A recent ominous sign that market share is up for grabs in the high-end retail shakeout:
"Lots of brands can go direct and all will go direct to consumers at some point. ... We will see more European and Asian groups take back the resale business. Buying previously owned is viable. Brands like Gucci and Chanel are viable and will have pre-owned themselves and may take out the higher end of the sector. Brands can do it so no one gets counterfeits, and they get money and preserve the brand. It will be perfectly acceptable and profitable.
But he thinks the industry remains a long way from the AI that will make the biggest difference in terms of customer satisfaction and profit margin. On the supply chain side of things, technology is advanced, but in terms of transactions and location data and browsing data that allows retail companies to personalize the shopping experience so well it increases sales and decreases cost, such as returns, "the AI data is not there yet," he said.
I think consumers are saying it's OK to take something that's been idle in someone's closet and buy it. They understand that's got to be better than to keep producing everything new.Younger shoppers not only care about how their clothes are made, but the impact they're having on the environment once they get rid of them. Resale — and, in fact, the whole circular economy — extends the lifespan of an item.
Longer-term, Pedraza is bullish on the return of luxury buying. "We will be dressing up again, at some point. The way we went, athleisure ... my working hypothesis is that handbags and other accessories will be desirable. There is a feeling that we won't be back to normal dressing up and going out. It may become less prevalent, but it will still be popular," he said.
It could be even worse for a start-up, though: they could be Rent The Runway. With the need to rent high-end apparel and accessories for events like wedding no longer a part of most people's lives,its business on digital, closing all of the physical stores it had expanded into. It laid off staff early in the pandemic and cut investment spending, but it also has raised more capital since March, though at a lower valuation. "That business is nowhere. It needs a new model.
Eat the rich Cuz they are eating the poor.
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