The regular promotions schedule that has long plagued fashion — and that U.S. consumers have come to expect — may be coming to an end. The reason: Among coronavirus’ impacts on the industry is that the culprits — off-season merchandise and an overabundance of product — are set to fall off in the move to a more thoughtful normal.
Fashion brands and retailers are largely holding or cancelling orders of summer collections, respectively, which typically deliver in April or May. Instead, they’ll hit stores in the summer months of June, July and August. In turn, fall styles will drop in September and October, in step with the start of the fall season.
“This should rectify what was a messed-up fashion calendar,” said Hillary France, founder and CEO of fashion business platform Brand Assembly. “If we’re shipping products in the month when people need them, it would help repair this set cadence of markdowns.”
What’s more, to eliminate liability that comes with retailers canceling and returning orders, many fashion companies are downsizing their collections. The major department stores have stopped accepting product since March, purchase orders be damned.
A fashion brand founder who asked to remain anonymous said that, if it were not for the company’s retail partners sending back styles, it would never offer promotions; the only items on its owned e-commerce site are retailer rejects — what they bought then returned after seeing low traction.
“When something’s not selling, the big retailers aren’t putting any marketing effort in,” they said. “They just dump it back into the industry, and that creates the really toxic ecosystem that we are all very familiar with.”
The Collected Group, owner of fashion brands Equipment, Joie and Current/Elliott, has cut the depth of its planned summer collections by one-third, said CEO James Miller; rather than robust assortments delivered every month for three months. Instead, the size of one of those assortments will be divided among the three scheduled deliveries to retain regular “newness,” he said.
The company, like many, is skipping the resort season altogether, which typically enters stores in October, November and December. Its fall collections, usually delivered in three monthly shipments, will not change in size, but will drop in six monthly shipments throughout the back half of the year.
“Coming out of this, there will absolutely be fewer brands on the shop floor, there will be lower units on the shop floor and there will be fewer customers in the store,” said Miller. “With all those factors playing together, there should be a natural methodology to going back to a sustainable full price-to-markdown ratio. It’s not going to change overnight, but it should begin to reset the way that the U.S. fashion industry works.”
Jess Brondo Davidoff, managing partner at crisis management company Sprezzatura, said one of the solutions she’s currently focusing on with brands is opening their eyes to which products are driving the biggest bottom line.
“Ninety percent of the companies we work with are going through some level of SKU rationalization,” she said. “We’ve cut up to 67% of their [products]; brands are just completely over-assorted.”
That includes pinpointing who a brand’s customers really are and what they’re buying, plus which of those products are most profit-driven. That’s determined by factoring in the discounts and performance marketing driving their sales, their rate of returns, and their cost of shipping and warehousing. Brondo Davidoff also considers what products first attracted customers with a high lifetime value; discounts may work to acquire first-time customers, but they don’t often keep them coming back.
Many brands’ survival plans include moving to streamlined assortments, with high sell-through at full price.
Miller referenced international markets, in which end-of-season markdowns happen just twice a year. “That customer is attuned to the viewpoint that a brand has integrity, stands by its price and also stands by its value. The [manufacturer’s suggested retail price] that goes out the door at full price isn’t built to be marked down; brands are not building additional dollars into their prices, because they know it will be marked down.”
Moving forward, across markets, he said the Collected Group won’t be delivering any products that are not seasonally appropriate. “Otherwise it just goes to perpetuate the already existing vicious cycle of markdowns, which has been most frequent over the last 12 months and that no one should be trying to fuel right now.”
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April 13, 2020 at 11:04AM
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‘Reset the U.S. fashion industry’: Why the vicious cycle of markdowns is set to expire - Glossy
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