From sies marjan to dvf to michael kors, under the epidemic, the encounters of American fashion brands are different, but they all point to a problem: perhaps the fashion industry should really stop and think about what kind of environment can make more brands come alive.
NEW YORK, UNITED STATES — American fashion brands haven't had a good time lately.
Due to the financial impact of the epidemic, New York upstart brand Series Marjan will terminate operations. Diane von Furstenberg's operating conditions have also deteriorated dramatically, deciding to narrow its global business model to a "China-only digital" model. Michael Kors announced its withdrawal from the traditional Fashion Week schedule under the warning of profitability, seeking more time for reflection and advocating a healthier supply and consumption environment.
The size of these three brands, regardless of size, their respective business methods and market performance, finally make them have different opportunities, but they also reflect the survival status of some other American designer brands within the existing fashion system. The COVID-19 pandemic has blocked the cash flow of many brands and highlighted the challenges they face in business recovery and reopening, but is it really all their fault?
Last month, Belgian designer Dries van noten led a group of designers to write an open letter calling for changes in the way fashion delivery and discounts are executed. Then, another bof-driven proposal by designers and executives called for a radical "rewrite" of the fashion agenda, with the common goal of realigning inventory distribution closer to the current season, a move that could delay or even reduce the need for discounts.
Michael Kors is the latest brand to reinvent the fashion industry's system. "I've always believed that today's fashion industry system needs to change," designer Michael Kors said in a statement: "I was thrilled to see the fashion industry open conversation about the agenda, from giorgio armani to dries van noten, from gucci to yves saint laurent, to major retailers around the world, who were talking about how to slow down the process and improve the way we work." We will all have more time to reflect and analyze the status quo and issues as a result, and I think the vast majority of practitioners will agree with this resolution, and it is time to adopt a new approach for a new era. ”
Sies Marjan: The death of a new star
Some nascent independent designer brands clearly want the industry to grow more sustainably, so they have joined the array of reshaping the fashion industry's agenda. However, due to the imperfection of their business models and the rush of cash flow, many of these brands may not be able to survive the epidemic.
In a statement of termination released yesterday by Sies Marjan, its creative director Sander Lak said: "What we have done in the past has been like a dream come true, thanks to everyone who has dedicated their time and talents to Sies Marjan over the past few years. "It is true that the brand had a very bright future when it was founded.
After "graduating" from Dries van Noten five years ago, Lak immediately founded the personal brand. While the brand was still in its infancy, it was generously supported by billionaires Nancy Marks and Howard Marks, who opened up to them the former studio of Ralph Rucci, which housed some of New York's most skilled dressmakers. Sies Marjan's PR used personal connections to ensure that major fashion editors would be in attendance at the brand's New York Fashion Week debut, including Anna Wintour, editor-in-chief of Vogue, who rarely made her designer debut.
The brand also lived up to expectations, with its fashionable style and grasp of color, it became one of the most watched brands in New York Fashion Week, and even the media at that time called it a "luxury brand that turned out to be a luxury brand". At that time, sies marjan was undoubtedly a dream and unattainable starting point for other designer brands.
In a 2016 bof interview, Sies Marjan expressed a long-cherished desire to build a "real" American luxury brand. In the past, the more well-known brands in the American fashion industry were those that sold pan-categories, such as ralph lauren, tommy hilfiger and calvin klein. "It's impossible for today's brands to become famous the same way," Lak said, "and that opportunity may have arisen in the 1990s, but now the probability is zero." ”
Sies Marjan CEO Joey Laurenti and Creative Director Sander Lak
Five years ago, sies marjan, despite its abundant financial support, did not intend to achieve it overnight, and its plan was to slowly precipitate itself, developing only one category at a time. "We're just trying to get the right timing and pace," said joey laurenti, the brand's CEO, "and of course we have a way to adapt to a faster pace, but in today's impetuous environment, we don't feel like it's a wise decision." ”
But abundant money and a calm heart cannot support everything, especially in the face of the solidified fashion system. Many independent designer brands have tried to come up with new ideas and compete with those strategic large European groups, but the latter has long mastered the complete pool of collaborative resources, its network includes retail, marketing, procurement, production and talent, including all the fashion industry-side resources, and has built an unbreakable industry rule around its own advantages.
In contrast, the lonely series marjan has encountered a series of obstacles, and the brand has not been able to invest in a direct consumer-facing sales model, so it has been very dependent on large department stores. Its front foot had just reached an exclusive sales agreement with Barneys, but the back foot project was stillborn due to the bankruptcy of the department store. Moreover, with the depression of the U.S. department store retail industry and its abuse of discounts, the poisoning it brought to smaller independent brands became increasingly significant, and eventually exploded by the epidemic.
diane von furstenberg: If you don't advance, you retreat
Old-school designer brands like diane von furstenberg (dvf) are also at risk. The brand has grown over decades, building a distribution network in more than 100 regions around the world, with a total of more than 450 points of sale, and 86 DVF direct and authorized stores in North and South America, Europe, the Middle East and Asia Pacific.
During the pandemic, the brand slashed its product offerings, slashed costs and shifted from department stores to developing its e-commerce channel, but the brand's UK subsidiary, DVF Studio Uk, filed for bankruptcy protection at the end of May. After several rounds of restructuring, only one "core team" remains, with the remaining 75 percent of employees having been laid off, including brand CEO Sandra Campos and product vice president Holliday hofstatter. Brand founder Furstenberg said the layoffs were painful, but it had to. In addition, the DVF brand will completely terminate its operations in the UK and France, and close 18 retail stores around the world, and will focus mainly on its digital business in China in the future – digging deep into the market that is now the world's largest consumer of personal luxury goods.
