We all know that the same survival of most Retail businesses, especially in the Fashion&Luxury field, is now at risk but why? Is Covid-19 the real cause of this disruption or is this pandemic more of an accelerator of these radical changes? But, most importantly, what can our firms do to tackle the most dangerous crisis they have ever faced and reinvent their business model? I have tried to answer all these questions with a deep analysis of the Fashion Retail Business and the suggestion of a set of solutions that will help both SMEs and traditional Retailers to bridge the gap with their competitors transforming this crisis into an opportunity.

1. FASHION RETAIL
AFTER COVID-
19:
APOCALYPSE
OR
RENAISSANCE?
PRESENTATION OFFERED
BY GABRIELE BIANCHINI

2. PRESENTATION STRUCTURE
• Divide before Covid-19
• Thesis
Introduction
• Customers
• Retailers
• Retail workers
Retail business model after Covid-19
• Fast vs Slow Fashion
• Retail Data Literacy
• Italian Retail Industry
Structural issues in the Fashion Business
• Mindset
• Solutions
• Business plan
Proposals for a successful retailer

4. DIVIDE BEFORE
COVID-19
 Retail had been predicted to change more in the last 5 years
than in the last 50 (Fitch in Retail 2020) before the Covid-19
epidemic.
 The Coronavirus epidemic is not the cause of the dramatic
changes the Retail Industry and the Fashion&Luxury business
are facing.
 As a matter of fact, most Retailers have proven to be slow to
adapt to the trends that were already visible:
 Customers had demolished the barrier between online and offline
 E-commerce had proven to be the real driver of growth
 The focus of Digital Marketing had already shifted from transactions
to experiences

5. CUSTOMERS WITHOUT BARRIERS
 60% of the workforce is made of Millennials and Gen Z (UK)
 Millennials: born between 1980 and 1995, they are considered
the world's first truly digital generation
 Gen Z: born after 1995, they don’t know a time without digital
and are called “digital natives”
 More than 50% of Millennials say they would rather spend money
on an experience than on a possession
 64% of 16 to 24-year-olds say they are more likely to become a
loyal customer if a brand engages with them on social media
Digital skills: Retail Accenture (Prediction for 2020, pre-Coronavirus)

6. E-COMMERCE AS THE REAL DRIVER
In Italy E-commerce is the real driver of Retail growth, in 2019
(before Covid-19):
 E-commerce has grown by +19% (+21% considering only
B2C products).
 Even tough E-commerce represents only 7.3% of total
purchases, E-commerce is responsible for 65% of the total
growth of Retail sales.
Osservatori Digital Innovation Politecnico di Milano, 2019

7. BEST PRACTISES IN DIGITAL
MARKETING
 Focus on communicating values and not on selling products:
 Corporate Mission and Vision
 Brand philosophy and culture
 Social responsibility
 Reach your customers where they are:
 95% of audiences don’t see the organic content produced
by brands on social media
 Invest in new platforms such as Spotify, Twitch and Netflix
with specific content related to the media
Patrizio Miceli, head of creative agency Al Dente

8. THESIS
 My thesis is that the current crisis will cause both short-term
and medium-term consequences:
1. Short-term changes: Retailers will have to adapt their procedures
according to the indication the Public Authority
2. Medium-term changes: Retailers will have to fully embrace the
Industry 4.0 revolution and make up for the lost time
The creation of a vaccine, which will take between 12 to 18
months, will not restore the status quo ante: the entire world
has been changing in the last decades and Covid-19 has only
shown how weak an old-fashioned business model was
In short, Covid-19 is the accelerator of the medium-term
changes, not the cause of them.

9. THE CONSEQUENCES IN A SENTENCE
“Some apparel, fashion, and luxury companies won’t survive the current crisis; others will emerge better
positioned for the future. Much will depend on their digital and analytics capabilities.”
(Fashion’s digital transformation: Now or never, McKinsey)
My prediction is that up to 80% of Fashion and Retail companies will face a high risk of closure in the next
2 years: heavily leveraged companies and traditional SMEs are the most vulnerable.

