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    July 30, 2020
    9 minute read

    5 European Brands Owning D2C

    by: Christian Hassold

    The shift to ecommerce during lockdown across the UK and Europe has been swift and all-encompassing – and long lasting. For many brands it has meant a switch from selling through franchises and third-party retailers to having to add a direct to consumer (D2C) element to their business.

    In the fast fashion world getting this right has been crucial to the very survival of many brands – but making it work is more complex than many realise, with a raft of challenges: managing product information across channels, recreating the in-store experience online, and fostering engaging customer relationships. 

    Here are five D2C apparel brands shaping the future of European ecommerce.

    Levi’s capitalises on online sales using technology

    Like many retail brands, Levi Strauss & Co saw store sales tumble across Europe as the lockdown began. However, while European revenues dropped 68%, its online D2C sales grew by 35%. 

    While the drop-off in store sales has hit the retailer hard, it is bouncing back with an acceleration of its digital transformation plan, focussing in on using artificial intelligence (AI) and data science to target new demographics, looking to bring its brand to Generation Z.

    Part of its shift is also to use AI to make it easier to buy jeans online. Customers often shop digitally, but jeans are a notoriously hard-to-fit item. To make its D2C offering more effective, Levi's has launched an AI bot, which acts a "virtual stylist" to help shoppers determine fit and style online. Being non-human it means that the brand can offer this service 24x7, again tapping into changing shopping habits.

    On top of this, Levi’s in Europe is also looking to make its brand more appealing to these and other consumer groups by making its operations more sustainable. 

    Chip Bergh, President and CEO of Levi Strauss & Co, says: “The pandemic is accelerating retail landscape shifts and consumer behaviour in ways that play to the strength of the Levi’s brand. And we are doubling down on our digital transformation, incorporating the power of AI and data science, and leveraging our iconic brands to have an even stronger focus on Gen Z and sustainability. We believe this will enable us to further grow our market leadership position and emerge from this crisis a stronger company.”

    Puma and Adidas: sporting rivals see D2C driving growth for both globally

    While set up as rival brands by competing brothers, both Adidas and Puma have both seen surges in sales in Europe via D2C. 

    Puma has seen very rapid D2C growth, up 22% to €1.4 billion in the year to March 2020, accounting for more than a quarter (25.4% to be precise) of all its sales. Some of this growth has come from opening stores – not least a new US flagship on Fifth Avenue in New York – but much of the growth has come about by expanding its online stores range of offerings and tapping into Singles Day in China, as well as Black Friday and Cyber Monday both in the US and increasingly across Europe. 

    Rival Adidas, meanwhile, has also seen rapid growth in D2C, which now accounts for a third of its overall sales. The ecommerce aspect of this has grown by 34% to just shy of €3 billion in 2019 – with the D2C component of this up by 18%.

    It too has tapped into international D2C expansion, with China seeing an 18% growth in sales. Europe, meanwhile, accounted for 14% of D2C growth and Russia 6%.

    At the time, just as coronavirus began to impact China, Adidas chief executive Kasper Rorsted said: “In 2019 we proved our resilience and delivered a strong year yet again. We recorded revenue increases across all regions and our direct-to-consumer business grew double-digits driven by ecommerce, one of our strategic growth areas.”

    Looking ahead he added: “In 2020, we will stay focused on the execution of our strategy to bring ‘Creating the New’ home and aim for a sixth consecutive year of double-digit bottom-line growth. Following the outbreak of the coronavirus, our business in Greater China has experienced a significant negative impact since Chinese New Year. As the situation keeps evolving, we cannot yet reliably quantify the magnitude of the overall financial impact in 2020. Regardless of the impact on our business, it remains our top priority to ensure the health and safety of our employees and their families.”

    Boohoo bucks the lockdown trend

    While many fashion brands and retailers took an initial hit when the coronavirus pandemic hit, UK-based fast fashion chain boohoo actually saw sales rocket up by 30% in the three months to 31 May. 

    UK revenues for the group – which also purchased Oasis and Warehouse during the pandemic – rose 45% in the quarter to £368 million, up by a whopping £183 million. In Europe, too, sales grew by 65%.

    All this was driven by shoppers switching seamlessly from stores to online as the lockdown started, driven by a swift and agile switch from ‘going out’ wear, to ‘staying in’ wear. 

    This ability to rapid change supply lines and manage inventory has been a boon to boohoo. While many other retailers were caught with vast stocks of summer outdoor clothes, boohoo’s just in time production was able to change course really quickly.

    Boohoo’s fortunes look assured if it can keep up this agility. The trajectory of the pandemic is still uncertain and agile retailers will be the ones that win out in the coming months. 

    The company has been troubled by reports of working conditions among some of its suppliers, but it has pledged to tackle this. Adding in Oasis and Warehouse – both of which collapsed during the pandemic – along with Karen Millen, which it purchased out of administration late last year, only adds to the brands it can now sell direct to a wider audience of consumers of all age groups.

    Armani takes a different approach to D2C

    Guided by Giorgio Armani himself, the Armani fashion label is creating a D2C offering as part of a broader shift to omni-channel retail, hastened by the current retail climate.

    However, it is taking a different tack. As part of Armani’s Next Era project, the fashion house is working with Yoox Net-a-Porter (YNAP) to leverage the latter’s global logistics network to, in Giorgio Armani’s own words “create a seamless connection between Armani’s clients and products, online and offline”.

    Armani sees D2C as a way of making the shopping process as flexible as possible. While it still uses stores, it wants to leverage those stores as place for experience and purchase, as well as facilitating online D2C sales. Orders will be processed through the YNAP distribution network, from distribution centres and Armani boutiques. Customers will get full visibility of the season’s entire collections online, so that they can view a wider assortment and shop all available products, whether they are stocked in boutiques or online.

    "In the past few months, I have been redesigning the Armani Group’s business model based on a concept that is very dear to me: do less, but better,” says Giorgio Armani, President and CEO Armani Group. “Mine is an invitation to consume more responsibly, focusing on authenticity and change. In Yoox Net-A-Porter, I’ve found a partner that allows me to transform this principle in a new multi-channel shopping project where the relationship with the customer is increasingly personal and direct, while e-commerce and boutiques are integrated in a dynamic balance, which will have a positive effect, also on the environment”.

    H&M accelerates D2C as shoppers shift

    H&M is another fashion retailer that sells its own-brand clothes that is accelerating its move towards online D2C retail. With its stores across the world closed during the pandemic, sales dropped 23%. However, online grew by 36%.

    As a result, the group is now hastening the closure of 170 old stores, opening 130 new omni-channel and digitally-focussed stores and looking, like Armani, to create a more joined up multi-channel D2C offering.

    This shift includes mobile-enabled features, enhanced in-store experiences, and improved online shopping tools. Online retail currently accounts for 14% of H&M's revenue. One of the apparel brand's areas of focus is "maximizing the use of big data and advanced analytics, and constantly inventing new algorithms to help fulfill our customers' needs," according to Errol Koolmeister, head of AI tech, architecture and data science at H&M.

    Establishing a cloud-based IT infrastructure, the unit currently produces fully-fledged analytical software platforms for implementation across the globe. "We work on AI use cases that tell us how we can quantify fashion, allocate it, and make it personal for each individual customer," Koolmeister said.

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