Research File: Market Level

RESEARCH FILE: HIGH STREET MARKET LEVEL

Lauren Barnes Fashion Brand Management AD6606 1819758

“Gen Z shoppers love celebrities and search for uniqueness and social justice” “We’re not luxury, we’re not mass, we’re not contemporary. But we allow ourselves to have a very varied price point range,” says the designer. “It’s all one customer and we build these capsules within one brand, versus saying: ‘This brand is for this mass consumer, this is for that.” (Hirschmiller, 2014) A new study focused on Generation Z's buying habits shows that the demographic puts a premium on style and uniqueness, is heavily influenced by celebrities and social media, and has a mind for social consciousness. Results showed that members of Gen Z are 7.2 percent more likely than other generations to say having a unique style is "very important" to them, with 25 percent believing it is important to have a unique view on style, hobbies and creativity. In addition, this generation is more likely to be influenced by celebrities and friends when making purchases (Lacombe, 2019)

Gen Z — young people aged 7 to 23 — love resale sites such as Depop, which has seen triple-digit growth between April and June compared to the same period last year; the majority of its users are Gen Z according to the company. They are proving slower to embrace online rental platforms like Rent the Runway, which have been positioned as offering an innovative, more sustainable alternative to shopping. Gen Z consumers cite a lack of one-of-a-kind assortment, the barrier of subscription payments and the total absence of ownership as reasons to stick to resale over rental.

In a UK survey by Mintel in 2019, 46 per cent of respondents aged 16-24 were not interested in clothing rental; 34 per cent had never rented but would be open to it and just 20 per cent had ever rented an item of clothing. Young fashion consumers are open to the idea but in practice their needs are not being met by existing services, says Mintel senior retail analyst Chana Baram. Some millennial-focused rental platforms say they plan to better target Gen Z customers in the near future.

“Maybe I would rent clothes,” says Georgia Canning, 21. “But there’s a pleasure that comes with owning an item and knowing you can resell it at any point if you need. ” Why Gen Z hasn’t opted for rental Gen Z is the generation most willing to invest in sustainable and ethical fashion, so rental might seem an easy sell. But it doesn’t yet feel like a sustainable clothing solution for Gen Z, says Ben Harms, director of insights and strategy at US youth consultancy firm Archrival. Young people believe laundry, delivery and

returns makes it less ethical than other options like resale, he says.

Plus, companies like URBN (which owns Urban Outfitters, Anthropologie and Free People) and H&M that have launched rental while continuing to produce large volumes of inventory don’t feel authentic. URBN is also under fire for cancelling orders and not paying garment workers amid Covid-19.

“They don’t want to rent sustainability. They want it to be authentic and real,” says Harms.

Subscription payments represent more of a barrier for Gen Z than millennials, says Martin Raymond, co-founder of The Future Laboratory, a London-based trends and strategy agency. Rent the Runway costs $89-159 per month depending on the rental plan, while Nuuly, URBN’s rental business, costs $88 for six items per month.

Targeting Gen Z sceptics “Access over ownership”, coined by McKinsey, is a key trait of Gen Z, yet industry consultants consider the group overlooked by the rental category. Some platforms plan to be ready when the generation grows into the rental economy. Rent the Runway launched with the millennial customer in mind, and the company points out that its core market is older than Gen Z. However the brand's college discounted subscription programme and “reserve” service (for one-off occasionwear) is attracting younger consumers.

News within the High Street market sector On Monday (February 2, 2021), the company clinched a deal to buy coveted high-street brand Topshop out of administration from parent company Arcadia Group. The acquisition ends months of speculation over the label’s future, with its sale one of the hottest to hit the auction block as a result of pandemic bankruptcies. Asos beat out competition from a range of rumoured suitors — including ultra-fast-fashion e-commerce company Boohoo Group, and UK retailers Next and Frasers Group — to secure the £295 million ($403 million) deal, which also included Topman, Miss Selfridge and activewear brand HIIT. To be sure, the company proved well-placed to weather the pandemic. Sales for the year ending August 31, 2020 were up almost 20 percent from a year earlier, as lockdowns meant more shoppers logged online to get their latest fashion fix. But its rivals have benefitted from the same consumer shifts too. In a Darwinian retail environment, e-commerce players are turning to acquisitions to turbo-charge growth and secure their place in the market long-term (O'Connor, 2021).

