In partnership with McKinsey, Business of Fashion has released their annual State of Fashion Report for 2019. Now in it’s third issue, the report has become the largest and most authoritative overview of the industry. Their forecast for 2019 is “sunny intervals but with storms ahead” with executives in the luxury segment feeling the most optimistic following impressive growths in 2018. Sadly for the high street and other segments, businesses are feeling a little more pessimistic following a tough year of trading and political uncertainty. In this blog post I’ll be talking about my top takeouts to take note of from the report covering industry shifts and consumer behaviours.
SELF DISRUPT .
This is the #1 trend identified by fashion executives as the most significant factor to shape the industry in 2019.
“Traditional brands are beginning to disrupt their own business models, image and offering in response to a new breed of small emerging brands that are accelerating thanks to decreasing brand loyalty and a growing appetite for newness. We expect more brands to follow suit on this path of self-disruption, which will have a significant impact on their operating models.”
We are seeing ‘challenger' brands’ who are disrupting traditional approaches go from strength to strength, leveraged by increasing use of digital and social media as a platform for engagement. Brands such as Reformation with strong green credentials, I.AM.GIA creating an Instagram IT Girl persona, both with a strong celebrity followings have seen double digit growths in their digital segments.
In order for established brands to stay relevant, we are seeing increasing shifts in business models introducing self-disrupting strategies. For example, Burberry’s new logo released alongside the email thread between Riccardo Tisci and Peter Saville and traditional brands turning to streetwear brands to create a cooler image. Louis Vuitton in 2018 appointed Virgil Abloh, known for his disruptive streetwear brand Off-White, as its creative director. We are seeing increasing strategies moving away from the traditional calendar instead opting for more regular ‘drops’ with more frequency to elevate rarity value and increase demand and anticipation.
GETTING WOKE .
With younger consumers coming into their spending prime partnered with the strong belief that brands have a responsibility to address environmental and social issues, we see an increased pressure on brands to step up and take action.
“Younger consumers are seriously concerned with social and environmental causes, which many regard as being the defining issues of our time. They increasingly back their beliefs with their shopping habits, favouring brands that are aligned with their values and avoiding those that don’t.”
Over the past three years a third of consumers worldwide have expanded the scope of their purchasing decisions to incorporate principled values and views. So brands need to react and call to action, (with authenticity) principles that embed these issues. For example, Nike supporting Colin Kaepernick, the face of the NFL’s “anthem protests,” and Levi’s fronting a campaign against gun violence. However, brands need to tread with caution when some causes tread the line between becoming controversial:
“Not all causes that fashion brands advocate are universally popular, and these can come with significant risks. Besides potential controversy from supporting divisive causes, brands may also risk being perceived as hypocritical if they do not carefully ensure consistency in their messages and actions.”
For example, Primark were severely criticised over a line of Pride T-shirts released last year which were produced in Turkey, ranked the third-worst country in Europe for LGBTQ equality. It goes to show that although consumers demand brands to take responsibility for social, ethical and environmental issues, it has to be authentic.
Dealing with the trust deficit:
Many surveys conducted over recent years have shown dwindling trust consumers have in brands, with more than 2 in 5 consumers saying they didn’t know which brands to trust. As a result, consumers are demanding to know where and how their product is made, quality and design provenance etc as well as being more critical of brands that they are doing business with.
“We expect the critical dimensions in which fashion players will be most scrutinised include: creative integrity, sustainable supply chains, value for money, treatment of workers, data protection and authenticity.”
In response, several brands have already moved towards “radical transparency” in manufacturing, hoping to regain the trust of disillusioned customers. This might include information about product origins or the environmental impact of manufacturing.
“Unless fashion brands adopt best practices from outside the industry and improve
supply chain transparency from within, consumers will begin to wonder what they
have to hide.”
Another way consumers are demanding transparency is through value for money. With the ability to make comparisons and product reviews in a saturated market, brands are responding by being more open regarding their processes, some brands are specifying cost of materials and labour and even mark ups. San Fransisco based brand Everlane championed a radical transparency model by sharing a breakdown of costs from materials to getting the product to the customer. UK luxury brand Private White VC has followed suit by sharing their ‘costing manifesto’ showing comparisons of their mark up process in comparison to other luxury brands, claiming their mark up is only x2 compared to traditional luxury brands x5 mark up.
SPEED TO MARKET .
There is a major shift occurring in the fashion industry whereby ‘trend’ is increasingly becoming consumer driven by actual demand rather than brand led based on forecasts. The shift is driven by a ‘pull’ dynamic where models are shifting to a supply and demand led strategy rather than led by designers, buyers and forecasts.
“The way consumers get inspired has changed. In the old world, they would often get ideas for purchases directly from brands (intermediated by magazines) or from in-store assistants. Now consumers turn to a much wider range of inspirations, from social media, celebrities and influencers, to spotting an attractive look on the street.”
With this shift, consumers are more reactive and expect instant gratification. Brands need to shift their supply strategy to realign themselves from the traditional seasonal model to allow for more reactive production, holding less risk in stock and buying into items with known and proven demand.