The year is 2020, and Zara has just announced that they will be closing one third of their brick-and-mortar retail locations. Their ecommerce operations only fared slightly better, with one fifth of the workforce cut. H&M announced a freeze on opening any new stores for the next quarter. Instead, they will be focusing on their more premier brands, such as Cheap Monday, Monki, COS, and others.
Meanwhile, the retail fashion landscape is more diverse than ever. Small collections of mid-sized brands are taking an increasing amount of market share from the big players. If you visit any large city, you will find a variety of shops selling locally made products and clothing designed with locally sourced fabrics. Many have become integral to their communities, hosting art events, workshops, and occasionally live music performances. Some have even gained international reputations, allowing them to run healthy ecommerce businesses.
The luxury market is equally in flux. The cult of designer-as-celebrity has hit a peak, with designers jumping fashion houses nearly every season. Designers are also under increasing pressure from investors to produce more commercial collections that sell fast, without markdowns. Further, online retail is now crucial to the survival of labels, so designers must also ensure that their collections are sellable in the digital sphere – where users don’t have the ability to try garments on and inspect them up close. Put another way, designing for the Amazon marketplace is very different from designing for a brick-and-mortar boutique.
Meanwhile, couture sales continue to decline, quickly becoming a commodity that only the 1% can enjoy. Fast fashion is also floundering and high fashion is struggling to remain relevant, but small boutiques and brands are exploding by making meaningful economic and cultural contributions and telling a compelling narrative about where the garments are produced and designed.
How Did We Get Here?
If this is a possible future for 2020, how can we better understand how we might arrive at this landscape? Let’s wind back a few years first.
In 2007, COS staged their first catwalk show at the Royal Academy. The looks were mostly monochrome white, grey, and black, with occasional splashes of yellow, burnt orange, and beige.
The garments were crafted from high quality and non-traditional materials, including slub jersey, mesh, and neoprene. Materials were fused together in unexpected ways and the garments featured several unique technical flourishes found in the stitching, silhouettes, and construction. The collection felt restrained, thoroughly modern, and expensive.
Judging from this showing, few would guess that COS is owned by H&M, known for providing cheap and cheerful wardrobe basics or for its factories’ decrepit working conditions – depending on who you ask.
H&M opened the doors to its first retail store in 1947. Perhaps not surprisingly, the multinational chain was founded on the simple idea of providing fashionable clothing at an affordable price. Today, H&M is widely credited – or blamed, again, depending on who you ask – for popularizing fast fashion.
Today, COS has over 150 stores worldwide and is in 19 ecommerce markets. The COS customer is young, professional, and has good disposable income. This sounds typical, except this person has also seen YouTube footage of the collapsed factories and understands the effect of unsafe labor practices; they’re aware of the increasing scarcity of natural resources; they are educated and value good design; they don’t want to look like everyone else, but are too frugal to only buy high-end items. Instead, they mix high with low, purchasing only one or two high-end pieces each year and pairing them with well-made basics. They have a personal brand that they have carefully cultivated. In short, they are a hyper-aware global citizen.
Defining Accessible Luxury
It’s telling that Michael Kors designed the first ready-to-wear collection for luxury brand Céline in 1997. Until that point, Céline had been known as a luxury couture brand and purveyor of high-end fragrances and accessories. Kors then left in 2004 to focus on his own brand.
That brand is now worth upwards of $1B with over 869 stores worldwide. Michael Kors is decidedly not a luxury brand, but it isn’t a discount brand either. Kors walks that line between high and low with surgical precision, enjoying the cachet and desirability of a high-end brand, while benefitting from the accessibility of the mass market. The bags retail for roughly $300 USD while a brand like Céline, for example, would retail for approximately $3,000.
Kors was tapping into the accessible luxury market before marketers, investors, and retailers defined it. Millennials cutting back spending on luxury products to allocate more on experiences, coupled with the growing middle class – forecasted to hit 3.2 billion worldwide in 2020, up from 1.9 billion in 2009 – has ensured that the demand for these goods will not go away anytime soon.
Kors’ instinctive ability to walk that line has even become the stuff of memes. The brand often finds itself as the synecdoche for a “basic” woman’s material desires, effectively solidifying the brand’s positioning in popular culture as the source for accessible, easy-to-obtain luxury goods.
The Slow Death of Luxury
Traditionally, runway shows define the aesthetic of the season for brands. Every small detail is carefully considered as part of that designer’s visual language to tell a story. Done well, the result is a cohesive vision that captures the imagination of the public, challenges the industry, and provides content for headlines, blog posts, videos, and Snapchats ad nauseam. All of this ensures that the industry remains relevant and exciting to the general public.
Currently, more and more designers are skipping the spectacle of the runway show, opting for showroom visits instead. Cost is often the most often cited reason, with general lack of interest a close second.
This is significant. On the runway, the product anchors a concise statement that the clothing, models, music, lighting, and venue all play a part in communicating. In the showroom, the product is just that; products on display ready to be purchased in volume by retailers. Luxury brands will soon face a struggle to retain the cultural relevance and cachet they once had – especially as they are forced to reconcile with large ecommerce platforms.
The New Fashion Landscape
At the end of the fourth quarter in 2015, Jeff Bezos announced that Amazon had exceeded $100B in revenue and that its goal is to reach $200B in sales. To do so, a strong presence in fashion, a category that has proven challenging for Amazon, would be necessary. The company has since invested in attracting luxury brands and consumers. But it wouldn’t be so easy; to help attract these labels, Amazon has agreed to break its typical practice of discounting their goods in the interest of quickly cycling through product. There’s no question Amazon has the process, scale, and infrastructure necessary to move product and Amazon Prime’s penetration is greatest in upper-income homes.
However, Amazon will need to become a trusted voice in the space and provide insightful and engaging content on the industry. This will likely be through content publishing, social media presence, collaborating with thought leaders in this space, and separating their high fashion offerings from the rest of the platform. This will take time, especially for a large, slow-moving corporation such as Amazon.
Conversely, independent boutiques and small ecommerce shops will soon be forced to compete with these large platforms to retain both brands and customers. Though they certainly do not have the resources, scale, and infrastructure of a company like Amazon, they are more nimble and can make decisions quickly. Their size and ability to actively play a role in shaping their local culture could be their saving grace. Forging strong relationships with designers early in their careers, establishing meaningful connections with consumers, and playing an active role in shaping and showcasing their local culture will allow them to maintain their niche positioning and grow their grassroots followings.
In this new landscape, it is not only the responsibility of these smaller brands to lead and push the industry forward – it is crucial to their survival as large conglomerates slowly follow behind.