The Great Fashion Reset: The Industry’s Future Post-Coronavirus by Simon Collins and Gary Wassner
Earlier this week, Omnilytics hosted a webinar featuring Simon Collins, co-founder of WeDesign and former Dean of Parsons School of Design and Gary Wassner, CEO of Hilldun Corporations and Project Runway: Fashion Start-up panellist.
Our topic? The fashion industry’s future post-coronavirus.
As the growing number of businesses shutter unemployment and furloughs rock the industry. Our two guest speakers agreed that with so much uncertainty ahead, the retail structure must evolve to cope with the ‘new normal’ as we navigate the aftermath of this crisis.
“There were changes that needed to occur in the industry for many, many years and this [crisis] is now the catalyst. We can’t avoid these changes” – Gary Wassner
Wassner, who has financed and invested in over 450 fashion companies for the past 40 years, shared his insights on what brands and retailers can do to ensure the survival of their businesses.
Underlying Issues in Retail
One issue that has long plagued the retail industry is the dynamic between vendors, brands and wholesalers. As Wassner points out, purchase orders which are essentially contracts, are not honoured as such. Buyers can purchase an exorbitant amount of merchandise, knowing they can charge it back to the brands if it doesn’t sell, resulting in a very unbalanced relationship between the two parties.
This has put immense pressure on small brands in particular, who have very little control over the destiny of their product once it leaves the warehouse.
Collins chimes that this overstocking issue stems from “an overreliance on calculations” in the merchandising and buying processes. Buyers were placing orders purely based on metrics without genuine consideration of the products or the target market, which does not work for fashion where an artistic approach is necessary.
Despite the turmoil between fashion’s biggest stakeholders right now, Wassner says the entire industry recognises the need for change.
“The relationship between brands and wholesalers – there is no question that has changed. Seasonality is a meaningless word at this point,” he says.
Wassner believes part of the problem lies in the rigid calendar that the fashion industry abides by. The current retail cycle involves brands producing and delivering collections three to six months ahead of its season. He explains that this practice is throwing off demand, as it forces products to be prematurely discounted before demand is built. Consumers no longer purchase products at full-price because they know it will eventually go on sale.
He continues, “Today’s consumer is a buy now, wear now consumer”, shopping habits have evolved greatly in the past 20 years and shopping according to the seasons is an outdated mindset. Fashion inability to break from this cycle is the reason why discounting is so rampant in retail. Collins adds his experience in merchandising proved “only 5% of the inventory would sell on full-price, while the bulk of everything was sold on discount”.
Both of our guests agreed that Q2 is an undeniably tough time for businesses. Wassner says “there is no spring collection right now and there will be no summer if stores don’t re-open”. The next few weeks will be dictated by promotions which he thinks is acceptable, as long as the next shipment is sold on full-price.
Business Continuity for Brands
Small brands, however, have a better chance of pivoting their strategies as they are less reliant on this cycle and have more freedom in deciding when to launch new products. At this stage, Wassner advises small brands to reduce overheads, SKU count and plan ahead to re-assort products. He adds that any unseen product in the warehouse can technically be considered ‘new’ and be integrated into the assortment regardless of seasonality.
“Go through your SKUs, highlight bestsellers and core products, find products that will be emotionally compelling,” said Gary Wassner.
Agility will be one of the areas where larger brands will be at a disadvantage due to the scale of their operation, but Wassner feels these brands have a better chance of weathering the storm. “Big brands that have a clear brand identity and DNA, who consumers buy for core products, will be fine.”
He continues, “brands built around core product, like Uniqlo, can choose not to launch any new products in the next two months… their inventory won’t die in the warehouse, it will remain valuable to a certain extent”. This has been proven true as data shows Uniqlo is scaling back on newness, especially in highly affected markets such as the US.
Wassner stresses the key to navigating this crisis is intelligent merchandising. For brands to survive, they will need to break away from the calendar and deliver the merchandise when consumers actually want it. This will eventually end fashion’s constant discount cycle and improve margins. He adds having a unique brand identity will also play a huge part in staying relevant against fashion’s increasingly homogenised landscape.
An example he brings up is Intermix, a chain of speciality boutiques owned by Gap Inc. The highly curated boutique carries an eclectic mix of young designers and high-end brands in medium-sized stores, assorted specifically for each location. Wassner says Intermix’s store sizes are the most ideal for post-pandemic shopping, where consumers can browse freely and comfortably.
Wassner is also advising the brands he finances to keep development costs as low as possible. He says a large chunk of a brand’s profit is wasted on creating samples that don’t end up being purchased by buyers. “Edit down your assortment to such a sharp degree that you’re confident it will sell… If only 30%-40% of your products are purchased by buyers, it means it’s a poor edit”.
He encourages brands to ignore industry expectations and do “what’s right for your P&L”, designers should not hesitate to scale back on assortment and reduce SKUs to improve profits.
The Future of Fashion Post-Coronavirus
“The future is going to be individuality – that is going to generate interest and full-priced sales. This is key to keep businesses alive and our industry sustainable” – Gary Wassner
Wassner emphasises the importance of small brands in the lifecycle of fashion, as they are the lifeline of creativity and innovation in the industry. “We need these small brands, even more than ever to create individuality, excitement and an emotional connection”.
He also urges brands to be resourceful and use the tools around them during this time, “the opportunity of access has never been greater and again, Omnilytics is one of the sources. It’s fascinating how much information you can get just by sitting an hour or two at your computer, but you need to utilise this information and come up with a plan to face these changes.”
To learn more about the insights shared by Simon Collins and Gary Wassner, watch the full webinar here.
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