LONDON — Fashion consumption is changing, and as shoppers wake up to the destructive effects of too many shopping trips to their local Zara, new business models have been cropping up and offering companies alternative routes to selling products — and becoming profitable.
Young, agile labels are moving away from the ever-demanding wholesale cycle and turning their attention to direct-to-consumer selling or on-demand manufacturing, while consumers are letting go of the stigma that used to be associated with the idea of renting or buying pre-owned garments, and embracing the circular economy on consignment sites such as The RealReal and Vestiaire Collective.
“Consumers are becoming more eco-conscious and gravitating toward companies and practices that share their values,” asserted Rati Levesque, chief merchant of consignment site The RealReal, which said it saved 65 million driving miles in energy and greenhouse gasses since its inception in 2011. “Shopping consignment and consigning is smart, sustainable and it contributes to the circular economy.”
The luxury resale market has grown to 20 billion euros globally and it’s set to grow a further 7 to 10 percent by 2020, outpacing the 3 to 4 percent growth of the overall luxury goods market, according to a report by Berenberg Bank. The growth of businesses such as The RealReal and Vestiaire Collective highlights shoppers’ newfound eagerness to participate in the resale model — and it’s changing the way they shop in the primary market, too.
Levesque said customers’ approach to shopping is shifting from “needing to own something forever” to “an investment or resale model mind-set,” and they often turn to The RealReal for advice on what to buy in the primary market.
“Customers are making purchases now, knowing that they can make a large portion of the original cost back. They want to know the resale value before they make a purchase, so we provide recommendations based on our data. Those decisions are sustaining the marketplace,” she said. “Resale is supporting the primary market, as consignors are using their commissions to shop for new designer goods.”
As resale is shifting market dynamics, brands have also been warming to the idea of, and beginning to work more closely with, consignment sites such as The RealReal.
Stella McCartney has just renewed her yearlong partnership with the company, and they are working to educate consumers about the circular economy and encourage them to “think about extending the life of luxury items, keep them out of landfills and in the hands of new owners,” said Levesque. Stella McCartney items being consigned on the site also increased 74 percent year-over-year.
To continue the initiative next year, the retailer will be releasing a sustainability calculator to show consignors the positive environmental impact of their consignment history.
French counterpart Vestiaire Collective has logged annual sales growth averaging 70 percent, and its inventory includes up to 900,000 luxury items — many of which are little worn and as good as new. It received $62 million in funding from the likes of Balderton Capital, Eurazeo and Condé Nast International last year to fuel its expansion ambitions in the U.S. and Asia.
The company has been amping up its editorial content to highlight the relevance of the secondhand or vintage items it sells online. It has an ongoing Seller Series that spotlights creatives who use the platform to sell pre-loved items from their wardrobes and has been spearheading buzzy social media campaigns. In September, it challenged a series of influencers to incorporate second-hand items into their fashion week wardrobes: They resurfaced Dior saddle bags, mules with the Burberry check, Loewe logo trousers and rare Chanel tweed bags as part of the project. They mixed them with trendy, of-the-moment items.
“Print ain’t dead and good clothes don’t die either,” wrote influencer and podcaster Camille Charriere, as she posed in a vintage Galliano newspaper print minidress. “A killer piece should last a lifetime, and if you grow out of it then maybe it’s time to let it become someone else’s treasure.” Charriere has teamed with Vestiaire Collective to raise awareness around consumer attitudes towards consumption, “particularly to encourage everyone to think about buying secondhand. Because good clothes are not necessarily new clothes.”
Fanny Moizant, the company’s cofounder and vice president in Asia-Pacific, said it’s about educating customers using real-life examples. “Pre-owned is no longer seen as old and dusty. Pre-owned can be a beautiful vintage velvet cape from Seventies Saint Laurent, or a brand new limited-edition Hermès Birkin that we have online,” she said, citing growing awareness of the environmental and financial benefits.
“We are at the beginning of a massive consumer shift. People are being driven by value and an increased move toward a sustainable mentality, while brands [can now see] that their clients are able to sell previous season pieces to buy new season pieces. It’s a triple win: Consumer, brands and resale are all creating value for each other.”
Retailers in the primary luxury market are becoming more aware that the market’s ongoing quest for newness might have gone too far, and are looking for more sustainable ways to utilize their stock.
London-based Browns believes the answer might lie in the rental model and, to wit, forged a partnership with Armarium last June to give its eveningwear collection a new lease of life.
“With social media consciously or unconsciously putting pressure on people to constantly update their wardrobes, the rental business doesn’t only offer a way to do this whilst managing your finances, it also addresses social responsibility,” said Ida Petersson, the retailer’s women’s wear buying director. “Sustainability is a serious issue the fashion industry is slowly starting to recognize and it’s important that wholesale accounts don’t ignore evolution. Both [rental and wholesale] can coexist as thriving businesses, as long as you are willing to explore and adapt.”
