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Fashion Network
16-05-2025
- Business
- Fashion Network
World Retail Congress: new EY report identifies key moves to lock in growth
Several messages were very clear from the World Retail Congress (WRC) in London this week — it's an uncertain world that isn't going to get more certain any time soon, the industry is evolving at speed, and retail business models need to adapt to drive growth. That latter point is the key one from a report produced by WRC and EY that was presented on the first day of the event. Called Adapting the Retail Model for a New Growth Plan, it highlights the enduring strength of the retail sector, which over recent decades has weathered the online shopping boom, smartphones, social media, financial crises, a global pandemic, supply chain disruptions, geopolitical instability and inflation. But it added that retailers can't afford to stand still and by drawing on various information sources has come up with some recommendations to help retailers grow. Those sources include interviews with retail leaders, proprietary EY research (such as the EY Parthenon CEO Outlook Survey and the EY Future Consumer Index), plus data from Coresight Research, Oxford Economics, Capital IQ, Euromonitor, MarketWatch, ThredUp, and Business Research Insights. So what are its conclusions? It said the retail leaders it spoke to identified six priority areas to accelerate progress. The first of these is leveraging existing assets to provide B2B services. Retailers are 'recognising the untapped potential of their infrastructure, expertise, customer base and investing in these capabilities to unlock revenue growth opportunity across the supply chain'. That means both 'upstream, through offering additional value to suppliers, and downstream through acquisitions and bolt-ons that shift them into a media- or platform-led offering'. Second, it said repurposing physical and digital spaces to deliver more service-based offerings is key. While online sales are still growing, 'physical stores continue to play a vital role in driving revenue. Repurposing the store and truly measuring their success from an omnichannel perspective will be more important. We see retailers repurposing store space into community hubs, click-and-collect hubs, piloting rental, resale and repair services and more. In grocery and pharmacy, integrating health services such as in-store clinics and wellness programmes offers further opportunities to meet evolving consumer needs'. Shedding underperformers, acquiring tech expertise And it believes that reshaping businesses through strategic divestments and acquisitions to boost performance is hugely important. The EY CEO Confidence Index reveals 'significant attention is being directed to streamlining portfolios and restructuring to save costs and free up capital to invest in future growth'. In fact, 49% of retail CEO respondents are planning divestments of poor performing, challenged and non-core assets in the next 12 months. The index shows M&A will play a key role this year although activity is likely to slow. Fifty-eight percent of retail CEO respondents are planning M&A in the next 12 months, primarily to access new technologies (37%), capabilities (35%) and vertical integration (35%). Of course, embracing technology to unlock efficiency, enhance customer experience and power new business models is also on the list of priorities. EY said technology is underpinning the majority of retailers' efforts to defend margins and drive growth with tech likely to be the most heavily ring-fenced expenditure category in retail budgets. Artificial intelligence (AI) will play a central role in such investments, with its applications split between embedding AI into current infrastructure and exploring new initiatives across various AI branches. The fifth key point is investing to develop entirely new value propositions. 'Retailers can leverage existing assets and make investments that take bigger steps by expanding or pivoting into brand new sectors', EY said. 'A move into technology, media, health, real estate or financial services could open new areas of growth. That's an interesting point given how many businesses are moving into retail media and only this week the UK's Frasers Group announced a big initiative on this front. The final point is exploring partnerships to support new business models and enhance operating models. Delivery platforms and new entrants are transforming the retail landscape as they rapidly expand beyond their original focus areas to capture a larger market share across multiple retail segments. Online food ordering and delivery platform companies, which initially built their businesses around restaurant meal delivery, are now aggressively moving into grocery, convenience and other retail categories, leveraging their established logistics and technology infrastructure to diversify revenue streams and meet evolving consumer demands. Ian McGarrigle, WRC chairman, said: 'Leading retailers have consistently outperformed market expectations by investing in new business strategies and we know retailers are exploring alternative business models such as pre-owned, rental, subscription, repair, health services, media and logistics. However, these models face challenges in scaling and generating significant revenue compared to traditional sales. The key factors hindering their success are time and money. 'Large retailers have seen some success, but the revenue from these new models remains relatively small. The focus should be on profitability and growth, as newer revenue streams are growing faster and have greater potential. Retailers need to take iterative steps to build scale, leveraging customer data and gradually embedding new models to drive growth and profit over a five- or 10-year horizon.'
