Social Media & E-Commerce vs. Traditional Retail

A lot of modern retailers are still trying to carve out their niche in the age of online commerce. Brands like Abercrombie, J-Crew & Gap are rapidly losing foot traffic and marketshare to a growing youth demographic who wants to buy and share online via platforms like Instagram, Pinterest & Snapchat.

Modern teens are spending more time with their limited budgets at stores like Zara or Forever 21 according to a recent report by Business Insider. They are also much more likely to share images of their finds on social channels with their network of friends and relatives.

Social Commerce

Social image platforms like Instagram & Pinterest are drastically affecting the way all consumers view fashion. Modern women are likely to use an app like Pinterest to pin “dream outfits” and wardrobes they are interested in. Low priced, low overhead online fashion outlets are equipped to sell the items that compose these dream outfits and as a result retailers who used to get this customer are losing them to online outlets.

Before the internet, the average consumer didn’t have access to higher level fashion. Most retail brands did well just selling their staple products. Now with instant access to a variety of styles and buying options, it’s much easier for a woman to assemble an outfit that looks great and doesn’t cost a fortune. Customers have access to the types of things they see on runways and can order it at the click of a button.

It’s for this reason that companies like Zara who have well conceived and efficient supply chains are taking over. They can respond to fashion trends at the drop of a hat and churn out new products quickly.

two young women taking selfie with mobile phone
women taking selfie with mobile phone

Then their supply chain helps to keep lead times shorter. Since they don’t have to commit all their stock in advance of the season and are manufacturing during the season.

A traditional retailer like the Gap is just not equipped to operate in this manner. They would have to completely rethink their business models to compete in a similar manner. Instead, they end up having to discount outdated fashions to get rid of excess inventory that failed to sell well. The discounting leads to declining sales and overall devaluation of their brand.

One retail chain, Banana Republic thinks they have figured out a way to bridge the gap. For 2016’s NYC Fashion Week they will allow customers to buy newly launched clothes online as soon as they debut on the runway.

What’s clear, is that retailers of all types, not only fashion need to find ways to adjust to an ever changing market. Social Media is also becoming much more important as a tool of networking with the people who like your brand and turning them into advocates for it. The need to spend zillions of dollars on advertising can be compensated for when you have thousands of your customers showcasing your products and prices on their Instagram & Tinder feeds.

A recent study conducted by Ernst & Young found that teens (affectionately called “Generation Z”) have

very high expectations for consumers and this can help retailers to set the bar higher which in turn affects their entire customer base.

The lesson is that by seeking to please the young generation retailers can greatly improve their business model and return their brand to a state of profitability.


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