The brand's founder Diane von Furstenberg realized the American dream in many people's hearts, and his first husband was the German aristocratic prince Egon von furstenberg, who immigrated to the United States in his 20s and founded the same name brand in 1972 and appeared on the cover of Newsweek in 1976. He also served as president of the Fashion Designers Association of America for 13 years and has mentored many up-and-coming stars, including Alexander Wang. Even such a legendary designer, almost representing American fashion, cannot reverse the fate of the brand being overturned by the times.
Counting the brand's historical achievements, it has already experienced a downturn since the 1970s. Since 1993, then-President Paula Sutter has complemented the brand's shoe, accessories and homeware collections, recreating the fashion lifestyle brand's performance in the early 21st century. However, DVF's performance has deteriorated in recent years, with its sales falling by half in the past 5 years. According to the 2020 Global Fashion Report – COVID-19 Update, jointly launched by Bof and McKinsey, the global fashion industry's revenue is expected to fall by 30% this year. However, the real reason for DVF's heavy blow is that it has been squeezed by the decline of physical retail and the pathological market model, and the epidemic is the final blow to it.
Diane von Furstenberg and first husband Egon Von Furstenberg
In fact, DVF has made a lot of positive improvements. As an old-school private brand that used to rely on brick-and-mortar retail, it has reduced the number of its direct stores from 32 to 19 in the past two years to save costs. The money saved was all invested in the e-commerce business, and some sources revealed to bof that the brand's direct consumer-facing e-commerce business recorded good growth.
But correspondingly, the brand also lost some important distribution customers, including department stores such as Bloomingdale's, Neiman Marcus, Saks Fifth Avenue and Nordstrom. The distribution business originally accounted for a large proportion of DVF's revenue sources, but the reduction in its distribution customers was not entirely due to the slump in the department store retail industry. A DVF employee who works in sales planning said the brand currently has only about 10 distribution customers in the U.S., and many wholesalers are reluctant to work with them because the products don't sell well.
DVF has always been one of the mid-to-high-end fashion brands, with products starting at about $200 and reaching as high as $1800. But in recent years, the brand's products have gradually been replaced by fast fashion and similar brands with faster paces. In this unprecedentedly crowded fashion market, DVF products are slow to update, the price of single products is too high, and it is difficult to attract consumers' attention under the current industry ecology. Sources said the brand's revenue this year is expected to be much lower than the $500 million announced in 2015, and may not even be $250 million.
The pace of commerce is accelerating, new inventory is piling up, discount dates are getting wider and discounts are getting bigger, but consumers are numb to these offensives, and distributors are excited. Even designers like von Furstenberg have struggled with canceling orders, delaying payments and overstocking. Especially today's epidemic, retailers have to rush to reduce the price of sales back and forth to pay rent and wages, let alone buy new goods.
Sources revealed that DVF has actually been looking for a buyer and is also considering licensing its brand name. However, when such a large and medium-sized fashion brand tries to transform, it will find that the expansion that has followed the pace of the industry for many years has made its business model very bloated, and the financing cost is quite high. Finally, it has shifted to self-reliance at the expense of shrinking its business model. As a designer and businessman, von Furstenberg has reinvented himself many times, and his different business models reflect the trajectory of the fashion industry, but it seems that it has not kept pace with today's fashion industry.
The current fashion industry agenda, which requires brands to spend months developing products before displaying and selling them, is now seen as one of the main issues that have hit brands' finances hard during the pandemic. The schedule forced the brand to offer products that didn't match the seasons, such as coats launched in the middle of summer and spring dresses in the cold winter. This rule was made before the arrival of e-commerce, but it is used unswervingly to this day, not to mention other technologies that make it faster and easier to develop and sell clothing.
Michael Kors: Waiting for an opportunity
As a large fashion company, Michael Kors has developed a good omni-channel business model with the blessing of its parent company, Capri Group, which is under much less pressure than independent designer brands, but it also inevitably warns of profitability. According to its fiscal third quarter report released in February, the brand's third-quarter revenue was $1.211 billion, down 5.1% year-on-year, and operating profit fell to $288 million from 3.2% in the same period last year.
As the pandemic has forced stores to close and shoppers to stop spending, billions of dollars of unsold inventory have forced brands to slash prices. Capri last month delayed the release of its annual earnings report and said the pandemic has and will continue to seriously impact the company's performance, expecting to lose $100 million due to the coronavirus.
Especially after witnessing so many brands parting ways, companies large and small are re-evaluating how they conceive, ship, sell, and promote their clothes. Michael Kors decided to cancel the New York Fashion Week launch schedule in September, planning to launch his Spring/Summer 2021 collection design later this fall, and reach a sales agreement with retailers before making it officially market-facing, thus allowing more time for supply chain operations.
In addition to this, the brand also plans to gradually deliver the product to the store, rather than adding a new full range in one go. This also gives consumers time to appreciate and digest the goods delivered in the fall without confusing them with too many items. Accordingly, the brand has also changed its annual fashion release schedule to twice a year, releasing only two collections, spring, summer and autumn and winter, in order to slow down the production process and better enhance the brand's creativity.
As Kors points out, the fashion schedule has been more in line with retailers' sales schedules over the past few years.
"Before the late 1990s, the New York Spring collection was on display from the end of October to the beginning of November, later than the Paris collection. This schedule has been around for decades and is running fairly well," he said, "and it's also important to re-recognize that September and March are key months for launching seasonal sales for consumers." This is when the fashion media can make a big splash, when the weather starts to change, and when people are ready to accept new collections and new products, because they can buy and wear them immediately. ”
"The brands were more vibrant at that time, and the industry had more exciting moments," Kors said.
Bof's editorial team in the U.S. also contributed to this article
Source: bof