Future of Commerce: A City View of Suburban Fashion Retailing

October 2021

Store-based fashion retail is heavily concentrated in city-centre commercial areas or shopping malls. Diminished footfall, because of both growing e-commerce penetration and hybrid working arrangements following the COVID-19 pandemic can support growth for suburban retail as an alternative. With fashion players increasingly tapping into hyper-local propositions, while experimenting with stores as micro-fulfilment centres, suburban retail can emerge as a post-pandemic winning strategy.

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This report comes in PPT.

Key Findings

City centre retailers face uphill task with less footfall

The COVID-19 pandemic disrupted work-life patterns by shifting millions of employees to remote working conditions. This subsequently led to some consumers swapping expensive city-life for cheaper and more spacious suburban areas.

Mass market brands have broad urban distribution

Luxury and premium such as brands Louis Vuitton and Nike tend to concentrate in affluent parts of city centres as seen in London, Paris and New York. They draw on their exclusivity, and are careful not to over-dilute their image - especially high-end luxury brands.

Luxury and premium retailers focus on city centres

Mass market brands such as H&M and Next focus more on delivering distributed spatial strategies. In London, Paris and New York, such brands have an extensive array of locations across the metropolitans, and cater to the demands of lower and middle income local consumers who lay emphasis on fast fashion and affordability.  

COVID-19 spurs consumers’ suburban shift

Less commuting into city centres, and fewer trips made my tourists, is reducing footfall in city centre locations. This is especially a worry for luxury brands which have a concentrated retailing strategy, and are dependent on a constant flow of wealthy individuals.

Cities concentrate fashion consumption

Fashion retail revenues and business strategies remain heavily reliant on city dwellers. This has been spurred by urban population growth and rising incomes which have continued to drive consumer appetites for discretionary spending.

Luxury spending is now taking place at home

The global pandemic has highlighted the negative social and environmental impact of current supply chains. This is fuelling demand for more sustainable and social practices which brands and retailers can no longer ignore, to remain relevant.

Domestic consumption in the spotlight

Already having one of the highest penetration rates for digital sales, at 28.7% of retail value RSP, global sales of apparel and footwear via e-commerce are set to further accelerate, given the compound effect of store closures and brands’ prioritisation of direct-to-consumer operations.

The digital-first mindset is part of the new normal

Pent-up domestic demand is turbo-charging recovery for fashion players although pre-COVID-19 levels of sales are not expected to fully recover until 2023. Brands and retailers need to adapt their product portfolios and omnichannel strategies to cater to the needs of local consumers and the increased time they spend at home.

Competing on social purpose and personalisation

Global sales of the luxury goods are already bouncing back strongly in 2021. Over half of revenues lost to the pandemic are expected to be recovered by 2022. Much of consumers’ spending on luxury goods is now taking place at home and giving birth of the new “locavore” luxury consumers.

Key findings (1)
Key findings (2)
Some industry leaders predict a shift to suburban retailing
Suburban growth drivers
Growth of suburbs offers new opportunities for business
The COVID-19 factor: Suburbs to grow in demand
Consumer footfall at retail and recreation points still lagging behind baseline levels
Lower mobility expected after COVID-19
Homeworking to open opportunities in suburbs and smaller cities
Suburban areas are large markets to tap into
London’s iconic luxury retailer Harrods bets on Suburbia for its stand-alone beauty stores
15-minute city move will spur greater localisation of services
Starbucks shifts from city centres to the suburbs
Pret a Manger is following it urban clients to the suburbs
Fashion consumption hyper-concentrates in big cities
Several US cities among the largest consumers of clothing and footwear worldwide…
…but cities in Asia Pacific are catching up
Chinese cities to double clothing and footwear consumption by 2040
City-level performance across fastest growing emerging markets
Major cities are an important anchor point for major brands
Leading players focus efforts on global mega-cities
Dutch sneakers brand Filling Pieces opens fully experiential flagship store in Amsterdam
LVMH plans to re-attract international luxury tourists to La Samaritaine , its iconic department store in Paris
London: Major retailers
Major retailers with a concentrated spatial strategy in London
Major retailers with a distributed spatial strategy in London
Paris: Major retailers
Major retailers with a concentrated spatial strategy in Paris
Major retailers with a distributed spatial strategy in Paris
New York: Major retailers
Major retailers with a concentrated spatial strategy in New York
Major retailers with a distributed spatial strategy in New York
Spatial distribution differences will impact sales performance of retailers
Comparing business strategies
Challenges to overcome
Become tomorrow’s next leader

Apparel and Footwear

Apparel is the aggregation of clothing and footwear. This dataset covers retail sales of apparel through both store-based retailers and non-store retailers. Excludes black market sales (i.e. untaxed, generated within informal retailing)and duty free sales (travel retail). Items must be new when sold to the consumer; second-hand/used items are excluded. Antique and/or vintage clothing and footwear is also excluded.

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