Off-price retail is increasingly becoming an important source of growth for the fashion sector as inflation has hit a high post-pandemic, the new study from McKinsey titled “Mastering off-price fashion in an omnichannel world” revealed.
According to an analysis of global data on the off-price market and a survey of 11,000 consumers in 10 European countries, it appeared that this segment grew faster than the fashion market as a whole, and it was hit less hard during the pandemic.
McKinsey estimated that off-price retail will likely grow five times faster than the market overall between 2025 and 2030. A key pusher behind the growth is the increasingly strong online presence of off-price retailers. Even T.K. Maxx, the European arm of T.J. Maxx, has drastically increased online offerings during the Covid-19 lockdowns.
Other online models that have taken hold include flash sales, done by players like Dress-for-less, Limango, Veepee and Zalando Lounge; mystery boxes from start-ups like Heat and Scare; and the more traditional sites that offer a standing assortment of fashion items, such as BestSecret, Booztlet, Brands4friends, Otrium and Yoox.
Katharina Schumacher, a digital expert and coauthor of the study, said: “Online sales account for 40% of the off-price market and they are growing extremely fast right now — about 13% annually, on average.”
She added that mastering off-price fashion in an omnichannel world will be key for fashion companies to “have their brands reach new consumers who would not normally consider making a purchase at the full price,” and to sell their excess stock more sustainably.
The study also revealed that off-price enthusiasts, who are interested in products in the luxury, affordable luxury and premium categories and do their shopping on specialised platforms like Dress-for-less, BestSecret, Brands4friends or Scarce enjoy comparing prices and spend 2.3 times more on their purchases than other groups of fashion customers.