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As Covid-19 continues to spread, forced store closures and a collapse in consumer demand have dealt a huge blow to the global fashion industry. Among the most vulnerable in the fashion ecosystem are the thousands of labels that emerge, which are small-scale, enduring cash flow problems and a large dependence on wholesale orders from third-party retailers means that the foundation of their business is shaken even in the best of times.
The UK is a hotbed for young design talent, in part because it is a world-class fashion school. Now, the British Fashion Council (BFC) estimates that if nothing is done, 35 percent of the labels that appear in the country will fail before the end of the summer. By the end of the year, 50 percent of the British fashion sector could be destroyed, according to the BFC, sinking a large number of young businesses.
The situation is similar in other markets, because retailers – they themselves are dealing with zero sales and possible collapse – cancel orders and extend payment terms, starving brands, who often operate season-on-a-cash basis for less than a few months, from the income they need to survive.
As a source of equity and debt financing is also drying up, the government has announced an emergency loan for small businesses. But in practice, getting access to this funding proved very challenging. Bureaucratic hurdles are exacerbated by the high demand, because lenders who have been accredited by the government to distribute loans are flooded. Then, there are obstacles such as forcing company directors to personally guarantee loans.
Trade groups like BFC and the American Fashion Design Board (CFDA) do what they can. On March 27, BFC, through a charity, launched the BFC Foundation Fashion Fund for Covid Crisis, a fundraising initiative for designer-owned small fashion businesses based in the UK, starting with £ 1 million (around $ 1.2 million) of money grants that are reused. Meanwhile in the US, Anna Wintour and CFDA Chair Tom Ford have reused CFDA / Vogue Fashion Fund to launch A Common Thread, a program that offers grants for small fashion businesses. To date, the initiative has raised more than $ 3 million in donations, including $ 1 million from American fashion giant Ralph Lauren. But such efforts, while noble, are not close enough to stem the bankruptcy crisis faced by a whole generation of young fashion designers.
Maybe there is reason to hope. Despite being hit by consumer confidence, e-commerce has become a relatively bright spot in the retail landscape that has been destroyed. Millions of people have flocked to tech giants like Amazon, which has seen huge demand for online shopping services since the crisis began, adding to its share price.
In fashion, online sales have declined 5 to 20 percent across Europe, 30 to 40 percent in the US and 15 to 25 percent in China, according to Coronavirus update to The State of Fashion 2020 by The Business of Fashion and McKinsey. “If there ever was time for a digital turbocharge, now,” the report said. “The closing of the global pandemic from offline retail channels has pushed digitally incompetent fashion companies to the brink.”
Unfortunately, most young fashion labels don’t have strong e-commerce channels. More often than not they depend on wholesale relationships with people like Net-a-Porter and Matches Fashion, who themselves suffer greatly from the crisis.
For its part, Amazon, which in 2018 took over Macy’s position as the biggest clothing seller in the US, has long tried to establish itself as a credible destination for high-end fashion, spending hours trying to convince designer labels to sell their products through the site. and sponsors everything from Met Gala to Tokyo Fashion Week. Just two weeks ago, the company aired “Making the Cut,” a luxury fashion competition organized by Heidi Klum and Team Gunn that offered contestants the opportunity to be in front of millions of viewers and sell their clothes on Amazon, not to mention the opportunity. with a prize of $ 1 million.
Now that young designers around the world are facing existential challenges, can Amazon come to the rescue, build platforms and related funds to support the world of independent labels in trouble, connect them with millions of digital consumers and quickly establish themselves as one of the world’s top fashion destinations in the process?
Farfetch, a luxury market that connects consumers with a global boutique network – and, increasingly, brands – is possible seems well positioned to make a move like that. But only Amazon really has the scale to do something like this with stacks of more than $ 40 billion, not to mention hundreds of millions of active customer accounts, collection of spending data and its ability to optimize almost every part of the supply chain puzzle, from management supplies to warehousing, which will be a big boost for young labels.
A relatively small amount for Amazon would easily shrink emergency funds so far raised by people like BFC and CFDA. And the tech giant should be able to make young labels sell on Amazon relatively quickly through existing market platforms. To be sure, Amazon’s lack of curation, gentle aesthetics and the utilitarian user experience have has historically been a barrier to gaining high fashion credibility. But the company has built one of the highest-performing e-commerce platforms in the world and can no doubt optimize part of the experience to make it more conducive to fashion.
The Seattle-based giant can take pages from Chinese platform fashion strategies such as Alibaba’s Taobao. For years, the term “Taobao brand” was a mocking term, because the platform was not considered suitable for a respectable label. But times have changed. The Chinese brand Babyghost, whose co-founder Joshua Huang is Amazon’s contestant “Making the Cut,” has built a very successful business behind Taobao and, more recently, the site of his higher sister, Tmall, who is jointly responsible more than 80 percent of total sales. And during lockouts, fashion labels on the platform continue to drive sales, making use of certain innovative functionalities such as live streaming and video chat.
