Sorting out the Business of Fashion report
Earlier this week, Business of Fashion and consulting firm McKinsey & Co. jointly released their State of Fashion 2017 report. The purpose of the report is to try and make some sense, connect the dots so-to-speak, of a fashion industry that is too large to report on cohesively on a daily basis. If fashion were its own country it would have the world’s seventh largest GDP, encompassing everything from luxury wear to crew socks.
While the full report, which you can download here, is a whopping 92 pages, what I want to focus on today is a list on page 13 titled: 10 TRENDS THAT WILL DEFINE THE FASHION AGENDA IN 2017. They’ve made the list short enough to fit on one page, but I want to take those trends, expand a bit, and maybe even give some of them a bit of a Hoosier twist. There’s a lot to dig into here, so let’s get busy.
1. INTENSIFYING VOLATILITY
What the report says: Volatility is the new normal. Geopolitical instability, terrorism, Brexit, and stalled trade deals will all increase a pervasive sense of uncertainty in the global economy.
Our take: Volatility may be an understatement. We’ve not even begun to see what the ramifications may be of a new US president and administration that is overly protective of American jobs, anxious to add taxes to companies that move overseas, and quick to add tariffs to imports. On one hand, this could aid US garment manufacturing which has struggled to compete with cheap shops in Bangladesh and other Asian countries. However, American workers are demanding better wages which the new US Labor Secretary isn’t keen on providing. There’s also a chance that we see OSHA’s powers diminished under the new administration, which could make working conditions more dangerous.
Put it all together and I don’t think one is overstating anything to call the atmosphere volcanic.
2. CHINA’S COMEBACK?
What the report says: China’s fundamentals, including growth of the middle and upper classes, remain strong and the government’s new fiscal policies are expected to improve conditions in 2017, but uncertainty remains.
Let’s define some of that uncertainty, shall we? Fashion loves the Chinese market and the rise of a luxury class across that country is what kept many of fashion’s biggest names from going under during the 2009 recession. However, even before recent political events muddied the waters, we were starting to see a pulling back from China’s wealthiest buyers. China’s government is looking to develop their own fashion industry so that they can keep more of that revenue at home. At the same time, as Europe and the United States become more protectionist and wary of international tourists who might also be corporate/industrial/political spies, frequent travelers from China are finding themselves facing increased scrutiny and suspicion.
Combine that with tensions rising in the South China Sea and the president-elect breaking protocol by contacting the president of Taiwan, and the stage is set to see China pull back from the West in a dramatic way should they be offended.
3. URBAN ENGINES
What the report says: City-based strategies trump country-based strategies: a new class of rapidly growing wealthy cities in newly influential markets are becoming central to the evolution of fashion.
The change has come subtly. We no longer talk so much in terms of French, Italian, or British fashion. Instead, we talk about the cities themselves. London, Paris, Milan, New York, Istanbul, Buenos Aires, Los Angeles, Sidney, Toronto, and even Moscow are all major fashion centers with more being added to the list. While the “big four” still dominate, designers and major labels are already beginning to pay attention to some of the other cities. Chanel has shown in both Istanbul and Buenos Aires. Tommy Hilfiger’s next show will be in Los Angeles.
What this ultimately means is that there are more players in a field growing broader than it ever has before. This could be a great thing for consumers as they have more choices. However, it is difficult to tell whether this kind of growth is sustainable.
4. SHREWDER SHOPPERS
What the report says: Working harder to keep up with smarter shoppers: “always-on” consumers are becoming ever more sophisticated, more technology-driven, and harder to predict.
Everyone loves a bargain and increasingly people are unwilling to spend any money unless they feel like they’re getting a deal. This is affecting the industry in a couple of different ways. One, it is setting up a discount tier in retail that is unsustainable and unrealistic. The entire outlet mall concept is costing labels millions of dollars and threatens to sink some major names if not curbed. At the same time, it is pushing a few retailers to break the law. The Los Angeles district attorney has charged four major stores—JC Penney, Sears, Kohls, and Macy’s—of misleading shoppers. According to the DA, the stores are claiming that clothes are discounted from a price at which they never sold in the first place. So, the bargain one thinks they’re getting isn’t such a bargain after all.
Now, with Amazon getting into the fray with their own brands, expect the discounting to take even more of a toll. American shoppers especially largely refuse to pay full price for anything. This makes belts at fashion houses and retailers quite tight.
