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Are stores out of fashion…
…or a competitive weapon in the digital era?

Nathalie Remy
WWD CEO SUMMIT
October 28th, 2013
… than the 3 networks
broadcasted in the

last century
McKinsey & Company
In fashion too, digital is a tide…

<10%

2010-12 China
online market
France purchasers

Market share

How will this impact you?
McKinsey & Company
Transforming stores, a must to overcome
the dual burden
Consumer expectations are changing
The economics of stores are deteriorating

Are stores out of fashion…
…or a competitive weapon in the digital era?
McKinsey & Company
In the old world, customers followed a linear purchasing funnel

Consumers used to
narrow a broad
selection of brands
to a single choice

AWARENESS

FAMILIARITY

CONSIDERATION

PURCHASE

McKinsey & Company
Today, the fashion Consumer Decision Journey is
multichannel… and changing the role of the store
EVALUATE
Stores / catalogs / WoM
Blogs / websites / search /
comparison

CONSIDER
Outdoor / editorial / windows
Blogs / display / video / emails /
social / search

Offline
Online

BUY
In-store
E-shop/m-shop
Click & collect

EXPERIENCE
Interact with friends and family
Blogs / social / reviews

McKinsey & Company
Text

Consumers’ expectations are changing

“Stores are here to stay”

“Technology is cool”

“Experience is a must”

McKinsey & Company
Retail strategies are also evolving
"To what degree do you envision
changing your retail strategy given
digital proliferation?"

No change

TOP 3 LEVERS

Adopt new technologies

5

Adjust store formats
53

Some change

Significant change

SOURCE: WWD participants survey

42

Adapt supply chain

McKinsey & Company
Apparel store productivity has declined
Change between 2006 and 2012

Total sales

-2%

+3%

+93%

Offline sales

-9%

-2%

+79%

Retail space

+6%

0%

+103%

Offline sales
per sqf

-14%

-2%

-12%
McKinsey & Company
Retail economic equation will further deteriorate
Pressure on sales productivity...

… with continued costs drift

Market growth

Margin

Online share

Labor

Retail real estate

Rents

McKinsey & Company
2 key steps to reinvent your retail strategy

Redefine role of the physical store
Adapt store formats and footprint

McKinsey & Company
Rethinking the role of each store…

PICKING

SELLING

BRAND BUILDING

…WITHIN AN INTEGRATED MULTICHANNEL STRATEGY

McKinsey & Company
Transforming store formats and footprint
Which retail format portfolio?
Flagship

Which target footprint?

F
FSS
SIS

Large free
standing store

Mini free
standing store

SIS

O

F
FSS

FSS

FSS

SIS
FSS

Shop-in-shop

Outlet

FSS

SIS

O

McKinsey & Company
The next challenge: make it happen!
Mindset
Technology

Performance
Talent

McKinsey & Company
Departing thoughts

Are stores out of fashion…
…or a competitive weapon in the digital era

nathalie_remy@mckinsey.com
@Remy_Nathalie

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Are stores out of fashion?

  • 1. Are stores out of fashion… …or a competitive weapon in the digital era? Nathalie Remy WWD CEO SUMMIT October 28th, 2013
  • 2. … than the 3 networks broadcasted in the last century McKinsey & Company
  • 3. In fashion too, digital is a tide… <10% 2010-12 China online market France purchasers Market share How will this impact you? McKinsey & Company
  • 4. Transforming stores, a must to overcome the dual burden Consumer expectations are changing The economics of stores are deteriorating Are stores out of fashion… …or a competitive weapon in the digital era? McKinsey & Company
  • 5. In the old world, customers followed a linear purchasing funnel Consumers used to narrow a broad selection of brands to a single choice AWARENESS FAMILIARITY CONSIDERATION PURCHASE McKinsey & Company
  • 6. Today, the fashion Consumer Decision Journey is multichannel… and changing the role of the store EVALUATE Stores / catalogs / WoM Blogs / websites / search / comparison CONSIDER Outdoor / editorial / windows Blogs / display / video / emails / social / search Offline Online BUY In-store E-shop/m-shop Click & collect EXPERIENCE Interact with friends and family Blogs / social / reviews McKinsey & Company
  • 7. Text Consumers’ expectations are changing “Stores are here to stay” “Technology is cool” “Experience is a must” McKinsey & Company
  • 8. Retail strategies are also evolving "To what degree do you envision changing your retail strategy given digital proliferation?" No change TOP 3 LEVERS Adopt new technologies 5 Adjust store formats 53 Some change Significant change SOURCE: WWD participants survey 42 Adapt supply chain McKinsey & Company
  • 9. Apparel store productivity has declined Change between 2006 and 2012 Total sales -2% +3% +93% Offline sales -9% -2% +79% Retail space +6% 0% +103% Offline sales per sqf -14% -2% -12% McKinsey & Company
  • 10. Retail economic equation will further deteriorate Pressure on sales productivity... … with continued costs drift Market growth Margin Online share Labor Retail real estate Rents McKinsey & Company
  • 11. 2 key steps to reinvent your retail strategy Redefine role of the physical store Adapt store formats and footprint McKinsey & Company
  • 12. Rethinking the role of each store… PICKING SELLING BRAND BUILDING …WITHIN AN INTEGRATED MULTICHANNEL STRATEGY McKinsey & Company
  • 13. Transforming store formats and footprint Which retail format portfolio? Flagship Which target footprint? F FSS SIS Large free standing store Mini free standing store SIS O F FSS FSS FSS SIS FSS Shop-in-shop Outlet FSS SIS O McKinsey & Company
  • 14. The next challenge: make it happen! Mindset Technology Performance Talent McKinsey & Company
  • 15. Departing thoughts Are stores out of fashion… …or a competitive weapon in the digital era nathalie_remy@mckinsey.com @Remy_Nathalie