10. THE RETAIL BUSINESS MODEL AFTER COVID-19
Change in Demand (Customers)
 Consumers Lifestyle
 Values
 Needs
 Purchasing behavior
Change in Supply (Retailers)
 Products
 Marketing strategies
 Sales Channels
 Role of Stores and Shopping Experience

11. CUSTOMERS
POST-
CORONAVIRUS

12. BIRTH OF THE
VALUE THINKER
Focus on
Overall
Value
Phygital
Mindset
Activist
Consumer

13. VALUES
Sustainability
Purpose
Fairness
Diversity
Inclusion

14. NEEDS
Digital connection
Personalization
Immediacy
Safety
Value for money

15. NEW HABITS
AND NEW
HOMES
Covid-19 has forced billions of people to social isolation with
limited opportunities to leave their homes
The main trends will be:
 Decline of apartments, rise of independent houses:
 Small but with a courtyard and a terrace
 Self-sufficient in case of a new emergency
 Increase of smart-working:
 Home workplace as a separate room with large windows, blackout
curtains and comfortable furniture
 Technically equipped and sound-insulated
 Active mindset:
 Workout workplace as a separate room with indoor equipment
 Athleisure wear

16. NEW CONCEPT OF HOME

17. PURCHASING BEHAVIOR
Higher price sensitivity
Search for discounts and promos
(“Discount mindset”)
Expansion of the contactless
experience
Smart payments and virtual try-on
(Just Walk Out technology and AR)
Onlife customer journey
Phygital shopping experience
(“Digital Escalation”)
Value Thinker: Buy less, buy better (and for longer)

18. RETAILERS POST-
CORONAVIRUS

19. NEW PRODUCTS
HIGH-END PERFUMED HAND SANITIZERS FASHIONABLE CLOTH
FACEMASKS
LIGHT AND TOUCH GLOVES

20. CUSTOMER-
DRIVEN
MARKETING
 Customer-centric strategy: focus on customer experience as
core KPI
 Personalization of the interaction: promotional discounts, product
recommendation, one-to-one communications
 Data-driven marketing: integration of online and offline data
(loyalty card) to analyze customer experience
 Customer insights: analysis and improvement of every marketing
initiative (ROI)
 Social media listening: continuous interaction with our
community and customer base
 Community listening: feedback, brand image management, brand
and campaign awareness

21. CHANNELS: THE CUSTOMER IS IN CHARGE
E-COMMERCE SOCIAL MEDIA PHYSICAL STORE

22. 75% of online
purchasers had never
previously
experimented e-
commerce
Online purchasing behavior during the
epidemic
No previous experience in E-
commerce
Previous experience in E-
commerce
THE COVID-19
IMPULSE
TOWARDS
DIGITAL
Netcomm analysis of the
2020 lockdown effects

23. THE NEW ROLE
OF STORES
 Store as small and nimble
showroom focused on
customer experience
 Shop as Media Store
 Store Media Value as the
new KPI

24. TRADITIONAL KPI: THE CUSTOMER EXPERIENCE KILLER
Traditional KPIs adopted in physical store conflict with a
customer-centric strategy:
 ATV (Average transaction value)
 UPT (Units per transaction)
 CR (Conversion Rate)
 Gross sales
These KPIs shift the focus of the sales associate from the long-
term value of customer experience to the short-term return in
sales.
The real thing that matters is the store Store Media Value.

25. STORE MEDIA
VALUE
Store as a pillar for both the customer acquisition and the
customer retention strategy
Store Media Value = Value per consumer impression * Quality
of the average impression * Quantity of consumer impressions
 Value per consumer impression
 APPC = Average Pay-per-click cost
Average pay-per-click cost across the different channels
 Quality of the average impression
 NPS = Net Promoter Score
How likely is it that you would recommend our company/product/service
to a friend or colleague? (0-10)
%Promoters (9-10) - %Detractors (0-6)
 Quantity of consumer impressions
 Walk-ins = Number of customers entering the store

27. WHICH STORE WOULD YOU CLOSE?
KPIs STORE 1 STORE 2
Walk-ins 100,000 100,000
Conversion Rate (CR) 10.0% 7.5%
Average Transaction Value (ATV) $ 1,000 $ 667
Units Per Transaction 2.0 1.5
Average Item Price $ 500 $ 444
Annual Sales $ 10,000,000 $ 5,000,000

28. WHAT ABOUT NOW?
KPIs STORE 1 STORE 2
Annual Sales $10,000,000 $5,000,000
Average Pay per Click Cost $1.50 $1.50
Detractors (%) 50 25
Promoters (%) 25 50
NPS -25 25
Walk-ins 100,000 100,000
Store Media Value (SMV) -$3,750,000 $3,750,000
Annual Sales + SMV $6,250,000 $8,750,000