5. GENERATION CORRELATION
What the report says: Opportunities to serve the young and the old better: fashion companies should consider how to fine-tune and diversify the way they approach both retired and millennials consumers.
What we’re looking at generationally isn’t really anything new. Younger generations buy because they want to look conteporary in their choice of styles. Older people buy because they have more disposable income and can afford nice things. What’s happening now, though, is a magnification of those trends. Younger people have extended lines of credit at an earlier age. Clothing is a major expenditure for those under the age of 25 but they’re careful about what they spend so they can buy more. Older generations secure in their retirement are looking for luxury purchases at a rate that far outspends their parents. Both have the ability to be dramatic wins for fashion labels.
However, fashion labels are failing to generate the loyalty that keeps them profitable long term. Especially as millennials get older, they are less likely to stay faithful to the brands they shopped when they were in college. Labels have a considerable challenge in more firmly addressing these sections of the market.
6. THE WELLNESS DIVIDEND
What the report says: Feeling good is the new looking good: more fashion players can start profiting from the wellness movement rather than competing with it.
Like it or not, fitness wear is the dominant sector in fashion, across the board, in almost every country. As a result, we see Chanel blending fitness fabrics in with their tweeds and other labels making strategic partnerships with athletic footwear companies. The ability to look good while working out as well as immediately after working out has drive sales of athliesure wear to the top of the charts.
This trend shows absolutely no sign of slowing down anytime soon. Interestingly enough, though, traditional athletic brands are not always reaping the rewards as traditional fashion labels move into the sector. While big names like Nike and Under Armor are seeing strong profits, smaller brands are having difficulty competing as names such as Ballenciaga and Prada hit the shelves in sporting goods stores. Amidst all the growth their looms an inevitable shake out between winners and losers.
7. CHANGING THE RHYTHM
What the report says: Disruptions to the fashion cycle: expectations set by the faster pace of fashion and consumer desire for instant gratification must be addressed to deliver fashion immediacy.
See-no, buy-now is here to stay, despite heavy opposition from both Parisian and Milan labels. The fahion cycle we once knew is gone. Also gone at an increasing rate are separate men’s and women’s shows. Designers are frequently opting to put both in the same show to save both time and money. This past September was the first big experiment with such a disruption and those who participated enjoyed significant rewards. As a result, we can expect more labels to fallow suit.
At the same time, consumers are demanding new fashions coming at them faster and faster. This is where things get dangerous. In order to produce more at less costs, garment manufacturers are turning to sweatshops and child labor in dangerous settings that frequently border on slavery. While both government and retailers having taken steps to prohibit child labor specifically, increasing demand makes it easy to skirt around the laws and the inspector. As long as demand remains high, labor issues will continue to be a problem.
8. ORGANIC GROWTH
What the report says: Investing more to nurture local clientele: 2017 has the potential to be the year of organic growth based on deeper relationships with existing clients rather than geographic, channel, and store network expansion.
Check your wallet. How many consumer loyalty cards do you have? Almost every major retailer has some form of customer retention program that involves sales, discounts, and other incentives to keep you coming back. What you can expect in the next year is for those programs to get more aggressive and more competitive. They know they’re not the only card you’re carrying. What they’re vying for is to be the one in the front of your wallet, the one you rely on the most.
There’s an opportunity here, though, for smaller designers and boutique shops. Local shops already know more about their customers, or, at least, have that opportunity. Mining those relationships so that customers stay local could give small shops and designers an advantage. Consider having special events to introduce frequent customers to new merchandise, or working with other shops near you to create bundled deals. Pampering customers has never held more opportunity than it does now.
9. UPSTREAM TECHNOLOGY
What the report says: Digital innovation goes behind the scenes: digitisation is a key to supply-chain efficiency, lower procurement costs, and enhanced sourcing opportunities.
You probably won’t see any of the digital logistics changes taking place within the industry, but you reap the benefits in lower prices. Everything from fabric development to inventory control benefits from increased efficiency in backend systems. Your purchases are immediately factored into how much of the same material is manufactured, when new orders are placed, and even where garments are placed in the store.
Nope, not the most romantic aspect of fashion at all, but this is where money is saved to pay for those dicounts we keep demanding. What is looking on the horizon is the ability to walk into a store, try on a pair of slacks, and walk them right on out the store. Amazon appears to be the current leader in that technology, but as it all comes together we could see even more innovations.