To be sure, delivery of food and other household needs is very important during this locking period. But Amazon Founder and CEO Jeff Bezos is known for thinking long term. Now is the time to make a bold game to support young fashion labels that will pay dividends and accelerate the ambitions of the giant e-commerce’s old fashion.
– Vikram Alexei Kansara
MODE, BUSINESS AND ECONOMY
Gap Inc. cancel summer and autumn orders in response to a pandemic. The US retail giant is asking for suppliers stop shipping orders and stop production for the fall, taking drastic steps to reduce the impact of the widespread retail lockdown. The company, which includes Gap, Banana Republic, and Old Navy, is already in a more dangerous position than some of its competitors.
Tiffany said Australian regulators needed more time to review the LVMH agreement. This delay is due to a coronavirus and plague push for the closing of the agreement, which is expected to be completed by mid-2020. This acquisition was completed by the US Securities and Exchange Commission in late March, while a draft submission was submitted in Europe. Tiffany said it still aims to close the agreement on the existing timeline.
H&M borrowed € 980 million to increase its liquidity buffer. Fast mode retailer warns it will register losses for the first time in decades in the second quarter. H&M said in a statement that the new 12-month bank facility with a 6-month extension option came in addition to the undisbursed € 700 million facility signed in 2017 and maturing in 2024.
Levi’s return to life in China when the store reopened, online sales rose. But the American company facing a crisis that peaked at home, where he will leave all of his retail store staff. He also said he had borrowed $ 300 million in a credit facility to improve its balance sheet. The company has a strong start to the year, reporting better-than-expected revenue and revenue for the first quarter ending February 23.
Off-Price retailer, TJX, mostly from 286,000 staff. The company said shop reopening date will comply with state and local guidelines. Outlets in the US remain closed to curb the spread of coronavirus. TJX also announced that some executives would make salary cuts to strengthen their balance sheets.
Fast Retailing predicts a 44 percent decrease in annual profit due to coronavirus. Brand owners include Uniqlo and Theory as well cut dividends for the full year outlook to 480 yen ($ 4.41) per share, down from ¥ 500, as it rolls off economic challenges outside of China’s main markets. Uniqlo, for example, closed around 170 stores in the domestic market this week after the Japanese government declared a state of emergency.
Huda Kattan released his salary for this year amid a coronavirus pandemic. Kattan family members who are related to business will also become give up their wages for the remainder of 2020. Kattan’s move is an effort to avoid layoffs of 267 employees who work for Huda Beauty globally. Huda Beauty has also donated $ 1,000 to 100 individual makeup artists as an act of self-isolation click creative creative very difficult.
Natura sees the growth of e-commerce amid the coronavirus crisis. The owner of Aesop and The Body Shop have promised to do it retain 40,000 workers at work for at least two months. The increase in the company’s online sales partially offset the decline caused by store closures. According to Natura’s chief executive, the company’s cash position of 4 billion reais ($ 770 million) is strong to face the crisis.
Macy’s chief financial officer will resign. The price of Paula is resigned as chief financial officer Macy’s, effective May 31, after less than two years in the role. He will remain in advisory capacity until November while retailers look for a replacement. News of Price’s departure came shortly after Macy announced that most of her staff of 125,000 were dealing with the closure of all 775 brick-and-mortar stores.
Asos knocked on partner McKinsey for the role of chief strategist. ASOS has named chief strategy officer Patrik Silén, report to Chief Executive Nick Beighton. Silén joined the company from McKinsey & Company, where she worked for 16 years and became a partner in 2012.
Nordstrom adds a board of directors. Nordstrom has appoint two new members on its board: Jim Donald, vice chairman of the board of food ingredients companies Albertsons Companies, and Mark J. Tritton, president and chief executive of Bed Bath & Beyond. Existing board members Kevin Turner and Gordon Smith will not seek re-election to the board when their term ends on May 20
MEDIA AND TECHNOLOGY
Amazon delayed the Prime Day event because of coronavirus. The e-commerce giant is postpone his most important shopping day year to at least the end of August and expect a potential hit of $ 100 million from excess devices now might sell at a discount. The decision also affects third-party traders who have relied on Amazon’s revenue platform.
V Magazine prepares initiatives to support emerging creative talents. CreatiVity is one of many programs created by media companies increase exposure for young creative during a pandemic. Confused and Other the magazine has also launched a project aimed at highlighting and supporting advertising material whose projects were delayed or canceled as a result of the outbreak.
Asos plans to increase equity and extend debt. Asos shares rose 34 percent, cutting losses in 2020 to 54 percent. UK online retailers continue to be under national lock in line with government policy. The company has conducted a liquidity stress-test and is comfortable that, with mitigation measures, there is sufficient liquidity in the existing £ 350 million ($ 431 million) facility to survive the crisis.
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