Director of E-Commerce
Roger Graell Sole currently serves as the Director of E-commerce for fashion label, Mango. He has over 15 years of experience within the E-commerce space having worked at companies such as Redcats and Lastminute.com. Roger is also currently an associate Professor at the ESIC Business & Marketing School in Barcelona where he lectures in digital business models.
Section 1: Immediate Impact
1.1. Within Mango, what did online consumer purchasing habits look like pre-COVID?
Well, I think that in terms of what was offered, it was quite similar. I think the fashion sector in particular has been one of the major sectors of E-commerce. However, what has been created during the last year, is that this trend has been accelerated heavily. To be honest, I think we need to be transparent with different countries, because I think they’re all different. There are countries like US or UK, or South Korea, where they have E-commerce that already has significant penetration. Then there are other countries like Turkey or Saudi Arabia, where they’ve had to start from scratch with the pandemic.
1.2. What has been the immediate impact of COVID-19 on online consumer purchasing habits during this pandemic period?
Of course, there are differences in terms of the fashion styles that customers are buying; that has most definitely changed. Customers are not buying going-out clothing anymore, it’s more casual clothing. So, the purchasing habits are different in terms of the types of clothes they buy. Of course, E-commerce has played a fundamental role in increasing this transition pace more than ever. However, in terms of the overall behavior itself, I think that the behavior is also much different. Footfall, of course, in the city centers, or the city malls, has dropped heavily as more customers are doing internet shopping because of the pandemic. As lockdowns come in and shops close E-commerce grows in strength.
In terms of customer spend levels, all spend behind clothing has had a significant drop. Certain consumer reports talk about a 10% to 20% drop in the spending behind clothing during this year. Of course, E-commerce has been able to capture some of the unserved demand that we’ve had in the physical stores, but it doesn’t compensate it completely. To have a picture before the pandemic, E-commerce had found approximately 15% of the fashion and clothing sector. Now, during this year, online shopping has significantly increased towards 50%. So, there’s inquests into what’s going to happen with the physical stores in 2021.
1.3. What have been some of the challenges around altering e-commerce purchasing processes during COVID-19?
Logistics has been a challenging topic recently because of the shutdown of the pandemic, especially as well taking the consideration of the restrictions on the movement of people during this as it has been and back in May. I think back in April, May, the biggest challenge was how would the industry do it. It’s true that in most of the countries this issue is already gone, because the mobility restrictions impact the E-commerce supply. So, then I will say that, from a professional point of view, E-commerce is not bad for fashion or for clothing. It’s not especially challenging, because the products that we sell can arrive one day earlier or one day later, but it doesn’t matter; we are not selling fresh food. So, I think that all the supply chains and the systems behind E-commerce for clothing works relatively well, either before, during, or after the pandemic.
A proper challenge is that for certain fashion companies, we don’t have these digitalization processes advanced enough. Though we are challenged, I think there are certain companies that didn’t bet heavily for E-commerce in the past and, of course these companies are the ones that are suffering the most now.
Just to name one simple example, it’s companies like Primark. They have not been operating on E-commerce before for their own reasons, but they were hit harder by the pandemic because of this and their lack of E-commerce capabilities in the short term. So, I think that one of the challenges for many of these companies was to pick up quickly this economic opportunity, it was that they were able to mediate the impact of the pandemic itself.
1.4. What have been some of the unexpected e-commerce success stories during this pandemic?
I think there was an unexpected success of everything related to sports clothing such as socks and bra hooks, they were growing more than ever, which was really unexpected. Then, in certain countries, to be honest with you, the pandemic really accelerated E-commerce far more than I expected. To name a few, I would talk about Saudi Arabia or Italy and France. There were countries where everything was prepared to become relevant for E-commerce, but for different reasons it didn’t happen, and the pandemic definitely kick started this.
If we compare the UK to one of these countries, I think that the UK is a country that has been relevant in E-commerce for a long time. Far before the pandemic, their E-commerce was a reality and impacting heavily on the customer behavior in terms of buying from home. Especially in the UK, I think it’s a very interesting country in terms of clothing E-commerce because all the actors there have been developing their E-commerce capabilities almost from the beginning of E-commerce.
When you think about people operators in the E-commerce sphere, you compound the retailer brands, and the UK ones have been acting in E-commerce for a long time. Department stores, I think the UK is the exception, because it’s one of the few countries where department stores were investing on online from the early days of E-commerce, so that’s why companies like John Lewis, became relevant on E-commerce. Then, on top of this, you have some full players like Next, which is very strong online. They have been evolving their business as well for years.
On the other side, if we think about Italy, it is a very old-style country in terms of E-commerce, where, fashion labels are strongly built off of brands in the streets and it is very walking oriented. Here, city centers and malls are relevant, and people like to socialize on top of this. So then, E-commerce was not as strong as it was in the UK. However, the reality is that, now with the rise of the pandemic, it is true that Italians are switching quickly because of the cluster-at-home mentality. From a technological point of view, they relied a lot on buying online. It’s true that they say that the challenge with Italian brands is that they do not double-up in terms of what E-commerce offers, but eventually they will pick up soon.
