If you’re considering launching a fashion brand in 2021 you might well be put off by the plummet in economic profit shown in this graph. The fashion industry’s economic profit is set to drop by 93% in 2020.
This may seem a terrifying statistic, especially so for brands who design, showcase and produce to the traditional fashion calendar. However, this catastrophic downturn might just provide independent brands with the opportunity they need to thrive.
Here are five reasons why this 93% plummet does not have to mean disaster:
71% of fashion executives expect online fashion businesses to grow by 20% or more in 2021. The opportunities presented via digitisation are seen as the ‘silver lining’ of opportunity in 2021. Adoption of new digital tools has rapidly increased during the pandemic with consumers embracing livestreams, video chats and shopping via social media. Consumers are predicted to demand more sophisticated digital tools and interactions with brands so companies must work to develop their online experiences and digital channels in 2021. It is likely that they will begin to crave a ‘human touch’ through digital interaction and experience will of course play an integral part in fashion sales.
The Covid-19 pandemic has highlighted the need for a ‘less is more’ approach in fashion helping to reduce overproduction. We hope to see brands taking a more efficient approach to assortment, reducing the complexity of collections and looking to align drops with big consumer opportunities. A key turning point in the ‘less is more’ model is breaking away from the shackles of the traditional fashion calendar to streamline design, collections and production.
Comfy and casual have been topical all year, a trend which started pre-pandemic and is set to continue as a dominant force across the industry going into 2021. We’ve seen casualisation of consumers' wardrobe on a global scale. Sales of activewear and loungewear have soared throughout 2020 providing further opportunity for independent brands to continue to shape this growing comfy and casual culture.
Some of the best recoveries are in local markets so far and we can build outwards from the local shopper. Strict restrictions have meant that physical retails slow downturn has been sped up and brands must actively consider the future of their stores. McKinsey comments that brands have learnt that ‘we don’t build our lives around retail. Retail builds itself around our lives’. A creative approach to the future of retail can be led by independent brands utilizing the flexibility of approaches such as pop-up stores. Forging local connections within strong communities remains a powerful approach to restructuring retail.
Small brands utilizing the pre-order drop model have thrived as they operate a lean, low-risk business. Even Louis Vuitton’s Chief Executive, Michael Burke has commented that ‘the higher the percentage of made-to-order business, the less overproduction you’re going to get involved with. That’s the first thing that luxury needs to concentrate on; smaller runs, ideally a run of one’.
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