Fashion Network
16-05-2025
- Business
- Fashion Network
World Retail Congress: new EY report identifies key moves to lock in growth
Several messages were very clear from the World Retail Congress (WRC) in London this week — it's an uncertain world that isn't going to get more certain any time soon, the industry is evolving at speed, and retail business models need to adapt to drive growth. That latter point is the key one from a report produced by WRC and EY that was presented on the first day of the event. Called Adapting the Retail Model for a New Growth Plan, it highlights the enduring strength of the retail sector, which over recent decades has weathered the online shopping boom, smartphones, social media, financial crises, a global pandemic, supply chain disruptions, geopolitical instability and inflation. But it added that retailers can't afford to stand still and by drawing on various information sources has come up with some recommendations to help retailers grow. Those sources include interviews with retail leaders, proprietary EY research (such as the EY Parthenon CEO Outlook Survey and the EY Future Consumer Index), plus data from Coresight Research, Oxford Economics, Capital IQ, Euromonitor, MarketWatch, ThredUp, and Business Research Insights. So what are its conclusions? It said the retail leaders it spoke to identified six priority areas to accelerate progress. The first of these is leveraging existing assets to provide B2B services. Retailers are 'recognising the untapped potential of their infrastructure, expertise, customer base and investing in these capabilities to unlock revenue growth opportunity across the supply chain'. That means both 'upstream, through offering additional value to suppliers, and downstream through acquisitions and bolt-ons that shift them into a media- or platform-led offering'. Second, it said repurposing physical and digital spaces to deliver more service-based offerings is key. While online sales are still growing, 'physical stores continue to play a vital role in driving revenue. Repurposing the store and truly measuring their success from an omnichannel perspective will be more important. We see retailers repurposing store space into community hubs, click-and-collect hubs, piloting rental, resale and repair services and more. In grocery and pharmacy, integrating health services such as in-store clinics and wellness programmes offers further opportunities to meet evolving consumer needs'. Shedding underperformers, acquiring tech expertise And it believes that reshaping businesses through strategic divestments and acquisitions to boost performance is hugely important. The EY CEO Confidence Index reveals 'significant attention is being directed to streamlining portfolios and restructuring to save costs and free up capital to invest in future growth'. In fact, 49% of retail CEO respondents are planning divestments of poor performing, challenged and non-core assets in the next 12 months. The index shows M&A will play a key role this year although activity is likely to slow. Fifty-eight percent of retail CEO respondents are planning M&A in the next 12 months, primarily to access new technologies (37%), capabilities (35%) and vertical integration (35%). Of course, embracing technology to unlock efficiency, enhance customer experience and power new business models is also on the list of priorities. EY said technology is underpinning the majority of retailers' efforts to defend margins and drive growth with tech likely to be the most heavily ring-fenced expenditure category in retail budgets. Artificial intelligence (AI) will play a central role in such investments, with its applications split between embedding AI into current infrastructure and exploring new initiatives across various AI branches. The fifth key point is investing to develop entirely new value propositions. 'Retailers can leverage existing assets and make investments that take bigger steps by expanding or pivoting into brand new sectors', EY said. 'A move into technology, media, health, real estate or financial services could open new areas of growth. That's an interesting point given how many businesses are moving into retail media and only this week the UK's Frasers Group announced a big initiative on this front. The final point is exploring partnerships to support new business models and enhance operating models. Delivery platforms and new entrants are transforming the retail landscape as they rapidly expand beyond their original focus areas to capture a larger market share across multiple retail segments. Online food ordering and delivery platform companies, which initially built their businesses around restaurant meal delivery, are now aggressively moving into grocery, convenience and other retail categories, leveraging their established logistics and technology infrastructure to diversify revenue streams and meet evolving consumer demands. Ian McGarrigle, WRC chairman, said: 'Leading retailers have consistently outperformed market expectations by investing in new business strategies and we know retailers are exploring alternative business models such as pre-owned, rental, subscription, repair, health services, media and logistics. However, these models face challenges in scaling and generating significant revenue compared to traditional sales. The key factors hindering their success are time and money. 'Large retailers have seen some success, but the revenue from these new models remains relatively small. The focus should be on profitability and growth, as newer revenue streams are growing faster and have greater potential. Retailers need to take iterative steps to build scale, leveraging customer data and gradually embedding new models to drive growth and profit over a five- or 10-year horizon.'
