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Unveiling the Transformative Retail Landscape of the Latin American Fashion Industry

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Fatima Linares Bio

The Latin American fashion industry was hit hard by the pandemic, but following two years of strong performances, sales have returned to pre-pandemic levels. The retail environment has changed as a result, and e-commerce is the clear winner of this transformation. Consumers in the region initially shifted to online shopping due to store closures during the pandemic, but later were attracted by the convenience they found in this channel. However, back to normality, they are keen to return to offline stores, questioning the potential of e-commerce moving forward.

Latin Americans prefer offline stores to purchase fashion items, but online shopping remains above pre-pandemic levels

According to Euromonitor International’s Voice of the Consumer: Lifestyles Survey, Latin Americans’ preference for physical stores when purchasing apparel and personal goods is the highest among global regions, as 75% selected offline as their preferred channel. “See or try before buying” and “immediate purchase” are the main motivators to buy in-store for 44% and 41% of these consumers, respectively.
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Stores closures pushed consumers to shop online during the pandemic, and some of them continued to do so despite the greater level of normalcy. During the pandemic, “immediate purchase” was among the top three factors for consumers shopping for fashion online, but in 2023, and with stores fully operational, its relevance dropped by almost six percentage points compared to 2022, to just 28%.

Over 35% of consumers selected “best price” and “free shipping” as the main motivating factors to shop online in 2023

Source: Euromonitor International

Convenience is also relevant for Latin Americans, as “ability to order at any time/anywhere” and “ability to access site on different devices” are key factors for 30% and 21% of consumers, up 3.5 percentage points and 2.5 percentage points from 2022, respectively.

Fashion shopping post-pandemic, wherever and whenever consumers want

The pandemic caused channel shifts in the regional fashion industry, with e-commerce benefiting the most. This channel was already the fastest growing over 2016-2019; and its explosive growth since 2020 turned it into the second largest channel with 13% of overall sales in 2022. The pandemic accelerated the growth of e-commerce in the region by at least five years, and now that consumers feel comfortable buying online, it is expected that the positive trend will continue, although growth will moderate. Diverse online strategies have captured the attention of Latin American consumers, with social selling the most accepted as shifting to WhatsApp, Instagram or Facebook to buy their fashion items is the fastest route to online shopping.

Transformative Retail Landscape Chart 2.svgIn-store sales through the other two largest channels for fashion, specialists and department stores, were the most impacted by the pandemic and the e-commerce overtake. Specialists’ share dropped from 61% in 2019 to 59% in 2022, while department stores fell two percentage points to 9% in the same period. In response, these retailers developed or strengthened their omnichannel strategies, which in some cases, helped them to offset the declines in their physical stores.

Post-pandemic, consumers were keen to return to physical stores, but their expectations, and the role of these have consequently changed.

60% of apparel and personal accessories companies worldwide plan to “build out more experiences in stores to elevate the brand experience”

Source: Euromonitor International’s Voice of the Industry: Retailing Survey 

60% of apparel and personal accessories companies worldwide plan to “build out more experiences in stores to elevate the brand experience” signalling how stores will play a key role when interacting with the consumer moving forward.

Over 25,000 specialist stores permanently closed over 2020/2021, but the channel returned to invest in the region in 2022, and over 9,000 new stores were opened. So far in 2023, and despite the challenging macro environment, announcements of new stores opening have continued, confirming the industry’s trust in the region’s potential.

Operators of department stores, on the other hand, are expected to continue investing in developing their online channels to compensate for the sales drop in physical stores, while turning the latter into touchpoints where they can connect and engage with consumers.

Omnichannel is essential, but it is just the starting point

After the boom in e-commerce, it is evident that omnichannel is no longer optional for those competing in fashion in the Latin American market. However, if omnichannel becomes the norm, what should brands and retailers do to attract and keep consumers engaged?

Retail channels have turned into a holistic and integral network that must be focused on creating value for consumers. Manufacturers should see retailers as partners and work with them to make sure their brands fulfil their promises throughout the shopping experience. Retailers, on the other hand, should find ways to stay relevant during this experience, which does not end with the purchase.
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According to Euromonitor International’s Voice of the Industry: Retailing Survey, almost 96% of regional companies consider “improve customer experience” as the top strategic priority for the next 12 months to five years.

Personalisation, seamless online and offline integration, in-store experience, mobile experience, social commerce, digitalisation, sustainability and DEI, loyalty programmes, gamification, data-driven insights, and transparent and continuous communication are only some examples of ways to engage with consumers, but most important is to understand which of these are relevant for their target audience.

Omnichannel is just the beginning. Fashion players should make their decisions with consumers’ needs in mind, leveraging technology, and understanding that nowadays their role goes beyond the pure transactional aspect of selling goods.

Learn more about Retail, Fashion, and Latin America in our reports, Retail Shifts in Latin American Fashion, and Building Brand Loyalty in Latin America.


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