With the cost of producing clothing rising and consumer spending driven by recession fears, this is a very tough time to be in fashion.
Recent research has found that consumer interest in spending on “apparel, footwear and accessories” is the lowest it has been in years. Independent designers, already struggling to compete with the lowest prices offered by fast fashion, now have to do more to justify the prices and win over customers who are more careful about spending.
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First founded in New York City in 1930, Fashion Group International has gone through many different economic cycles when it comes to supporting and promoting an emerging fashion business.
Courtesy of FGI
Here’s what to do when retailers “buy less”
TheStreet spoke to current CEO Marian Greese about the challenges of doing so in this economy as well as what it takes to start and maintain a fashion business now. The interview has been edited for length and clarity.
TheStreet: What economic-related changes have you noticed in the fashion industry over the past year?
groats: Our retailers are buying less. Sales from retailers are down about 20% in the buying process going into the next season and so everyone is looking to work together (to cut costs). Collaboration has been a way for young talents to get out of the epidemic and an essential way for brands to be introduced to different markets. The war in Ukraine has certainly changed the economic landscape in many ways.
In May, FGI held its 27th annual “Rising Star Awards” and honored nine leaders in categories such as evening wear, casual wear, accessories and sustainability. What should people new to the industry understand about the way forward?
As artists, many creative people enter the industry because they love art, fashion, beauty, accessories, or textiles. Creating samples is how most people start their careers. The next very important piece is scaling. Once someone gets a few orders or a lot of orders, the business side really begins.
It’s usually that two to four year time period where the business is very weak. This is really where business acumen is very important (because) it’s nice to make 10-15 samples, but if a retailer buys 50 or 100, do you have that fabric? How do you manage their production, where is it produced, and the profit margin…? These are details that really need to be addressed when expanding which is why it is important for us as an organization to support this new business as it grows.
What are some things that one must be aware of in order to stay successful in the fashion industry in 2023?
There has been a lot of disruptions of economic scale and inflation. It’s an ever-changing landscape at the moment and everyone is trying to adapt to see where the new markets are. The retail landscape has changed for many years but through the pandemic many new distribution platforms have emerged. Instagram and TikTok and so on Instagram and many of these digital platforms that were only social are now closing business deals.
A very new and ‘very old’ way of doing business
How has the retail landscape changed in the past few years?
I see a lot of popups. Just look at New York City. Just because of the cost of real estate, pop-ups have been a way for both older brands and younger brands to really test the market but some stay longer. While this one-on-one experience is a very old way of doing business, brand owners are really able to talk to their customers and get feedback. These pop-ups are really very essential in getting information about how their products are shaping the market.
An old adage from the merchandising industry is to get the “product, placement, and promotion” right. This can come from the designer side or from the retail side. He’s trying to make sure you’re in the right place at the right time because he’s a moving target now.
So it’s a little more complicated than, “The mall is dead?”
What I see is that malls are becoming lifestyle centers. It really speaks to what people need right now in their lives. It is not just a place for shopping and placing stores but a lifestyle destination. For some it is an easy term (to understand and embrace) and for some it is more difficult but it really just speaks to the changing consumer needs and our lifestyle. The pandemic was a huge shock and not every business was able to adapt (…) but the goal is always to speak to and keep the most loyal consumer.