NBC News
14-05-2025
- Business
- NBC News
Shein and Temu find temporary reprieve as U.S. relaxes tariffs
President Donald Trump 's tariff pause gives Temu and Shein a temporary window of opportunity to restock U.S.-based warehouses and re-evaluate their supply chain management, experts and insiders say. On Monday, the U.S. and China agreed to lower tariffs on most Chinese imports to 30% for 90 days. The agreement included a relaxation of the so-called 'de minimis' rule, effective Wednesday, which will see low-value packages shipped to the U.S. from China now be taxed at a tariff rate of 54%, down from 120% previously. Previous tariff rates had driven price increases for U.S. consumers on Shein's platforms. Meanwhile, Temu halted direct shipments from China altogether, leading to some disruptions in fulfilling its U.S. orders. But the recent tariff cut has given them a chance to ramp up shipments from China and restock their warehouses and fulfill existing orders, supply chain experts say. 'In the short term, [Temu and Shein] are definitely going to increase their shipment volume to the U.S.,' said Anand Kumar, associate director of research at Coresight Research, adding that it will also help the companies reassess their long-term strategy. According to Jason Wong, who works in product logistics for Temu in Hong Kong, his company stalled shipments from China after the end of the 'de minimis' exemption and relied on U.S. stockpiles to fulfill orders. Under the latest tariff policy, Wong anticipates that bulk shipments subject to the 30% tariff rate will resume to the U.S., replenishing these stockpiles. ″30% is still high, but compared to 125%, 30% is basically nothing,' he added. Small values, higher levies The tariffs situation nevertheless remains more complicated for small-value packages under 'de minimis.' The latest policy update retains a $100 flat fee per postal item, while scrapping a previously planned increase to $200 starting in June, according to an executive order released by the White House on Monday. According to Wong, for Temu to resume its small-value shipments from China to the U.S., the tariffs still need to be relaxed further — something he expects will happen eventually. Shein has not said that it is ending direct shipments from China. However, it says on its platform that 'tariffs are included in the price you pay.' The reduction in tariffs on low-value packages shipped to the U.S. from China could therefore result in the easing of some prices, said Coresight's Kumar. In anticipation of changes to the 'de minimis' exemption, Shein has also expanded its supply chains, building manufacturing operations in countries such as Turkey, Mexico and Brazil. It also reportedly plans to shift production to Vietnam. Shein and Temu did not immediately respond to CNBC requests for comment. On May 2, Trump ended the 'de minimis' exemption policy, which analysts had criticized as hurting local businesses and disguising illicit fentanyl trade. The small-package tariff exemption had helped Temu and Shein maintain budget prices on the merchandise they shipped directly from China. The U.S. government had briefly suspended the exemption in February before reinstating the provision days later, as customs officials struggled to process and collect tariffs on a spate of low-value packages. U.S. rivals like Amazon, on whose platform many third-party sellers offload products sourced or assembled by Chinese manufacturers, are also expected to ramp up shipments during the 90-day window, trade experts said. 'All the companies are just going to scramble to get everything they can into the country as quickly as they can,' said Cameron Johnson, Shanghai-based senior partner at consultancy firm Tidalwave Solutions. 'Everybody's in the same boat.'
