Retailers attempt to solve dressing room dilemma as online sales rise

On a recent trip to fast fashion retailer Zara, 20-year-old Katherine Hearden donned tops, shorts and dresses in several sizes.

With Zara’s changing rooms still closed due to Covid restrictions, she knew she wouldn’t be able to try anything in this store. Instead, Hearden checked in and crossed the street with her father to another department store, where she grabbed a random pair of jeans and walked into an open dressing room. Her plan from the start was to use this store to try out her Zara choices and shamelessly send her father back to Zara to give him back what she wasn’t going to keep.

“My poor dad,” Hearden, a Boston College student, said in an interview. “We keep him waiting in lines everywhere we go.”

Hearden’s experience points to a greater dilemma that apparel companies have grappled with for years, but which was particularly illuminated during the pandemic. Retailers from Gap to Lululemon to American Eagle had to close stores to customers for several weeks last spring. And even when clothing stores began to reopen, many businesses still chose to keep dressing rooms closed, in an effort to prevent the spread of Covid. Some of them, like the one in Zara, remain closed in parts of the United States.

The headaches for consumers are somewhat obvious: not being able to try on items in stores potentially means stocking up on extra sizes, as Hearden did, to see later what works at home. Buyers tend to use a similar strategy when looking for clothes or shoes online – they will buy a dress in two or even three sizes – which has increasingly happened during the health crisis. For businesses, this chain of events is causing return rates to skyrocket. And that comes at a cost. With the Covid pandemic serving as a sort of wake-up call, retailers, including the nation’s largest, Walmart, are looking for ways to solve the dressing room dilemma.

Consumers returned an estimated $ 428 billion in merchandise last year, or about 10.6% of total U.S. retail sales, according to a study by the National Retail Federation. Clothing accounted for about 12.2% of that, the NRF said, adding that for every billion dollars in sales, the average retailer incurs $ 106 million in returned merchandise.

Justine E., a healthy recipes blogger named “@justine_snacks” on Instagram, recently used the social media app to express her frustrations with Zara.

“The locker rooms aren’t open so you automatically know you have to return SOMETHING, but when you return that thing you will. [probably] buy something else, and then you’re stuck in the ‘Zara loop’, ”she wrote.

Zara did not immediately respond to CNBC’s request for comment.

A survey of 401 U.S. shoppers by Coresight Research found that 42.4% returned unwanted products from March 2020 through March 2021, with clothing ranked as the most returned product category, nearly double the rate of ‘electronic.

Of the top 10 causes that Coresight identified in its survey as the reasons for returns, “bought just to try” ranked 7th.

According to Deborah Weinswig, founder and CEO of Coresight, the higher return rates specifically in the clothing category are likely exacerbated by the fact that many people first purchased clothing online last year. Consumers going to the mall had no choice but to surf the web. Online clothing and footwear sales rose 27.2% to $ 121.5 billion in 2020, according to data from Coresight.

“High levels of returns affect the profitability of a product,” Weinswig said. “The size, fit and color not meeting buyers’ expectations also results in return rates in clothing. “

Retailers are now looking to smaller start-ups that have been working on the technology for years to solve this problem.

3DLook, a mobile body measurement technology company, recently launched a new platform, called “YourFit,” which it plans to offer to more clothing retailers. It allows shoppers to virtually try on clothes and will make size recommendations based on user data. The technology aims to show customers what clothes will look like on them, in a virtual experience online or on a smartphone.

“Encouraging people to scan themselves… there’s definitely a lot of education involved with it,” said Whitney Cathcart, co-founder and chief strategy officer of 3DLook, in an interview. “It’s an emerging technology. Consumers are used to taking quizzes, and our goal from day one was to ask them as little as possible and allow this truly rich experience around fitness. “

1822 Denim was one of the first brands to incorporate 3DLook technology about two years ago.

Tanya Zrebiec, vice president of innovation and strategy at 1822 Denim, said the company’s return rates have fallen about 48% since partnering with 3DLook, while average order values ​​have fallen. increased by about 23%. Conversion rates are also on the rise, she said, meaning customers are shopping rather than abandoning a cart online or leaving stores empty-handed.

“There have been so many issues with the size and the fashion industry telling the consumer what she should wear, how she should look and how tall she should be,” Zrebiec said in an interview. “Most fashion companies never take into account the actual appearance of their consumer.”

Since the technology was added, 1822 has had a much better hold on inventory, she said. He knows what his customers will be looking for because he keeps a database of their sizes.

“It’s difficult to have every size of product for every consumer,” Zrebiec said. “So that also helps us tremendously with managing our inventory levels – and really understanding who our customer is, how big they are and how we can get the right product without having overage and inventory that just is wasted. “

One of the biggest votes of confidence in virtual dressing room technology has been from Walmart, which in May announced plans to acquire Israeli start-up Zeekit, in a bid to better serve customers who buy. clothing on its website. Terms of the deal were not disclosed.

When Zeekit’s technology is integrated into Walmart’s website, customers will be able to upload photos of themselves or choose from different designs that represent their size, shape and skin tone. The site will then show how the clothes will fit. Users can also share virtual outfits with friends for a second opinion.

Zeekit said its virtual dressing rooms reduced return rates by 36%. His previous clients include department store chain Macy’s and sneaker manufacturer Adidas.

“Virtual fitting is a game-changer and solves what has always been one of the hardest things to do online: understanding the fit and what an item will look like on you,” said Denise Incandela, vice president clothing and private labels executive.

Before people started using augmented reality apps to try on clothes, the virtual try-on experience was the most widely adopted by the beauty industry. Google launched an augmented reality beauty trial tool late last year, to help brands like L’Oreal, MAC Cosmetics and Charlotte Tilbury. Lip balms and eye shadows are much easier to replicate on a face over a mirror, experts say, than finding the right fit for an entire outfit.

Facebook is working on ways to use augmented reality to virtually try on items such as clothing, even when displayed in an advertisement. It could be an initiative that helps catapult the experience into the mainstream. This would follow Snap’s acquisition of sizing technology company Fit Analytics in March.

Amazon, which dethroned Walmart to become the nation’s largest clothing retailer, has jumped into virtual dressing room technology, but nothing has gained momentum. It seems more focused on how tech works in the home category. It offers a “View in Your Room” feature on its website, allowing customers to design a space with augmented reality tools.

Amazon may seek to increase its investments in fashion, following Walmart’s decision. Still, some consumers will probably still prefer a trip to a real walk-in closet.

“I would be skeptical about that,” Hearden said of using virtual dressing room technology for itself. “I always like to try.”