LATEST NEWS (January 19, 2019) La Caisse Expands its Investment in Metro Supply Chain Group...More

Welcome to the inaugural edition of OurView: Apparel & E-Commerce! This is where we will be highlighting important happenings in the industry, breaking down consumer trends and demographic data and looking at ways to turn challenges into opportunities for our customers. So, grab a coffee, sit back, and enjoy our picks for the top newsworthy developments in the apparel and e-commerce sector.

Sector News

First up is Aritzia, where Brian Hill has regained the majority share voting power for the Canadian clothing company he founded in 1984. US private equity firm Berkshire Partners LLC has held the majority voting share since their 2005 investment in the company. During that time, Aritzia grew from 18 to over 80 locations in North America. While there has been no update on the transaction since the initial press release at the end of February, reports are that the deal closed in early March. Aritzia has posted 17 consecutive quarters of positive comparable sales growth, and we look forward to seeing the brand continue to grow under the direction of its Canadian founder.

Consumer Trends

In demographic news, a study by Environics Analytics and J.C. Williams Group exposes the online spending habits of Canadians and highlights growth opportunities. British Columbia tops the nation in e-commerce spending per household with $3369 spent online annually, closely followed by Alberta and Ontario. Quebec trails all other provinces with only $2336, well below the national average of $2748. Interestingly, ecommerce sales in Quebec are lowest among predominantly francophone areas such as Laval and Mirabel. Apparel continues to be a powerhouse in e-commerce, accounting for 20% of the market, while grocery has emerged as a growing market. As online offerings in grocery increase, revenues have tripled since 2016, with the market now valued at $6.4 billion. Canadian e-commerce revenue is expected to increase from $40 billion in 2018 to over $55 billion by 2023, providing good levels of opportunity for retailers.

Industry Challenges

Returns! They’re a growing challenge for most e-commerce businesses. Data indicates that online purchases are returned 3 times more frequently than in-store purchases. With over 50% of online apparel returned due to fit issues, research has primarily focused on improving true-fit technology. Bucking this trend, a new study out of Harvard Business School has placed a spotlight on a new sector of returns: opportunistic returns. Dynamic pricing has long been a mainstay of retail, but this research indicates that over 15% of e-commerce returns can be attributed to this pricing model. It was found that customers will continue to monitor prices after a purchase and will return the item if it experiences a price reduction within 10 days. In my opinion, this information alone is not enough to eschew a staple pricing model. However, it does present opportunities for companies to conduct cost-benefit analysis that incorporates the cost of returns alongside the increased revenue that dynamic pricing offers. There’s also an argument to be made
for offering a simple price-matching service after purchase, allowing retailers to save the transportation and handling costs that are directly related to opportunistic returns.

Alyssa Mosca
Metro Supply Chain Group