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PA IN THE MEDIA

Apparel retailers try lending clothes to draw in shoppers

James Taylor, retail expert at PA Consulting, comments on retailers experimentation with try-before-you-buy concepts.

Read the full National Real Estate Investor article here

The article notes that many US apparel retailers are located in regional malls, and they blamed sluggish mall traffic, the weather and unsuccessful promotions for the dismal first quarter. Yet retail experts say it’s not necessarily that consumers aren’t buying clothing; they’re just shopping differently, and some apparel retailers aren’t keeping up with ever-changing consumer tastes and shopping habits. Some haven’t invested enough in their omni-channel strategies.

Lululemon is offering a new perk at the flagship store, which allows customers to take a workout class in the gear that they’re considering buying so they can test it out first. The pilot program is free of charge for select Lululemon merchandise.

James says: The “try-before-you-buy” concept is part of a more experience-focused approach to retailing. The move will likely help increase sales, particularly sales of higher-priced items as consumers move away from fast fashion and are increasingly looking to purchase better quality—often more expensive—items that will last longer.

He adds: “It makes sense that consumers would want to try before they buy and confirm whether it is the right purchase for them.” Brands like eyeglass company Warby Parker pioneered this approach in offering customers the opportunity to try five frames at home before committing to a purchase online. Further, the growth of Rent the Runway demonstrates that consumers are less interested in purchasing items that could potentially be for single use.

He continues: “This kind of strategy also encourages consumers to try lesser-known brands as it reduces the risk of them being disappointed with their purchase.”

However, this strategy requires that consumers be already interested in purchasing the products from the brand in the first place.

Experiential is a smart move

James continues: Lululemon’s new store is right on trend, providing an exceptional brand experience that gives consumers a broad range of reasons to visit the store. “It also provides a great testing ground should Lululemon want to broaden their offering into new categories.”

H&M is the latest retailer to launch a buy-now, pay-later payment program that it hopes will persuade customers to spend more money at its stores. The program starts this fall in the United States.

Consumers will be able to keep an item for 30 days before deciding if they want to keep it long term. Then they can choose to split payments into four interest-free installments over two months. There are no fees to use the service. H&M joins Urban Outfitters and Abercrombie & Fitch, which launched similar programs. Retail experts say it could be a way to attract younger shoppers who have less buying power.

James says: “Buy now pay later” can help increase revenue as it reduces the barrier to purchase for consumers, allowing them to pay in interest-free installments. It can also drive conversion and reduce the need for discount sales. “Improved sales figures reduce inventory, and therefore, the need to discount, which improves gross margin." 

However, it’s not all rosy.

James continues: “It’s unlikely to increase the share of wallet spent on apparel in the longer term. In fact, paying installments will reduce buyer power in the longer term. For example, paying off over multiple months means that you have less to spend on clothes the following month.”

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