29. SHOPPING EXPERIENCE 4.0
 Total integration between the online and the offline
dimension: consumer-centric customer journey
 Interactive changing rooms and Smart Mirrors
 Contactless checkouts (Just walk-out by Amazon)
 Personalization of the shopping experience
 Curated shopping and Digital Assistants (Brand App)
 Tailored offers (Bluetooth beacons)
 Interactive displays and shopping tags to show product
information

30. RETAIL WORKERS
POST-
CORONAVIRUS

31. RETAIL
WORKFORCE
4.0
Digital and Data literacy across
every level and role
Automation of administrative and
repetitive tasks
Remote connectivity and smart-
working

32. RETAIL WORKERS: WINNERS AND LOSERS
Most promising jobs
1. Digital marketers
2. Social media managers
3. Data analysts
Disappearing jobs
1. Cashiers
2. Traditional Sales Assistant
3. Traditional Warehouse workers

33. STRUCTURAL
ISSUES IN THE
FASHION
BUSINESS

34. RISE OF SLOW FASHION
 Fast-fashion existential crisis
 Widespread criticism for the Fashion Industry pollution and waste
(92% of the items produced are not sold in the primary channel)
 Upsurge of No-season fashion items
 Growing concern for climate change among new generations are
making sustainable brands gain market share
 New Fashion Calendar
 Plans to realign collections with seasons in stores are already in
place (ex: Giorgio Armani)

35. NEW YEARLY
FASHION
CALENDAR

36. GIORGIO ARMANI’S OPEN LETTER
“The current state of things is absurd, with the overproduction of
garments and a criminal nonalignment between the weather and
the commercial season.
The decline of the fashion system as we know it began when
the luxury segment adopted the operating methods of fast
fashion, mimicking the latter’s endless delivery cycle in the hope
of selling more.
This crisis is an opportunity to slow down and realign
everything; to define a more meaningful landscape. It is also an
opportunity to restore value to authenticity.”

37. IS FAST FASHION
GOING TO DIE?
MY PREDICTION
As income inequality and the impact of the economic crisis
intensify, the polarization in our society will likely become a
polarization in customers behaviors
The working and lower-middle classes will rely on Low Cost
Retailers due to their shrinking purchasing power: the mainstream
consumers will buy from retailers such as Walmart while the
fashion consumerists will be the new customer base of the Fast
Fashion Retailers.
 Mainstream consumers: consumers with little to no interest in
fashion trends
 Fashion consumerists: consumers with an extreme interest in
fashion and desire to wear the last trend

38. LOW COST AND FAST FASHION
Mainstream consumers Fashion consumerists

39. IS SLOW
FASHION GOING
TO DOMINATE?
MY PREDICTION
The upper-middle and upper classes will become the customer
base of the Slow Fashion Retailers: the value thinkers will choose
brands that are both innovative and sustainable while the fashion
elitists will choose luxury brands that offer a form of responsible
luxury.
 Value thinkers: activist consumers with a digital mindset and a
strong set of values, mainly Millennials and Gen Z belonging to
the new middle-class
 Fashion elitists: consumers with an elevated purchasing power
that see fashion items as their main status symbol, mainly the
top-earners urban elite

40. SLOW FASHION
Value thinkers Fashion elitists

41. SO WHAT?
 The economic opportunities and the
willingness to sacrifice a short-term gain for a
long-term value will be the key factors to
determine how much market share Fast Fashion
will lose and how much Slow Fashion will win.
The middle class and the young generations will
shape the future of the Fashion Retail Business

42. HOW DATA-
FRIENDLY IS THE
RETAIL INDUSTRY?
The Qlik Data Literacy Index,
2018
The Retail Trade median score is
extremely low.
Besides, considering the traditional
adversity of the Fashion Retail
Business towards Data Analytics, the
picture becomes even more dramatic.

43. THE ITALIAN
RETAIL
INDUSTRY IN 3
DATA
CORPORATE
DATA LITERACY
INVESTMENTS IN
DIGITAL
LEVEL OF
FRAGMENTATION

44. CORPORATE
DATA LITERACY*
*The index is related to any
Italian Industries
The Qlik Data Literacy Index,
2018
The Italian median score is among the lowest measured:
only Spain and Japan have a lower score.

