Discussions about the fashion industry thread

[NickPollica]

Reading "were not profitable" in a notes app font from a founder/ceo of a San Fran DTC apparel company who just got called out by a sitting senator running for the democratic nomination in the US for what looks like union busting at the time of a global pandemic was not on my bingo card. But there it is. Why are they not profitable at the scale they were at? Weak margins / unit economics? Friday's catered lunch? CAC?

It is impossible to scale a business with keystoned margins, no matter how much you sell of something.

 

[imatlas]

keystoned margins

What does this mean?

 

[cb200]

Keystone margins is doubling the price at every step. Say the cost to make a jacket is $100. Brand then sells that to retailers at $200. Retailer sells that to consumers at $400.

 

[Shirtmaven]

I closed my shop on march 13th and sent staff home. Business since the first of the year had been sluggish. When the broadway theatres closed and the TV/movie productions stopped i had no choice. I am now 2 hours away in upstate, NY.
.My cutter took home about 15 small orders. He lives a short drive from one of my sewers. Of course, i am not bringing in staff on public transportation to finish off the shirts.. i wanted to make some masks, i was jealous watching Justin, at Hertling still open. I just turned him on to some contacts for medical grade textiles.
The bailout is confusing. I told staff to file for unemployment. Now it seems like to qualify for certain loans, i had to keep staff on payroll.
I would run out of money before i would see part of the stimulus. NYC has grants. Hopefully they will come through.
I know business will return, just need my landlord to be patient.

 

[bry2000]

This is what I came up with when I googled “keystoned”.

 

[NickPollica]

Keystone margins is doubling the price at every step. Say the cost to make a jacket is $100. Brand then sells that to retailers at $200. Retailer sells that to consumers at $400.

Kind of, but in the case of many “disruptor” brands, like everlane, they don’t wholesale, so their retail is double their first cost.

 

[LA Guy]

It is impossible to scale a business with keystoned margins, no matter how much you sell of something.

Agreed, but those brands are not really keystoning it.

 

[Gus]

Reading "were not profitable" in a notes app font from a founder/ceo of a San Fran DTC apparel company who just got called out by a sitting senator running for the democratic nomination in the US for what looks like union busting at the time of a global pandemic was not on my bingo card. But there it is. Why are they not profitable at the scale they were at? Weak margins / unit economics? Friday's catered lunch? CAC?

Regardless of their margin structure, how much of what they made was unique and distinctive at their prices and to their customer demographic? They were just another contemporary casual brand IMO. Companies succeed by doing what no one else is doing in an otherwise crowded field. You need to find a niche. My mentor used to say two things that made all the difference in the success of my business: "Find a niche where you can be the market leader" and then "Differentiate, differentiate, differentiate". Everlane was just another apparel line.

 

[NickPollica]

Regardless of their margin structure, how much of what they made was unique and distinctive at their prices and to their customer demographic? They were just another contemporary casual brand IMO. Companies succeed by doing what no one else is doing in an otherwise crowded field. You need to find a niche. My mentor used to say two things that made all the difference in the success of my business: "Find a niche where you can be the market leader" and then "Differentiate, differentiate, differentiate". Everlane was just another apparel line.

Their product was the model. That was what was supposed to differentiate them. No one ever stopped to realize that the product was mediocre at best. This goes for basically that entire wave of brands. Creating a fake need, “solving” it with cheap, uninspired product and selling as many as they possible can at razor thin margins.

 

[LA Guy]

Their product was the model. That was what was supposed to differentiate them. No one ever stopped to realize that the product was mediocre at best. This goes for basically that entire wave of brands. Creating a fake need, “solving” it with cheap, uninspired product and selling as many as they possible can at razor thin margins.

Damn bro, tell us how you really feel.

 

[imatlas]

I agree with that assessment of Everlane, though. I was initially pretty enthusiastic about the DTC model and their story, and even went out of my way to stop by their original office and say hello. I stopped buying after my first few items, though, because the quality was meh and the designs were utilitarian at best.

 

[clee1982]

Garment workers going unpaid as fashion labels cancel orders

DHAKA, Bangladesh (AP) — A survey of factory owners in Bangladesh found that major fashion retailers that are closing shops and laying off workers in Europe and the U.S. are also canceling their sometimes already completed orders, as workers often go unpaid.

apnews.com

well given what’s happening in the west now why are we not surprised...

 

[Gus]

We are going to see a mass of brands, and the retailers who sell them, fold. There are far too many that are "kinda sorta" like everything else.

 

[smittycl]

Cycled through DC today. Tidal Basin was closed but a week after peak Cherry Blossom bloom so the crowded CV incubator already happened. Many of the bridges closed to cyclists and pedestrians to keep folks off the Mall. Did the menswear tour.

Loro Piana concerned about smash and grabs I think. (they have three more windows boarded up to the right of the door as well).


Paul Stuart, Canali, and Cuccinelli still looked nice.




Sid Mashburn seemed a little post-apocalyptic.


My tailor is open for appointments!

 

[Gus]

To me, it will be interesting to see where we are in 12-18 months with the few remaining luxury department stores and all of the directly competing international fashion brands with their own competing storefronts. How long can Saks or Neiman Marcus continue selling Cucinelli, Canali, LV or Gucci and remain in business when those brands have shops right around the corner from them in every major city? The era when Saks or NM traveled around the world to seek out and have high quality, specialty goods made just for them is so long gone. When they went the route of just selling the same international fashion brands that everyone else was selling, they lost what made them special.