Section 2: Lasting Impact
2.1. What will be the lasting impacts of COVID-19 on online consumer purchasing habits?
I think to summarize 2020, what the pandemic brought to E-commerce was an acceleration of the E-commerce presentation by three years. E-commerce was growing their share for the last ten years now, and what helped it was this pandemic, which has pushed this trend forward faster than ever. So, we’ll be obligated to try and make this E-commerce an opportunity and I think this is really going to be impactful. With all the implications of the acceleration that E-commerce has now, this potentially will make less footfall in the malls and shopping centers, potentially because the spending budget of people is not increasing. E-commerce has accelerated the penetration, and of course this is a part of implications in terms of the way we build businesses, the way we run stores in the physical world.
That doesn’t mean that the stores will be very strong, because there will not always be stores, but it’s true that it has some implications in terms of rent, in terms of footprint that you should have in certain countries. So, I think it’s just an acceleration of what was happening before. Of course, when it happens suddenly, the impact is stronger than when it happened slowly.
To be honest, it’s hard to get the full data of the customer’s spend because, my one theory can be that it’s not that the customers are less loyal to their brands, it’s that they’re spending less on clothing because they have less need to buy clothing. So, I think we will see the impact on loyalty once everything gets back to normal. Now, it’s really early, it’s complicated to have this full visibility of loyalty on your own brands, especially if you have an E-commerce business.
I think this question has the most complicated answer, because there is a big question mark over what’s going to happen with the physical stores, so I’m not sure it will recover the levels from pre-pandemic or not. Now, with the pandemic, what we have estimated is that we have accelerated the involvement of E-commerce maybe three or four years so we’re having a grow rate that was a certain grow rate, and with the pandemic we still have this grow rate three or four years ahead.
I think we will not go back in terms of E-commerce in regression because as I mentioned customers have tried it, they like it, and so many of them will remain or, at least all of them will be more open to buying E-commerce again in the future. So, I think that this E-commerce transaction will remain as high as it was in 2020. In 2021, 2022, this grow rate will not slow down because we will have been going so fast on 2020 that it’s going to be hard to keep a high grow rate. However, there is still going to be certain growth and I think E-commerce will be here to remain.
2.2. How will Mango look to further optimize its e-commerce channel for the future?
I will say that, there will definitely be more investment allocated to E-commerce in general now, not only on marketing but as well in terms of exclusive, this is 100%. In terms of employees, I’m sure it’s going to be a big switch from brick and mortar to E-commerce now and, that will level off to favor E-commerce. In terms of market investment, I think that the offline channel was profitable, and I think it will be there to stay again because, I think it’s not always easy to build a brand exclusively online.
I think it will be like the E-commerce transition we have seen this year. We have here an increase of E-commerce transaction. At the same moment, we have seen an increase of the marketing spend behind digital which has been very accelerated, and I think it’s going to be the same for the coming years. We will keep spending more on digital, but this share will not grow as fast as it did in 2020 however, it will slowly grow in the next few years.
2.3. How will consumer demographics towards online purchasing change?
There have been differences within the demographic of the online customer. However, I think that one of the things that the pandemic brings into the E-commerce is that the older people as well have joined the E-commerce shopping. We have more older people than any other sector shopping online. So, I think that young people have always been very active on E-commerce but now I think that this pandemic has helped it a lot to accelerate the impression of older people buying online. The reality is that all these younger generations get older every year and will definitely be back more as older people buying online in the next few years.
2.4. How will long-term consumer marketing strategies change due to the shift towards e-commerce?
There is definitely going to be a rise in increased spend around digital and social media advertising in the very short term after the first shock of the pandemic. I think, when the pandemic started back in middle of March, all brands, without exception, stopped doing any sort of advertising campaigns. We stopped investing, we stopped spending any money at all because it was a challenging situation and that was a first reaction.
However, this stoppage didn’t stay for long because we realized very quickly, after less than a month, that the pandemic hit us at, that E-commerce was becoming active, and because people were not allowed to walk on the street, E-commerce was still there to bring clothes to the customer. Once the situation, in terms of cash flow for companies stabilized, thanks to this temporary reduction of employees or thanks to keeping the E-commerce business working, we realized that E-commerce presents an opportunity for us to capture this demand that wasn’t happening offline.
I think most of the companies as well, including ourselves have switched all the marketing budget into the online, in particular we can talk about social networks. As well, we can talk about search engines, or we can talk about in general online advertising. This is the right channel to invest money to keep the customer loyalty as high as possible during these strange times we are living in. So, I definitely think that, most of the investing was switched to online. I guess at some point things will go back to normal, and the offline marketing spaces will exist again.