Petersson added that by experimenting with the rental model, Browns was able to engage a younger audience that would otherwise not be able to afford to pay for its designer pieces upfront.
New, niche retailers are also taking a different route to buying. They are curating their retail offerings around specific occasions, such as holiday dressing, or an overall design philosophy, in order to avoid accumulating too much stock and discounting it before it gets enough shelf life — and creating waste.
Koi Bird, a new concept store in London’s Marylebone, specializes in travel shopping and focuses on sourcing brands with little visibility in London, working with them to design exclusive products.
“We buy small [quantities], it’s all limited and by the end of the season, we generally sell out. It makes the experience feel more unique; you are really discovering a piece and buying that piece because you love it, not just because it’s on sale,” said founder Belma Gaudio.
Alex Eagle, who is known for her tasteful curations of fashion, furniture and lifestyle products in her boutiques across the U.K. and Berlin, shares a similar philosophy: Her edits shift the attention to high quality and timeless design, with small selections of seasonal pieces peppered across her in-house range, and one-off collaboration pieces with designers.
“Because we don’t adhere to the rigorous seasonal schedule, we have the time to dedicate real attention to each piece we make, sourcing the very best fabrics and testing the pattern until we have perfected every component,” said Eagle, adding that she is encouraging customers to buy pieces that might not be “hot” or “of the moment,” but will suit them in 10 years’ time.
“This means that our clothes are very much buy-now-wear-now, so you can find that perfect shirt for summer or cashmere coat during the winter months. Pieces don’t go out of style and there is a continuous demand for them. We are never left with cupboards full of out of date and out of style stock,” added Eagle.
Brands, too, are growing tired of the fashion cycle and the risks of producing too much unwanted stock. Instead of adhering to tried and tested brand-building methods, they are taking new routes to manufacturing, customer engagement and even design.
Muzungu Sisters, the London-based label by Dana Alikhani and Tatiana Casiraghi, set out to become “the antithesis to fast fashion” since the brand launched seven years ago.
Drawing on Alikhani’s human rights studies, the duo began by developing Muzungu Sisters as a lifestyle project to spotlight the work of artisans from across the world and support their rights, through a creative business rather than nonprofit advocacy work.
Even though the duo quickly garnered media attention and turned what started as a lifestyle project into a fashion brand, they never followed the fashion rule book and continued selling and sustaining interest around the same set of products — luxe Moroccan velvet jackets, colorful Uzbek ikat kaftans and Sicilian pom-pom baskets, among others.
“These are actually pieces of national and culture heritage. They have existed in their localities for generations and they still continue to be relevant because they have that energy about them, of being heirlooms and carrying cultural significance,” said Alikhani. “It was never a case of doing pom-pom baskets because pom-poms are in fashion. Those baskets have been produced in Sicily by the same artisans for hundreds of years. It’s not a question of fashion, per se.”
They also built a dedicated customer base by hosting pop-ups across the world and creating a true “traveling project.” They only began wholesaling with a small number of partners, refusing requests to replace artisanal work with machine-made products just to lower price points.
“I would always explain [to retailers] that products are expensive because they are all hand-embroidered by third-generation, prize-winning embroiderers. We choose our partners based on who understands our philosophy and respects the artisans’ work behind the products,” added Alikhani.
New York-based designer Misha Nonoo also pioneered a new selling model, having switched to an on-demand manufacturing model over a year ago. Her ambition was to create an operation fit for a modern fashion label.
“Wholesale wasn’t working from a business perspective and it wasn’t in line with my aspirations towards sustainability. So we completely upended our supply chain, manufacturing each piece on demand when our customers placed an order,” she said. “It’s a much leaner way of doing business and therefore definitely helps brands become profitable quicker. Just the fact that we don’t have loads of inventory at the end of a season makes a world of a difference to our bottom line.”
Not having presence in department stores can ensue less visibility for a brand. But according to Nonoo, controlling the channels can equally benefit from direct interaction with the consumer, keep price points slightly lower and offer more personalized services.
“Our whole approach is much more consumer-focused and we can now make use of hyper-targeting. We have a very clear insight into our customer database and can target them with relevant ads or newsletters,” added the designer.
Footwear label Bionda Castana followed a similar path when it relaunched last month. The brand now offers four shoe styles for preorder every month, customers can place orders online on the first week of every month and the remaining three weeks are dedicated to production. Orders are then shipped directly from the brand’s manufacturing partner in Italy straight to the customer.
The idea was to create “a luxury, no-waste offering” and cater to customers’ ongoing appetite for the brand’s signature styles, said Natalia Barbieri, the brand’s cofounder. “It allows us not to be holding onto stock or making styles that don’t sell and people don’t want. It’s apparent that product doesn’t get enough shelf life and that’s why past styles are selling out on Vestiaire Collective.”