The garment industry is having a big problem. At a time when the economy was growing, unemployment was low, wages rose again and consumers were eager to shop, Americans were spending less and less on clothes.
Fashion retailers often blame e-commerce group Amazon.com Inc. Because consumers an inch without leaving their smartphone would rather surf the web to shop than go to local stores to shop. That fact has made sales plummet and accelerated the bankruptcy of fashion chains from American Apparel to Wet Seal. But that’s not the whole story.
Clothing has lost its appeal
The garment industry seems to have no way to prevent Americans from spending money on closets. Many startups promised to revolutionize the garment industry, but then quietly left without blasphemy. Because, these days, who needs fashionable clothes when they can express themselves through social media? And why buy an expensive new dress when they can spend that money on a free weekend outing?
Clothes simply have lost their charm. And nothing seems to cover this fact. As a result, more and more garment companies are falling into misery and even bankruptcy.
This problem has actually been in place for decades. In 1977, clothing accounted for 6.2% of US household spending, according to government data. But four decades later, spending has fallen to half that figure. Clothing is being replaced by travel, dining and experiences, which have increased to 18% of total spending. Technology alone, including spending on data packages and media content, accounts for 3.4% of spending. Spending on technology now surpasses spending on apparel and footwear.
There are many reasons for this shift. Some of the reasons are objective, beyond the control of garment companies, such as changing social tastes leading to changing shopping behavior. But it was the mistakes these companies made in the process that accelerated the death of the garment industry.
In the past, office workers were required to wear a suit, tie or pleated pants, long skirts and high heels during the work week. But by the early 1990s, that seemed to have changed. In Silicon Valley, the trend of wearing khaki pants but still feels formal has become popular. That trend has also crept from the tech industry to other industries as comfortable friday days have become commonplace. Now, office dress is in a comfortable style on Mondays as well as on Fridays.
Over the past five years, the number of employers who allow comfortable dress on any given workday has increased by 10%. The result of this comfortable dress trend is that Americans need to wear only one type of clothing more and more, as there is almost no difference between work wear and weekend outfits.
Ties are also disappearing, even in industries like finance. Soft soles can be worn for any occasion including weddings and religious ceremonies. And about half of Americans say they can wear jeans to professional offices, according to a survey by NPD Group.
It is also understandable why this is bad news for garment companies. Because, when you remove a type of clothes from your closet, the need to buy new clothes when the fashion changes will also decrease. Meanwhile, falling prices are becoming a trend in the garment industry.
In large part because clothing production has become cheaper in recent years, especially as more and more manufacturing is shifting to cheaper labor markets. Take the Levi’s 501. Men’s jeans. This pair cost 58 USD in 2009, then rose to 64 USD three years later but fell to 59.5 USD last year.
This downward pressure on prices coincides with the rise of inexpensive fast fashion retailers in the US. Walmart and Target have long accustomed Americans to the fact that they can get what they want without spending a fortune. Now retailers like H&M can mimic runway collections for as little as $ 35 or men’s jeans for as little as $ 25 and can beat other retailers in terms of their speed to market. trendy design.
For years, this seemed to be a recipe for success. The H&M fashion chain, for example, has expanded very rapidly in the US and generated $ 3.2 billion last year. H&M’s growth also coincided with the rapid expansion of rivals in the fast fashion industry such as Forever 21 and Zara.
But even the fast fashion success story has its cracks. While the number of H&M stores in the US is still increasing, the speed of launching new stores has been at a 2-decade low. The retailer has managed to clean up the products shoppers didn’t want, partly because customers are ignoring clothing-filled stores (making them confusing when choosing) and changing and then prefer an online experience that feels “neat” and comfortable.
The fashion industry used to have a huge influence on the way people dress. Retailers, high-end magazines and designers are powerful figures in the fashion industry. They used to dominate seasonal trends and shoppers for the most part followed the trends they set.
Ten years ago, teen clients wore Abercrombie & Fitch’s fashion from head to toe. But in today’s consumer-driven economy, social media influencers are often the dominant force. These online surfers have developed a strong following through posts about their costumes, their makeup, and their lifestyle.
These influencers are also less loyal to luxury brands. A celebrity on Instagram could combine Tory Burch fashion, TJ Max, with casual clothing from Target. Consumers have realized that they can invest in something of value and buy items that imitate high fashion (of course, less quality) and this combination gives them a Unique look, let them take a selfie. With their smartphones, shoppers can easily compare prices, even use mobile apps to take snapshots and find a cheaper alternative.
Facing the digital trend, retailers are spending more and more money on digital marketing campaigns, building images, branding on social media, paying for promotional articles. advertise online and invite influencers to promote their products. Retailers hope that these ads will look “real” more and closer than TV ads using images of celebrities.
With less fashion being refreshed, there is less reason for consumers to spend money adding new designs to their wardrobes.
But since there are millions of people creating new trends or styles online with countless different aesthetics, it is even more difficult for the new trends to really break through, making a difference in the eyes of the online community. This is a major reason that many fashion brands are reluctant to take adventurous steps in designing and launching new models.
In the past, designers spent months researching to come up with a collection with the style “overcoming all limits” to create a buzz for the brand. But this desire to disrupt can put a brand at risk of spending too much time and money on a design that could fail.
To cut costs and speed up product launches, many brands buy fabrics in bulk that can be made into many different designs and fabric patterns. But the result of that is that consumers have fewer options and these options are also “too safe” (ie less risk of consumer rejection, but because they are less disruptive. difficult to create fever). With less fashion being refreshed, there is less reason for consumers to spend money adding new designs to their wardrobes.
Given the pressures and challenges facing the fashion industry, it’s not surprising that the number of clothing store closures hit a record again last year. That does not merely reflect a shift to online shopping trends. E-commerce startups were born to seize the opportunity of this disruption in the retail industry. Yet even startups stumbled, a sign that deeper problems were choking the fashion industry.
The online darling in the fashion industry, NastyGal, went bankrupt in 2017. Other faces, instead of choosing to swim by themselves, sold themselves to retailers that have long in the market. One example is Bonobos, a once-popular men’s fashion brand, acquired by retailer Walmart in 2017.
Stitch Fix Inc., an e-commerce clothing dealer founded in 2011, is an exception. The retailer already knows how to combine algorithms with data to select custom-tailored outfits, giving shoppers a “personalized” feel and a very pleasant home experience. Stitch Fix went public on the Nasdaq in November 2017 and the share price is up 34%.
Experts say that retailers should learn from Stitchfix about its ability to borrow technology to create products according to customers’ needs, even though they face the challenges of offline store – a challenge that most are shunned by e-commerce companies.
Even if retailers can tackle this challenge, the “ghost” of weak demand is expected to linger the garment industry for many years. That means more stores will be closed and more bankruptcies await, with or without the presence of e-commerce giant Amazon.
“It was a time of change and that wasn’t pretty,” said Jan Kniffen, founder of J. Rogers Kniffen Worldwide Enterprises in New York.
Ngo Ngoc Chau
* Source: Investment bridge