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COVID-19 Effect on Digital Marketing and E-Commerce Sales Within the Fashion Industry

Starting in 2019, the coronavirus pandemic has had a major social and economic impact. The newly implemented COVID-19 policies limited human activity, buying power, demand, and altered consumer habits. Consequently, such changes were reflected in business operations. As with numerous B2C and B2B industries, an industry that was severely affected by such changes was the fashion industry. The effect that COVID-19 had on consumer lifestyle and spending power had an inevitable impact towards the industry’s marketing strategies. Within the clothing industry’s marketing strategies, COVID-19 had influenced different marketing components, especially digital marketing, e-commerce and physical store sales. Although such new changes erupted from a negative event, it also introduced businesses to new opportunities when it came to marketing. Marketing evolved from traditional, “pre-covid” marketing, to COVID-19 marketing and finally, a new, future stage of marketing.

Marketing Before COVID-19

Prior to the U.S declaring COVID-19 as a national health emergency, the global apparel industry was a rapidly growing industry, estimated to be worth around $1,802.5 billion USD in 2019 and expected to grow even more. Within the U.S alone, the apparel industry was worth $367.93 billion USD. The industry’s sales consisted primarily of brick and mortar sales, and the rapidly growing e-commerce sales. In 2019, the peak physical store sales were estimated to be worth around $35,157 million USD. Within the same year, the e-commerce sales were estimated to be worth $102,542 million USD. According to the U.S. Department of Commerce, there has been a moderate correlation between the rise of e-commerce sales and the decline of physical store sales from 2018 to 2019. In 2018, e-commerce and physical sales accounted for 26.6% and 73.4% respectively. In 2019, however, there was a rise in e-commerce and a decline in physical sales, resulting in 30.1% and 69.9% respectively.

Based on the findings listed by The Business of Fashion (BoF) in the State of Fashion 2019 report, the majority (34%) of the surveyed industry executives described the industry in 3 words - “changing”, “digital”, and “fast”. Additionally, the executives agreed on several marketing industry trend terms that stemmed from the 2018 trends. These consumer shift trends describe consumers and companies in the following terms: “mobile obsessed”, “platforms first”, “start-up thinking”, and “getting personal”. In other words, executives expected for both consumers and companies to focus on e-commerce and essentially take advantage of mobile devices, AI, company apps and websites. Executives believe that established companies will “disrupt” their marketing strategies and match those of start-ups’ due to the belief that start-ups have a more updated view on consumer habits, compared to older, established companies. Executives predict that consumers will want companies to approach them with a high degree of personalization as well as express social responsibility and support towards social, political, and environmental matters that their customer base values.

Marketing During COVID-19 (2020-2021)

Although the pandemic disrupted several aspects of trend prediction reports, there was a large portion of predictions that were fulfilled. Throughout the ongoing duration of the COVID-19 pandemic, there were numerous phases for these trends that were based on governmental policies. For instance, once the mandatory quarantine policy was implemented in Spring, 2020, there was a noticeable drop in physical store sales. The significant decline is seen in the US Census Bureau’s graph where in 2019, the physical sales amounted to $35,157 million USD and in 2020, it dropped to a mere $2,744 million USD. This drop is accountable due to the consumers’ initial panic, the newly implemented policy, and the policy’s  prevention of social gatherings and physical shopping. The majority of retail stores were closed indefinitely and some even filed for bankruptcy. Once the population has passed the initial panic, the physical store sales went back up in June, 2020, but still have not reached their previous average peaks.  On top of the consumer base’s inability to shop physically due to the pandemic, this slowly recovering decline could also be the result of our society’s shifting preference towards an e-commerce based shopping experience.

Digital Marketing and Social Media

Throughout the pandemic, 45% of consumers reported to have increased their social media activity and 26% reported to have increased their video streaming. With the rise in the population’s digital presence and the decreased ad spend budgets due to the decline in physical sales, brands have increased their digital presence accordingly in order to optimize costs.  The industry specialists under McKinsey & Company claim that brand digitization has numerous advantages. It is stated that even prior to the pandemic, brands that have higher digital presence (on top of a physical presence) do better than brands that do not. These digitized brands also had an easier time transitioning with the start of the pandemic.