CNBC
13-05-2025
- Business
- CNBC
Shein and Temu find temporary reprieve as U.S. relaxes tariffs
U.S. President Donald Trump's tariff pause gives Temu and Shein a temporary window of opportunity to restock U.S.-based warehouses and re-evaluate their supply chain management, experts and insiders say. On Monday, the U.S. and China agreed to lower tariffs on most Chinese imports to 30% for 90 days. The agreement included a so-called "de minimis" rule relaxation, effective May 14, which will see low-value packages shipped to the U.S. from China now be taxed at a tariff rate of 54%, down from 120% prior. Previous tariff rates had driven price hikes for U.S. consumers on Shein's platforms. Meanwhile, Temu halted shipments directly from China altogether, leading to some disruptions in fulfilling its U.S. orders. But the recent tariff cut has given them a chance to ramp up shipments from China and restock their warehouses and fulfill existing orders, supply chain experts say. "In the short term, [Temu and Shein] are definitely going to increase their shipment volume to the U.S.," said Anand Kumar, associate director of research at Coresight Research, adding that it will also help the companies reassess their long-term strategy. According to Jason Wong, who works in product logistics for Temu in Hong Kong, his company stalled shipments from China after the end of the "de minimis" exemption and relied on U.S. stockpiles to fulfil orders. Under the latest tariff policy, Wong anticipates that bulk shipments subject to the 30% tariff rate will resume to the U.S., replenishing these stockpiles. "[The] 30% is still high, but compared to 125%, 30% is basically nothing," he added. The tariffs situation nevertheless remains more complicated for small-value packages under "de minimis." The latest policy update retains a $100 flat fee per postal item, while scrapping a previously planned hike to $200 starting June, according to an executive order released by the White House on Monday. According to Wong, for Temu to resume its small value shipments from China to the U.S., the tariffs still need to be relaxed further — something he expects will happen eventually. Shein has not said that it is ending direct shipments from China. However, it says on its platform that "tariffs are included in the price you pay." The reduction on tariffs of low-value packages shipped to the U.S. from China could therefore result in the easing of some prices, said Coresight's Kumar. In anticipation of changes to the "de minimis" exemption, Shein has also expanded its supply chains, building manufacturing operations in countries such as Turkey, Mexico and Brazil. It also reportedly plans to shift production to Vietnam. Shein and Temu did not immediately respond to CNBC's request for comments. On May 2, Trump ended the "de minimis" exemption policy, which analysts had criticized as hurting local businesses and disguising illicit fentanyl trade. The small-package tariff exemption had helped Temu and Shein's maintain budget prices on the merchandise they shipped directly from China. The U.S. government had briefly suspended the exemption in February before reinstating the provision days later, as customs officials struggled to process and collect tariffs on a spate of low-value packages. U.S. rivals like Amazon, on whose platform many third-party sellers offload products sourced or assembled by Chinese manufacturers, are also expected to ramp up shipments during the 90-day window, trade experts said. "All the companies are just going to scramble to get everything they can into the country as quickly as they can," said Cameron Johnson, Shanghai-based senior partner at consultancy firm Tidalwave Solution. "Everybody's in the same boat."