10. OWNERSHIP SHAKE-UP
What the report says: Emotionless reappraisal of brand portfolios: fashion conglomerates can be expected to further intensify their focus on big brands, creating space for other brands and industry outsiders such as private equity and family owners to acquire targets.
This is another part of the fashion industry that doesn’t get a lot of attention except in industry mags such as Business of Fashion and WWD. This is important, though, because it gives emerging designers a chance to be seen. When investors sell a brand, they can then use that capital to help younger brands become established. With fashion institutions churching out more young designers every year, this turnover of capitol is necessary for anyone to succeed.
2017 holds a lot of promise, but it also holds a lot of challenges. The winners will be those who step up to the challenges and take advantage of the opportunities.
So, the question would be: are you up to the challenge?
What is #tiedtogether
A new movement is underway in the fashion industry
The Short Version
Digital fashion magazine Business of Fashion (BOF) introduced the #tiedtogether campaign this week, just in time for the ready-to-wear fashion season. Its aim is to provide a focus point for unity and inclusiveness by asking people to wear white bandanas.
A Little More Detail
There’s not a whole lot more to write on the matter. BoF’s own #tiedtogether page is rather brief and void of too many details. The movement is in response to the significant silence on the part of the fashion industry as a whole regarding recent world events, such as the US travel ban and the impact of more nation-centric trade deals. Fashion brands must have a global presence to be successful, but things such as travel limitations and high import fees/tariffs can not only strain the business side of fashion but create animosities between people from different countries.
Few fashion brands have bothered to say much about political situations for fear the backlash might hurt business. While there was some dustup last month regarding which designers might dress the new First Lady of the United States, most companies have chosen to not take a stand. The most notable exception is Levi’s, the denim jean maker, which signed on to an amicus brief for the US 9th Circuit Court of Appeals opposing the travel ban.
BoF’s movement is admirable, to be sure. With the world seeming to fray at the edges, it would seem that we could do with a little more unity and inclusiveness. The question is whether people are actually interested in either. The distance between political ideologies is extreme and in many camps, unity is seen as a compromise that favors the evil of the other side and inclusiveness is pretty much the same as fraternizing with the enemy. The strength of the #Resist movement is an example of the challenges to finding or creating a global sense of unity around most any topic.
Fashion is not immune from politics and the question designers and labels face now is how much of their personal attitudes and feelings to allow into their work. Under previous circumstances, the conventional wisdom has been to keep the two separate. However, there are some notable exceptions to that rule, the most obvious probably being Dame Vivienne Westwood and her strong stand for environmental causes. Much of the rest of fashion, however, prefers to remain quiet.
#tiedtogether did get an important endorsement last night as all the models walking in the Tommy Hilfiger show on Venice Beach were wearing white bandanas imprinted with #tiedtogether on their wrists. Even the designer had one tied to his belt loop as he made the finale walk. If BoF can convince other designers to incorporate the concept into their shows in a similar fashion, the idea might have a chance of catching on, at least as an accessory idea.
Still, we’ve seen this type of movement before. Just because people wear a bandana, or a plastic bracelet with a certain inscription, or a given set of beads, doesn’t mean that they actually subscribe to the philosophy behind the symbol. Wearing every white bandana in the world has little effect if the people wearing them do not genuinely believe in unity and inclusiveness across the deep chasm of political divide. The white bandana risks becoming just another fashion trend with no real substance behind it.
What’s missing in this movement is an example, someone or something that demonstrates what unity and inclusiveness mean in the fashion world. If we’re talking racial inclusiveness, which has been a problem for fashion shows, then seeing more diversity on the runway would be a good start. If we’re talking about gender inclusiveness, then the trend toward mixed men’s and women’s show is a start, but seeing more transgender models on the runway would be a significant step forward. Size diversity has been a significant issue, but only a handful of designers have done anything on that front. There are options and those options have always been there. The industry has been frequently criticized for not embracing those options before now. Are we to expect that a white bandana can be the thing that makes a difference?
BoF is certainly trying hard to get as many designers, editors, models, and bloggers on board as possible. Just getting industry insiders to understand and sign on to the concept is a herculean effort. While we applaud BoF for taking the initiative in starting this campaign, however, we remain skeptical of any real change. We’ve seen other campaigns for inclusivism before and watched as major designers totally ignored them. We will be watching carefully to see if a white bandana can actually make a difference.
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