With inflation hitting a new high post-pandemic, off-price retail is increasingly becoming a growth avenue for the fashion sector, says a new McKinsey study titled ‘Mastering off-price fashion in an omnichannel world.’ The segment is growing faster than the fashion market, indicates the survey done on 11,000 consumers in 10 European countries.
The market is estimated to grow five times faster than regular apparel market between 2025 and 2030. Most of the growth will be pushed by the increasingly strong online presence of off-price retailers like TK Maxx, the European arm of TJ Maxx, as per a Women’s Wear Daily report. Katharina Schumacher, Digital Expert and Co-author adds, accounting for 40 per cent of the off-price market, online sales are growing at around 13 per cent annually. To add new customers, brands need to master off-price fashion in an omnichannel world, adds Schumacher.
The study also reveals, off-price shoppers, interested in luxury, affordable luxury and premium categories and active on specialized platforms like Dress-for-less, BestSecret, Brands4friends or Scarce, spend 2.3 times more on their purchases than other groups of fashion customers. For example, around 30 per cent customers in Germany spend more than €1,000 year on off-price fashion. These buyers are willing to pay the full price for premium and luxury brands, explains Achim Berg, Global Leader-Apparel, Fashion and Luxury, McKinsey & Company. Fashion companies should therefore, carefully weigh which products they offer off-price, he adds.
Felix Rölkens, Co-author, McKinsey says, shoppers’ expectations from off-price outlets are also growing. They now expect amenities like sales staff who speak several languages, restaurants and a good customer experience, from these stores, he adds. To fully capitalize on this growing opportunity, brands must adopt a multipronged strategy to maximize revenues for both channels, and secure their brand equity, Rolkens says.