Forbes
13-05-2025
- Business
- Forbes
Beyond Blanket Markdowns: Smart Pricing For Returned Fashion Items
Arun Rasika Karunakaran is a retail product management leader @TCS specializing in AI-led transformation, merchandising & store operations. getty A 2023 study by Coresight Research estimated that the average return rate for clothing ordered online was 24.4%—that's approximately $38 billion in returns, with $25 billion in processing costs for apparel retailers. What makes fashion returns particularly complex is the variable lifecycle of products. From "fad" items that remain relevant for mere weeks to "classics" that sell steadily for years, fashion retailers struggle to properly price returned merchandise based on its remaining market value. The traditional method of applying blanket markdown percentages to returned items leaves billions on the table. The one-size-fits-all strategy fails to account for product-specific value retention. A returned black dress in classic styling, for example, might retain 85% of its value, while a returned neon statement piece from last season might be worth just 15% of its original price. This disparity highlights the need for more sophisticated pricing models that account for a product's position in its lifecycle. A data-driven approach could offer retailers a sophisticated solution to this problem. By analyzing the complex interplay between product attributes, lifecycle patterns and logistics costs, retailers could optimize pricing for returned fashion items. The innovation lies in how to break down products into "attribute components"—fundamental characteristics that influence consumer preferences, rather than looking at individual items in isolation. For example, instead of analyzing a polka dot black blouse individually, the focus should be on recognizing patterns in how consumers value the "polka dot pattern" combined with "black color" and "blouse style" across the entire product catalog. Leveraging Attributes-Based Intelligence With the item attributes, retailers could come up with an attribute relationship repository for each item group or category (such as women's tops or men's suits). This repository potentially captures the association between various product attributes and consumer purchasing patterns. By applying machine learning methods, retailers could identify the lifecycle length of different attribute combinations and estimate how much value a returned product retains based on: • The current stage in its lifecycle • The specific attribute components that make up the product • Logistics costs associated with processing the return • Current inventory levels • Promotional history ROI Of Intelligent Return Pricing Research found that less than half of returned goods are resold at full price. Fashion retailers could implement an attribute-based pricing approach to significantly improve the recovery value from returned merchandise. As reported in a CNBC article, Tobin Moore, the CEO of Optoro , said, 'A lot of retailers can add 5% to their bottom line by better optimizing the management and resale of their returns.' The attribute-driven approach is particularly valuable for multibrand retailers and department stores managing diverse product assortments with varying lifecycle patterns. For these businesses, even a modest 5% improvement in return recovery can translate to millions in recaptured revenue annually. This could prove most effective during seasonal transitions and holiday return waves when retailers traditionally struggle with processing high volumes of returns while maintaining price integrity. By dynamically adjusting prices based on product attributes rather than calendar dates, retailers can maximize recovery value during these critical periods. Strategic Application Beyond Pricing The benefits extend beyond optimizing the price point for returned items. The attribute relationship mapping creates valuable applications throughout the retail ecosystem: • Merchandise Planning: Retailers can analyze which attribute combinations have longer lifecycles to make more informed buying decisions. This enables merchandise planners to balance trend-driven pieces with more durable attribute combinations that retain value longer. • Assortment Strategy: By understanding the relationship between attribute combinations and return rates, retailers can refine their assortment strategy to minimize returns while maximizing sales potential. • Supplier Negotiations: Data on attribute performance can inform supplier negotiations by identifying which manufacturing partners consistently produce items with attributes that retain value longer after returns. • Product Development: For retailers with private label programs, the system provides invaluable feedback on which design elements and attribute combinations to incorporate into future collections for optimal lifecycle value. The Future Of Returns Management As e-commerce continues to grow, with global online fashion sales projected to reach $1.2 trillion by 2025, according to Statista, efficient returns management becomes increasingly critical to profitability. Data-driven return analysis reveals crucial customer behavior patterns while creating opportunities for inventory optimization. Retailers leveraging this intelligence can transform return challenges into strategic advantages that boost profitability. By pricing returned items optimally, retailers can ensure items re-enter the marketplace quickly rather than ending up in landfills—a crucial sustainability consideration when the fashion industry contributes roughly 92 million tons of textile waste each year. Adopting Attribute-Based Return Pricing For retailers looking to adopt an attribute-based approach, I suggest starting with: • Comprehensive data collection from all touchpoints • Integration at the individual transaction level • Attribute mapping across the product catalog • Machine learning model development to recognize patterns • Continuous analysis of lifecycle patterns for different attribute combinations While the above steps require sophisticated data infrastructure, the return on investment can be substantial. For a mid-sized fashion retailer processing $10 million in returns annually, even a 10% improvement in recovery value represents $1 million in recaptured revenue. In an industry with notoriously thin margins, effectively managing returns is no longer optional—it's essential. The future of fashion retail belongs to those who can turn the challenge of returns into an opportunity for data-driven optimization. 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