45. Only 1.5% of
revenues are
invested in digital
Revenues
Investments in Digital
Other expenses
INVESTMENTS
IN DIGITAL*
*The data is related only to
Top Italian Retailers
Osservatori Digital
Innovation Politecnico di
Milano, 2019

46. ITALIAN RETAIL INDUSTRY
 979.000 stores and restaurants in Italy in 2019
 In 2019 (before the Covid-19 epidemic), 8.330 stores have
been closed
The 300 Top Retailers control only the 6% of the market
Osservatori Digital Innovation Politecnico di Milano, 2019

48. THE WINNING ATTITUDE
Be Customer-
centric
1
Be Smart
2
Be Innovative
3

49. BE CUSTOMER-
CENTRIC
Your customer is both physical and digital: integrate every channel
and communicate a unified message!
 Click-and-collect
 In-store return of online purchases
 Online check of products availability in-store
 Online selling in-store
E-commerce needs physical operations and stores need to be
visible online.

50. BE SMART
Your customer wants both convenience and value.
 Smartphone and cashless friendly
 Small stores close to your customers
 Store focused on relations, digital commerce (E-commerce or
Social commerce) focused on transactions
 Division of store areas and segmentation of customers visits

51. BE INNOVATIVE
Your budget or your size are no excuse for resignation.
 Open-source/low cost solutions for Analytics and CRM
Access, Power BI Desktop, Google Analytics, Hubspot CRM
 Contactless experience for hygiene purposes
Cashless payments and Smart Mirrors
 E-commerce and Marketplace solutions for digital sales
Farfetch, Amazon, eBay or Proprietary E-commerce
 Strategic partnerships
Post offices, restaurants

53. SOLUTIONS FOR
A RETAILER 4.0
 Retailer App
 Smart Mirror
 Proprietary E-commerce
 Open-source/low cost Analytics and CRM solutions

54. RETAILER APP
“In today's competitive
landscape, a mobile
application is not just another
piece of technology for retailers,
it is a vital tool to engage
shoppers with their brand”
(Synchrony 2018 Digital Study)

55. THE ROI OF A RETAILER APP
BENEFITS
Incremental sales up to $2.300.000 in 18
months
(App with a user base of 100.000 users)
(Engaging the unengaged customer: The value of a
retailer mobile app, International Journal of
Research in Marketing)
COSTS
30.000€ - 40.000€
(Cost of development for a Retail Mobile App Like
Walmart)
(Apptunix, mobile app development company)

56. SMART MIRROR
”Overall, customers spend
less time in the store, and
buy more of what they try.
This has the added benefit of
reducing the time shop staff
spends returning unwanted
items to shelves and racks.”
(Universiti Putra Malaysia
UPM, 2017)

57. THE ROI OF A SMART MIRROR
BENEFITS
Up to 100% more customers visits
(Smart Mirror placed outside the shopping area)
(Analysis on the DPCM regarding restrictions on
store visits)
COSTS
9.000€
(Equipment and Service Fee)
(Magic Mirror)

58. E-COMMERCE
“An e-commerce store is a must-
have in order to increase sales
and build your brand. Your
customers are increasingly
browsing and shopping online,
and an e-commerce store will
keep you competitive, expand
your reach and allow you to offer
a better customer experience.”
(Software Advice tech
consultancy company, 2017)

59. THE ROI OF AN E-COMMERCE
BENEFITS
Survival of the Retail Business
(Must-have due to Covid-19 crisis and consumer
trends)
COSTS
Professionally-built e-Commerce website:
5,000€ – 10,000€
Domain name:
2€ - 20€ per year
Hosting:
300€ per month

60. OPEN-SOURCE/LOW
COST SOLUTIONS
Cost:
0€
Return:
Invaluable

61. THE BENEFITS OF A DATA-DRIVEN
STRATEGY
The effective use of data can determine up to 60% increase in
operating margin
The Data Science of Retail, Sales, and Commerce, Barton
Poulson

62. TIME TO THINK DIFFERENT

63. THE REAL LESSON FROM CHINA
“In the Chinese language, the word "crisis" is composed of two characters,
one representing danger and the other, opportunity.”
(JFK)
Which side are you on, Retailers?