But somewhere along the way, Topshop lost its lustre. The 90,000-square-foot Oxford Street emporium that was once the beating heart of London fashion, synonymous with cutting-edge clothes which could be worn by those within and outside the industry became just like any other fast fashion store, peddling unremarkable designs in cheap, disposable fabrics. My generation, once outfitted in head-to-toe Topshop, began to move onto fashion-forward, mid-range brands like Arket or Ganni, while younger Gen Zers flocked to online retailers like ASOS and Boohoo which had eclipsed Topshop with their ruthlessly low prices, rapid

turnover and savvy influencer marketing strategies.

At the start of the pandemic, Arcadia’s cancellation of over £100 million worth of clothing orders from suppliers in some of the world’s poorest countries did nothing to cast the brand in a favourable light. In an age of more mindful consumption, it became hard to square shopping at Topshop with knowledge of Green’s tax avoidance and short-changing of pensioners while leading a champagne-soaked lifestyle of private jets and super yachts. Yet despite Topshop’s dramatic fall from grace, its collapse is tinged with sadness for millennials like me who grew up during its heyday. For those of us who came of age in the early noughties and 2010s, Topshop was our entry point into fashion, the go-to destination once we outgrew Tammy Girl's sparkly slogan tees and through which we could envisage a life for ourselves beyond the humdrum of suburbia (Semic, 2021).

• Asos agreed to buy Topshop, Topman, Miss Selfridge and HIIT from Arcadia Group for £295 million ($405 million) • Boohoo has confirmed it is in talks to buy a trio of the group’s labels (Dorothy Perkins, Wallis and Burton) for £25 million ($34 million); Arcadia’s remaining brands are expected to fetch as much as 10 times that figure • Online fast fashion retailers are buying troubled brick-and-mortar chains for their brands, not their stores

That the pandemic is driving deep structural change in the fashion industry does not come as a surprise.

But what was most remarkable about the flurry of activity in the UK this week was the nature of the acquirers. The virus has sent online sales skyrocketing, driving the kind of e-commerce acceleration that would normally have taken years in mere months and pushing upstart digital players — once the new kids on the block — into dominant positions.

Physical retail will eventually rebound. People value shopping in stores for the entertainment value, said Berg, who predicts a post-pandemic surge in sales at brick-and-mortar locations. Yet digital sales are set to remain significantly higher than pre-pandemic levels over the long term.

UK retail sales plunge to lowest level since May. The Confederation of British Industry’s retail sales balance, which asks retailers to compare sales with a year earlier, slumped to -50 in January from negative three in December. The outlook for retail sales in February was -47, its lowest since July (Kansara, 29).

References Hirschmiller, S. (2014, November 6). Telegraph . Retrieved from Telegraph: http://fashion.telegraph.co.uk/ news-features/TMG11102032/Best-designer-collaborations-in-high-street-history.html KANSARA, V. A. (2021, January 29). Business Of Fashion. Retrieved from Business Of Fashion : https://www. businessoffashion.com/briefings/retail/the-great-british-retail-restructuring?from=2021-01-29&to=2021-01-30 Lacombe, G. (2019, January 23). Fashion Network. Retrieved from Fashion Network: https://uk.fashionnetwork.com/news/Gen-z-shoppers-love-celebrities-and-search-for-uniqueness-and-social-justice-new-studyfinds,1059977.html Maguire, L. (2020, July 6). Vogue Business . Retrieved from Vogue Business : https://www.voguebusiness.com/ fashion/gen-z-isnt-ready-to-rent-clothes-yet