complex, up to twins of entire organizations with all their business processes. The strategic direction of technology, according to analysts at Gartner, is a direction with high disruptive potential and either already entering widespread use, or rapidly growing, dynamic and capable of reaching a critical point in the next five years.
For the introduction of digital technologies, all processes, objects and materials are subject to digitization, i.e. the entire chain from product to consumer. Labeling is a product passport, but in fact, it is one of the steps towards creating a system of Digital Twins of products.
The share of people who buy clothes just to be photographed in a new image for social networks is growing every year. According to a survey by Barclays Bank, 9% of users do this. New textiles and functional designs have become a reality for sportswear brands. Microsoft and Google have already filed patents for smart textile technology. Apple is spearheading the development of tactile solutions that will be critical to creating flexible touch surfaces - smart clothes. Fashion brands will have to pay expensive licensing fees to use these technologies as they lag behind in innovation. The next generation of digital apparel designers Amber Jae Slooten and her company The Fabricant are opening up a whole new fashion market: the digital world. With 100% digital collections,can only be worn on virtual platforms, this new way of creating and promoting fashion will change the way we see our industry - and ourselves.
“Soon the most beautiful people in the world will no longer be human” (The Washington Post). "Virtual models such as Lil Miquela, Shudu and AlionPole are just the beginning of the avatar revolution. People are getting used to these virtual personalities, and some brands see them as an opportunity to make money." The future of modeling is selling influencer lookalikes for ad campaigns.
Big fashion players will move even more towards the concept of “reuse or recycle”. In most cases, clothing rentals work the same way as online movie theater subscriptions - pay once, choose things, and wear them for a limited time. BananRepublic, New York & Company and Bloomingdale are already operating under this scheme. The cost of the service ranges from $ 50 to $ 160 per month for renting several wardrobe items, according to Reuters. After the expiration of the term, the client will be able to purchase previously rented items at a discount. On Lyst, luxury goods were resold 255% more frequently in 2019 than a year earlier. According to a ThreadUp report, 26% of premium shoppers choose used clothing. Another report - TheRealReal - notes that 32% see second-hand shopping as an alternative to "fast" fashion.and the most coveted brands in this category are Gucci, Louis Vuitton, Chanel, Prad and Hermes.
The rise of 5G could drive new social media technologies in 2020. Customers will be able to “try on” the design on social media before purchasing. 5G will also enable new streaming media formats with high-definition graphics, audio and interactive technologies. Live video purchases, already generating $ 4.4 billion in China in 2018, will become more popular in Western countries. Potentially new features are expected to appear on platforms such as Facebook, Instagram and YouTube to make in-app purchases easier.
Konstantin Bandorin: “Production volume in 2015-2019. grew by an average of 5% per year. According to expert estimates, the share of the gray market in the light industry in 2019 is 25%”.
Konstantin Bandorin, Development Director of the Innovative Research and Production Center for Textile and Light Industry, spoke about various measures to support Legprom in China, Turkey, India and Bangladesh, and also cited statistics on the positive impact of subsidies in Legprom of the Russian Federation.
The capacity of the world light industry market, according to various estimates, is currently $ 1.1-1.3 trillion. (69.3-81.9 trillion rubles). The capacity of the market for light industry products in Russia is about 3 trillion. rub. The share of light industry in manufacturing is 1.1%. According to expert estimates, the share of the gray market in the light industry in 2019 is 25%. The average salary in the industry is almost two times lower than the average salary in Russia in manufacturing.
The production of the light industry in the last ten years in monetary terms has grown in Russia: from 191 billion rubles. in 2009 up to 520 billion rubles. (preliminary estimate) in 2019, in dollar terms, the indicator increased by about 33%, and the average annual growth rate over the ten years was 3%. During the same time, Russian GDP in dollars increased by 24% (to $ 1.6 trillion).
In 2015, the production of light industry products increased by 33.4%, then the growth rate slowed down. Nevertheless, the volume of production in 2015-2019. grew by an average of 5% per year. Thus, it can be stated that in recent years, financial support measures have had a significant impact on the growth of the light industry market as a whole.
The next CPM - Collection Premiere Moscow exhibition will be held from 01 to 04 September 2020 at the Expocentre Central Exhibition Complex in Moscow. Russian and international fashion manufacturers will demonstrate their collections for the spring-summer 2021 season.