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The Changing Business Model

By Ilse Metchek, President, California Fashion Association

In 2018, the California Fashion Association, with CIT’s sponsorship, surveyed business trends within the Los Angeles fashion industry’s leaders. Most notable was the speed with which companies changed their thoughts on current issues.

Are big changes underway? In 2017, changing the business model (45 percent vs. 20 percent) dominated, and reevaluate sourcing fell (4 percent vs. 22 percent).

In fact, changing business model was the main focus for almost half (46 percent) of the respondents, as opposed to only 20 percent, just two short years ago.

We are particularly focused on the question posed above and the resulting issue for our industry.

Clearly, there are still only four marketing channels:

  • Limited Marketing: manufacturer to retailer to consumer
  • Direct Marketing I (Vertical Retailing): manufacturer to consumer
  • Extended Marketing: manufacturer to wholesaler to retailer to consumer
  • Omni Channel Marketing: brand-owned shopping chart or multi-line offering

While these distribution methods are blending, new business models must address the changing requirements for:

  • International sourcing and distribution techniques
  • Salaries being driven upward for design, pattern making, and technical expertise
  • Faster design cycles and just-in-time delivery and production accuracy
  • Technology for inventory control, data analytics for product development

It’s all about the Internet. Even when consumers buy clothing in a brick-and-mortar store (where the vast majority of apparel purchases still take place), the Internet hugely influences their buying habits. Over 75 percent of consumers with Internet access perform some of their shopping online, including reading reviews, researching apparel or comparing prices. One study found apparel industry emails have an open ratio of nearly 35 percent, making this a highly effective marketing strategy.

Consumers are changing, in both their demographics and their expectations for a shopping experience. We all know that social media is having an outsized effect on the apparel industry, with old and new fashion labels scoring huge fan bases on Facebook, Instagram and Pinterest. Taking advantage of the latest virtually oriented social media networks for promotion of apparel products is a must.

The future is now, and so is the past! The decision for the direction of any brand is to journey backward into the realm of vintage, re-cycled, legacy banding, etc.—or go forward where no predictive apparel industry fashion statement has gone before.

After all, do we really know what “sustainable,” “organic” and “authentic” means to the consumer? According to a survey of over 1,000 consumers, conducted on behalf of the Changing Markets Foundation and the Clean Clothes Campaign in December of 2018, a mere 34 percent said they are concerned about the manufacturing of clothes they buy, and only 16 percent say environmental issues have influenced fashion purchasing decisions in the past year.

It certainly is more difficult for a company to define itself. Some may call the present cycle one of confusion—perhaps it is just a different proposition. It might be more difficult for the market, but having such varied expressions of style could be quite good; and perhaps we will find the balance in the non-seasonal calendar of the coming year.

 

Ilse Metchek

President

California Fashion Association

ilse@calfashion.org

 

 

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