There has also been an increase in digital marketing methods such as email marketing, social media presence, and etc. While prior marketing strategies were rather obvious, the new marketing strategies are more cautious and smart about their approach in order to appeal to the current market. The brands within the industry understand that it is crucial that they maintain their presence in the lives of their customers by relying on digital reminders such as emails and social media. This is done in a calculated manner where brands attract customers through deals, creative and captivating content, or emotionally appealing messages. By doing so, brands are able to market themselves while maintaining their image and authenticity.

Instagram

The app has developed features that optimize marketing strategies for brands, such as Instagram’s “Shop” function which allows users to buy products from the brand’s account page. Additionally, Instagram offers brands marketing analytics data to show page activity, through both ads and follower engagement. Apart from direct marketing, a large portion of social media marketing, especially apparel, is done by social media influencers (SMIs). Previously, SMIs have been a large part of digital marketing but had to face several COVID-19 related challenges regarding paid collaborations with brands. However, SMIs and brands were able to adjust their strategies accordingly. In the past, SMIs focused on direct product promotion, whereas now, they focus on delivering customer value through creative content. The sponsored content produced by SMIs communicates with a customer by selling a specific lifestyle, aesthetic or value that resonates with the SMI’s follower base. Based on the research conducted by the International Journal of Marketing Studies, it has been revealed that while 72% of the respondents use Instagram to socialize with their friends and family, 47%  and 41% of the same respondents use Instagram to follow their favorite SMIs and keep up with trends respectively. The same research discusses why consumers follow a specific SMI, revealing that 79% of consumers value the content, 69% value the personality (and ideals), and 57% value the lifestyle. In terms of brand content, respondents expressed that they prefer brands that are able to “cheer them up” and that post educational, empathetic and socially responsible COVID-19 related content.

TikTok

Another take on social media marketing was the rise of TikTok. TikTok creates an opportunity for brands to competitively communicate with a younger audience. Similarly to Instagram, TikTok users prefer authentic, non-scripted content where “non-influencer” users are able to promote apparel in a genuine manner. Due to a large and increasingly growing user base of 800 million users, a variety of both affordable and high-end brands have joined the platform. Once again, brands have found a way to market themselves in an authentic and even educational manner. For instance, a TikTok influencer by the name of Wisdom Kaye would show several ways to style a garment, joined by other fashion influencers and their broad variety of styling tips.

Future of Marketing After COVID-19

While numerous sources present COVID-19 as a setback, some sources disagree. BCG’s industry experts argue that COVID-19 has “created a new reality” for the apparel industry. BCG argues that it is important for brands to take advantage of the situation and expect that after the pandemic, the shopping culture will continue preferring e-commerce yet still require physical stores. Furthermore, it is recommended that brands have a high functioning omni channel presence that gives their customers flexibility when it comes to shopping both online and physically.

Based on the findings listed by The Business of Fashion (BoF) in the State of Fashion 2021 report, the surveyed industry executives have expressed that there are several new themes regarding the future of pandemic fashion. Companies are encouraged to acknowledge the decline in demand and brand perception, especially with social media portraying fashion as unethical and bad for the environment. As a response, it is advised that companies are vocal, active and just in terms of their operations, suppliers and employees. There has been a large emphasis on sustainable fashion throughout social media, hence customers no longer value quantity, rather they value quality. In accordance, companies are pushed to focus their supply and marketing efforts towards promoting styles while considering the demand and the environment. It is recommended that companies are flexible with the inconsistent conditions brought by the pandemic and that they are able to adjust. Lastly, it is once again emphasized that it is crucial for brands to have a digital presence.

Despite COVID-19 having a devastating effect on several industries, it created an opportunity for the apparel industry to adjust and make takeaways. Due to the increased digital presence caused by the pandemic, brands learned to increase their digital presence as a form of marketing and allocate their resources accordingly. Not only did the majority of apparel brands become present on social media, but they have also learned that consumers are tired of direct, overly-scripted marketing. Brands have adjusted their marketing strategies and promoted themselves as relatable, educational, ethically aware, and genuine. Although there has been a decline in physical store sales and a large portion of brick and mortar stores had to be closed, apparel brands now focus on developing an omnichannel network. Most importantly, apparel brands should prioritize flexibility in terms of operations and marketing as they consider their future strategies. Although the future of the pandemic is uncertain, it is predicted that the industry revenue will continue to grow. Despite there being an evident decline amounting to $1,460.06 billion USD in 2020, there is a reason for optimism regarding recovery. The revenue that has been recorded in 2021 amounts to $1,705.53 billion USD and there are speculations that it will continue growing exponentially for the next 4 years.