Market Entry Specialists


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Phy-Gital Era

Online Fashion by 2025

Although E.commerce as a channel is slow to be implemented by the fashion and luxury market, the consumers have made it imperative that it’s easier to purchase online. In a report titled ‘The age of Digital Darwinism’ by Mckinsey, it has been identified that although e-commerce mono-label models like, records largest value of sales; marketplace websites like Etsy, Farfetch, Asos are catching up.

The main target group, currently would be the youth. The youth would strongly contribute the luxury growth engine. Accroding to Bain, there has been an upmark of upto 85%, in which 65% has been due to millennial and GenZ. The attributes of this Target group has influenced other generations. The report by Bain further stated that 30% of this consumer spending on luxury market is because of ‘constant engagement’ and a 3600 degree approach that has been the recent trend in online fashion and luxury.

If we split category wise, 41% is occupied by accessories while apparel sector makes 26%, but beauty and luxury makes only 20% of the market.

This year, 32% of global luxury consumption will be contributed by the Chinese shoppers, erstwhile 30% while US consumers account for 22%, erstwhile 23% marking a depreciation.

To take advantage of this young generation shoppers, channels are integrating their business to create a 360 degree ecosystem using online and physical modes. By 2025, it has been estimated by McKinsey that number of physical stores would face a drop from 91% to 75%, whereas online impressions would increase. Thus the online fashion and luxury sector enjoys a greater mind-share at this moment, as it is pegged to reach 25% in retail sector by 2025, which is a stark increase form 9% last year. Thus brands are looking to curate an entire experience for the consumers using physical and digital platforms.

The era of Phy-Gital is upcoming in the luxury sector. Using online as a support platform has been the trend of the bygones. Now, online platform is used to include location specific product offerings, experience garnering and personalization’s to transform the transations to relationship building thereby increasing customer loyalty. For the expats and the tourists, brands are increasingly creating multiple store formats to mirror the environments, to make sure that customers feel different.

Customer’s want to live the story, thus embarks the ‘Phy-Gital Era!

Written by Shruthi Sharma, PGPB Candidate at SDA Bocconi Asia Center | SANDA Live Project Participant |