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Can e-commerce take over retail spaces?

With luxury designers like Zaheer Abbas preferring to open an e-store to an on-ground retail outlet, Instep explores if the demand for e-commerce can eventually diminish the need for retail spaces

Can e-commerce take over retail spaces?
(Above) Designer Zaheer Abbas recently launched a very visually appealing e-store to cater to both local and international customers.

Pakistan’s continuing demand for fast fashion and ready-to-wear has compelled fashion designers to leave the comfort of their studios and open exquisitely furnished flagship stores across the country, offering creative creations right off the rack. This has not only relieved customers of the hassle of booking studio appointments for an outfit but has also pushed designers to think in terms of business and volumes apart from just artistic creativity.

While the burgeoning market for fashionable ready-to-wear has motivated designers like Sania Maskatiya and Zara Shahjahan to branch out onto the high street, the truth is that mass crowds can only be spotted during sales period. Unfaltering economic issues have forced customers to become more hesitant in overspending whereas increasing costs of setting up a business means a young designer cannot expand physically beyond a certain point. In this case,it may be important to note the growing popularity of online shopping.

According to Zahir Rahimtoola of Labels, retail expansion suffers from the lack of a transient population that can be better tackled by embracing e-commerce as a business model. “Pakistan is poised for a substantial e-commerce growth simply because it doesn’t enjoy a transient population hence the only way to grow business is through the e-commerce route,” he suggests while speaking to Instep.

Lahore-based designer Zara Shahjahan opened a retail space in Karachi, earlier this year, to tap into the city’s demand for fashion.

Lahore-based designer Zara Shahjahan opened a retail space in Karachi, earlier this year, to tap into the city’s demand for fashion.

Over the years, the world has seen a significant growth in online purchases making fashion and apparel only the second largest sector of e-commerce following electronics. With around 3.17 billion Internet users for whom buying clothes online has become second nature, fashion brands around the globe have the opportunity to expand their target market beyond their physical reach. And now with luxury labels like Chanel and Burberry, who have been notorious for refraining from progressing into e-commerce, also dipping their toes in the e-market by launching online shopping platforms that sell more than just cosmetics, it can be safely said that the world wide web has revolutionized the business of fashion as the desire to shop online grows by 19% per year globally.

It seems Pakistani consumers are no different. “Internationally the brick and mortar ratio to e-commerce business is 20%. However in Pakistan we have witnessed much higher percentage of e-commerce growth in comparison to physical retail. One simply needs to look at current statistics to see that the future of the fashion business lies in e-commerce. Market estimates place the e-commerce business anywhere from US$25 million to US$ 1 billion annually. This is expected to grow to about US$ 6 billion in the next five years,” revealed Rahimtoola. “There are 30 million internet users which make it an approximate 15% density and is growing month to month. An interesting fact is that there are 15 million fashion-related Facebook fans and these numbers are growing by the day.”

It is no wonder then that more and more designers are tapping into the online market. Designer Zaheer Abbas, who has long been at the receiving end of criticism for being one of the most inaccessible designers, recently launched his swanky new e-store giving customers across three different continents a chance to hang his designs in their wardrobes with just one click. Visually appealing and detailed in the variety that it offers, Zaheer’s website has to be one of the most customer-friendly and haute in design amongst his contemporaries. Apart from giving users a 360-degree visual of the outfit, it also has the option of buying one in different currencies.

When asked why he chose to open a website instead of a proper retail space, he said, “We wanted to go for an e-store because our label has a very international appeal and it seemed like a good idea. E-stores are far more transparent than stockists. Customers can buy the outfit for the exact price while sitting at home and don’t have to be fooled by stockists quoting a higher price. Plus you cannot open a retail store everywhere; it’s just not feasible.”

It sure isn’t given the rising costs of operation, squeezed profit margins and undying utility expenses. However, while a viable option and one with a wider reach, e-commerce also doesn’t come without challenges, the first and foremost being sizing. An e-store purchase does not guarantee that the outfit bought will fit properly. According to international studies, between 20 to 40 percent of all clothing purchased online is returned, often due to issues with the fit of an outfit. This can in turn be a costly business transaction for the designer, as it not only results in lost revenue but also lost overheads associated with shipping.

“There will always be a need for physical stores. For lower end or commodity products people may increasingly switch to shopping online locally but for high end, luxury fashion women prefer to try on the options. Hence majority of our sales are in store locally where as the e-store is more popular with international clients,” asserted Umair Tabani from Sania Maskatiya.

Sania Maskatiya’s flagship store in Lahore designed by Y’oca is the third in her list of stores across Karachi and Lahore.

Sania Maskatiya’s flagship store in Lahore designed by Y’oca is the third in her list of stores across Karachi and Lahore.

With e-commerce is fast becoming the bigger piece of the pie despite having drawbacks of its own, can it really completely take over physical presence? No yet; at least not in Pakistan. Even though reports hint towards a growing global trend of customers flocking to the internet for shopping, a recent survey reveals that currently Pakistan has only 20% Internet users compared to Europe and North America’s 80%, which may be growing but is still minimal – the reason why physical sales still dwarf online ones. The best strategy then becomes to navigate between the two, for now.

“Designers will have to go back to their drawing boards to build a business model that is based on high-end prêt and bridal wear in store with the inclusion of e-store for both local and international clients as this is the most profitable segment of the business of fashion in Pakistan,” Rahimtoola suggested.

As per Forbes, designers can no longer rely just on the ‘Build, and they will come’ notion. As much as it is understandable that Pakistani fashion urges that women make a conscious effort to first try on the outfit, a handful of simple clicks are more appealing than covering the distance only to not find the desired item on the rack. Moreover, the limitation of location means only a certain population of customers is offered the privilege of a shopper’s experience while you miss out on the rest. E-commerce means identifying and penetrating these newer markets; markets that are far from one’s reach, hence it’s best not to downplay its impact. It’s time to re-engineer a model that includes both online and physical presence until future evolution requires one to rethink again.

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