The Fashion Industry Still Fails Emerging Brands
With brands stuck in a rut, unable to adapt quickly to cultural shifts, new media, and innovation, and the industry standing by, the time has come to chart a course that leads to new success.
This article is part 3/12 of The Next Big Bang: The Brand Universe Solution to Growth, the inaugural research thesis by edition+partners, distributed here on SOTA. In the ever-evolving landscape of brand development, the concept of a Brand Universe emerges as both a tangible entity and a strategic methodology, offering a dynamic approach to brand survival and growth.
In last week's second edition of our comprehensive 12-part report, we looked at the three eras that made up fashion’s evolution over the decades.
We started with The Golden Age of Brand (1950-1990), a period which was characterised by a growing middle class, the emergence of ready-to-wear, and an expanding international market. Once fashion became mass, a new era was ushered in. The Mainstreamification of Fashion (1990-2010) saw the rise of masstige brands, the birth of the luxury fashion group, and the e-commerce boom. Most recently, we’ve witness The Birth of the New Luxury (2010 - 2020), a defining period in the global fashion industry where luxury embraced streetwear, collaborations took over, and traditional institutions and authorities across the board were challenged.
More than a trip down memory lane, these eras take us on a journey into the past that illuminates our understanding of the present at a time when we’re on the cusp of the start of another era. Let us explain.
An Industry Tipping Point
Clothing brands are among the companies that are most likely to fail in their early years. According to Statistic Brain, just 47% of businesses in the retail industry still operate after the first 4 years of operation. In 2023 alone, brands once widely celebrated by the fashion industry including Raf Simons, Christopher Kane, and Julien McDonald all shut their brands.
Many smaller brands are expected to follow this year with payments from wholesalers, which represent the biggest chunk of income for most emerging brands, come in later then ever, competition is increasing, and production and import costs continue to climb.
Many of the brands who were considered early adopters of new platforms, aesthetics, and systems in the last New Luxury era over the past 15 years have become complacent and lost their competitive advantage as a result. Indeed, the dynamics of change, innovations, and shifts in consumer behaviour that were once considered groundbreaking in their respective eras must now be considered as baseline fundamentals for brands.
While each era has seen brands emerge stronger than the era that predated it — with an increasingly global, influential, and authoritative presence on culture — the rapid pace of societal transformations, which once unfolded gradually over years, is now occurring at an unprecedented pace. It means that consequently brands striving to excel in the crowded fashion landscape must maintain unwavering vigilance.
Despite the continued dominance of industry giants, the well-trodden path to brand growth in the fashion world is displaying signs of wear and tear, necessitating a more urgent call for change than ever.
“Up until three years ago, there were so many brands that had this growth on digital ads that had nothing behind it. They could skip ‘brand’ and still grow. But when the dust settles, you see how it really is,” says Andreas Palm, co-founder of CDLP, a Swedish design house known for its sustainably made luxury undergarments.
At the crux of this changing era lies a truth that for nearly two decades, emerging brands from New York to London to Paris have followed a traditional growth template that emphasises vanity metrics at the expense of solid business practices and sustainable growth. Their journey, which often starts in fashion and art schools where little real-life business experience is imparted, has left many young designers ill-prepared for the harsh realities of the industry.
A Total Guard change…
Yet, by no means is the lack of growth in most of these brands the sole fault of the founders themselves. From the industry press, buyers, fashion councils, venture capital and private investors, and various sales and press agencies, which for too long have misguided young designers, there is often a lack of long-term support, education, and strategic guidance that helps future-proof these businesses they publicly claim to support.
Where some succeed at lending a helping hand, most don’t have the best interests of young brands at heart, extracting value from hopeful, young creatives and prioritising the bottom lines of their own businesses yet give little security back, until the next wunderkind with their fresh-out-of-school nascent label emerges.
“While support systems for designers from CFDA/Vogue Fashion Fund or the LVMH Prize are well intentioned, they are supporting an outdated system. In order to sustain and develop businesses — to once again birth top brands that captivate the consumer — it’s time to audit the approach,” Lauren Sherman wrote for The Business of Fashion back in 2017. Seven years down the line and the industry has yet to find this new approach to brand growth.
For brands themselves, critical areas such as hiring, processes, merchandising, sales channel mix, supply chain management, finance, branding, marketing, legal matters, and business expansion often come at the expense of pure creative expression in the form of blockbuster big fashion shows, marketing activations, and brand campaigns often unspokenly requested by buyers and press, and urged on by sales and PR representatives. Too often these shiny affairs leads to financial exhaustion within just a few years.
An All Time High Pressure
The pressure to create a name for oneself already start at the very beginning of the food chain when students are still in art school. It’s no surprise that 87% of fashion students say that anxiety created by high personal expectations, big financial burdens, and a debilitating fear of failure is affecting their creativity, according to a 2020 report by 1Granary, the well-respected educational publication and platform that supports emerging talent find creative and commercial success early on in their careers.
Olya Kuryshchuk, 1Granary’s founder and editor, questions the pressures that are put on emerging brands to become global powerhouses from the get go by agencies, press, and the designers themselves. “We need to think about why we need to help brands grow? Which brands deserve this support? Why do they exist in the first place? What’s the industry’s motivation? Is growth always a sign of things going in the right direction? Is all growth beneficial, and who benefits from it?” she tells SOTA. “[Most of all] how does this continuous quest for growth affect everyone in the industry and the world in the long term? We should start with these questions over the next five years.”
On the flip side, brands that have managed to achieve significant scale have done so by adhering to traditional business techniques, to their benefit. But while these fulfil a need in consumers’ lives, the formula that’s allowed the brands in the past decade to become mass has become formulaic, often lacking the human connection, the ability to react in real time, and cultural relevance that the new generation of consumers seeks in brand as a result.
Like in many creative sectors, within the fashion industry the critical issue at hand is the outdated nature of growth formulas, which have been crafted and upheld by the old gatekeepers and followed by those aiming to gain a glimpse of success. These formulas and middlemen are no longer equipped to meet the evolving demands of the fashion landscape, both for consumers and brands alike. This disconnect has reached a boiling point today.
More than ever the challenges to brand growth include market saturation, high price points that don’t align with consumers’ expectations, overreliance on wholesale leading to profit margins and loss of direct consumer interaction, a disconnect between creative inspiration and everyday wearability, cash flow issues and a lack of business acumen, the misallocation of resources and focus, and an absence of customer loyalty. Many brands are stuck in a rut, unable to adapt quickly to cultural shifts, new media, and innovations. The industry stands by and does little to help.
To overcome these challenges, burgeoning brands of all sizes must redirect their focus towards more customer-centric, innovative, and culturally relevant strategies that will shape the brands of tomorrow. The time has come to chart a course that leads to new success and put the brands back in control. For 2024 and beyond, a new brand building framework must be considered. We’ll be releasing our proposition from next week.
Next Tuesday, in part 4/12 of The Next Big Bang: The Brand Universe Solution to Growth, we at last arrive at the full introduction of our Brand Universe framework which we expand upon in the weeks that follow.