Delivery Innovation in Apparel – Thematic Research
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Over the last decade, delivery methods have undergone fundamental changes driven by technological advancements, increasing competition, and rising consumer expectations. Many apparel retailers have been quick to re-strategize and restructure their logistics to find new ways to provide a convenient shopping experience to customers and gain their loyalty, while others have been slow to react and have fallen behind.
Though a handful of players started offering convenient delivery services in the late twentieth century, these services gained traction following the launch of Amazon Prime in 2005, which raised shopper expectations of fast and free delivery. The success of Amazon Prime has led to the introduction of similar delivery saver schemes such as ASOS Premier, Next Unlimited, JD X Unlimited, and boohoo Premier. Across the apparel landscape, this is a rapidly growing trend amid younger consumers, who generally shop more frequently for lower basket sizes. As with online delivery, retailers must maintain an awareness of their competitors’ offers and should look to be a first mover if there is limited activity from rivals.
Despite the many advantages that online retailers have, the rise of the online channel has created a rapidly growing issue – last-mile delivery.
Following the outbreak of COVID-19 many consumers shifted their spending from brick-and-mortar stores to online and are continuing to demand the fast and convenient delivery of products to their doorsteps. This has put significant strain on retailers and delivery companies working to fulfill last-mile deliveries. Last mile delivery refers to the final stage of supply chain operations and is often described as the most challenging phase of any supply chain. During the early days of the pandemic, traditional brick-and-mortar companies like Walmart struggled to cater to the sudden increase in online orders, despite 90% of Americans living within 10 miles of a Walmart store. Online retailers such as Amazon are generally better equipped to deal with last-mile delivery challenges thanks to their well-established logistics channels and distribution networks.
Consumer concerns over COVID-19 and the resulting shift to online have spurred retailers to invest in innovative delivery solutions to enhance their reach and cater to evolving demand with fulfillment options and short delivery times being of high importance to shoppers. While this was initially driven by the impressive fulfillment offer from a handful of selected companies (most notably Amazon), retailers across sectors are now shifting capital expenditure towards their supply chains.
What are the different trends for delivery innovation in apparel market?
The main trends shaping the delivery innovation in apparel theme over the next 12 to 24 months are autonomous delivery vehicles, Drones, automated warehousing, blockchain, computer vision, RFID solutions.
Autonomous delivery vehicles:
Autonomous delivery vehicles can lower the delivery time of online orders considerably as they can run and deliver products all day, unlike traditional deliveries that require human intervention. This includes restrictions that limit drivers to 11 hours on the road per day. Also, autonomous deliveries will help retailers reduce labor costs, as over 75% of shipping costs are related to labor in the US. The introduction of faster and cheaper deliveries will encourage shoppers to opt for home delivery services.
Drones:
There is potential for drone delivery in the global retail landscape. According to a GlobalData survey, more than one-third (36%) of UK consumers would consider receiving online orders by drone. The survey also revealed that the COVID-19 crisis has driven interest in drone delivery; 41.2% of those that would consider the service believe that it is more hygienic than receiving a delivery from a person. Anxiety over hygiene will likely persist post-pandemic, and this will maintain consumer demand for delivery methods with less contact.
Warehouse automation:
Warehouse automation has been a prominent way for retailers to streamline their supply chains for some time now. The use of robotics in order fulfillment processes has been intensified in recent years, with numerous retailers adopting the latest technologies that require minimal human intervention to offer fast and error-free deliveries.
E-commerce:
Across the board, the ecommerce channel has emerged as a winner during the COVID-19 pandemic, as it was the only channel that generated substantial revenue for many apparel retailers. Convenience and compulsion have been the defining factors of the ecommerce boom; people have found it easy to shop online and get things delivered during lockdowns, and those who earlier preferred to shop at physical stores (especially Gen X and boomers) were forced to adopt new digital ways.
Sustainability:
The popularity of organic and sustainable products will continue to grow. There has been a sudden spike in the number of retailers offering sustainable products to appeal to millennials and Gen Z. These consumer demographics are particularly concerned about climate protection and the general well-being of the environment, especially after the global pandemic. Retailers will have to re-align their delivery approach to keep up with consumer demands surrounding sustainability.
What is the value chain analysis of delivery innovation in apparel market?
The extended retail value chain consists of three major stages: manufacturer or processor, distribution and logistics, and retailers. Manufacturing begins with sourcing the right materials for production in the right quantities at a pre-determined cost. Considerations here include demand forecasting, supplier management, timely procurement, and product traceability. The next stages involve distribution and logistics, which is the movement of final goods to retailers’ stores or directly to consumers if they have ordered them via websites or apps. Distribution and logistics involve the systems of delivery as well as returns.
What are the key companies for delivery innovation in apparel market?
The key companies for delivery innovation in apparel market are Amazon, Magazine Luiza, Mercado Libre, Walmart, Ocado, Zalando, Majid-Al-Futtaim, Alibaba and JD.com. Amazon has been a pioneer in delivery and logistics, making it popular among customers and changing the delivery landscape, customer expectations, and forcing other retailers to speed up the pace of innovation. The company has been active in terms of mergers and acquisitions. In 2019, Amazon acquired robotics company, Dispatch, which specializes in AI, autonomous vehicles, deliveries, and robotics.
Key players in delivery innovation in apparel market
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Market report scope
Retail value chain stages |
Manufacturer, Distribution and Logistics and Retailers |
Key players | Amazon, Magazine Luiza, Mercado Libre, Walmart, Ocado, Zalando, Majid-Al-Futtaim, Alibaba and JD.com |
Scope
The report provides an overview of the challenges that have emerged, strategic responses undertaken by retailers, and the key winners and losers. It also covers the key industry, technology and consumer trends and outlines mergers and acquisitions associated with the theme.
Reasons to Buy
- This report identifies the important themes early, enabling companies to make the right investments ahead of the competition, and secure that all-important competitive advantage.
- Identify the key winners and losers in the global apparel industry.
- Better understand the key industry, technology and consumer trends that emerged during the COVID-19 pandemic and continue to affect all stakeholders in the apparel industry.
Magazine Luiza
Mercado Libre
Walmart
Ocado
Zalando
Majid-AlFuttaim
Table of Contents
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