Discussions about the fashion industry thread

[jah786]

I think the real story here is why do successful independent retailers try to become the next mega-retailer? I went to college in Richmond and Need Supply was THE store. In 2015, they were doing ~$9M/year in sales, 40+ employees, and growing - a completely respectable business anyone could be proud of. But for some reason this wasn't enough for them. They had spent 20 years building up to $9M/sales, but decided to take on investors, acquiring Totokaelo, and trying to keep up with huge players like Farfetch. They got what they wanted "peaking at $50M/year in sales", but did so with a "growth at all costs" mindset that left them over-extended and easy prey to unusual circumstances. Boutiques need to learn when to say "Enough is Enough" and stop trying to expand every season.

agree 100%. There's nothing wrong with that at all. I guess I wonder, were they profitable at 9m/year? If so, what does the end game need to be? Scaling up has big risks, and NEED got burned by being overextended, which is tragic.

 

[BlakeRVA]

agree 100%. There's nothing wrong with that at all. I guess I wonder, were they profitable at 9m/year? If so, what does the end game need to be? Scaling up has big risks, and NEED got burned by being overextended, which is tragic.

I'm uncertain about their profitability, but I can say in Richmond they had significantly lower fixed costs like rent, staffing, utilities than their competitors would in areas like NYC, London, LA. Therefore, any struggles with profitability would be due to variable costs, which you have to circle back and ask "Why?" again.

I think this article makes it pretty clear: "Over the last two years, Cormack Capital has poured an additional $6.7 million into Need Supply, which has used the investment to upgrade its technology and other back-end operations, creating a platform that can be used by multiple retailers at once."

Cormack Capital Group had put millions into Need Supply and spent millions buying Totokaelo, so they were looking to recoup their investment. In order to do this, NSTO likely needed to significantly grow revenues. Chris Bossola (NSTO CEO) said in the same article: "the company believes it can triple sales over the next three years." And Lyndon Cormack, head of Cormack Capital, said "We’ve been growing year over year, steadily, but it feels like the gas pedal can be pushed."

Expectations were high and not being met, so Cormack Capital decided to not invest further in the company and now both Need Supply and Totokaelo are closing permanently. Growth at all costs, even obsolescence.

 

[ghdvfddzgzdzg]

re: community and stores, I def feel that with Self Edge, specifically the NY location. always a good cast of characters when i've gone in there.

 

[IJReilly]

I think the real story here is why do successful independent retailers try to become the next mega-retailer? I went to college in Richmond and Need Supply was THE store. In 2015, they were doing ~$9M/year in sales, 40+ employees, and growing - a completely respectable business anyone could be proud of. But for some reason this wasn't enough for them. They had spent 20 years building up to $9M/sales, but decided to take on investors, acquiring Totokaelo, and trying to keep up with huge players like Farfetch. They got what they wanted "peaking at $50M/year in sales", but did so with a "growth at all costs" mindset that left them over-extended and easy prey to unusual circumstances. Boutiques need to learn when to say "Enough is Enough" and stop trying to expand every season.

Sounds sensible, but I can easily see how a business could view the options as either growing rapidly or getting crushed by larger, VC-backed online competitors. No idea about the specific case of Need Supply, though.

 

[BlakeRVA]

Sounds sensible, but I can easily see how a business could view the options as either growing rapidly or getting crushed by larger, VC-backed online competitors. No idea about the specific case of Need Supply, though.

I don't agree with that assessment. There are several successful mid-sized retailers that have carved out their niche in the industry and haven't been pushed out by Big Box players. Haven, Self Edge, Bodega, and Sid Mashburn all come to mind. There are advantages and disadvantages of being big, mid-sized, or small. I don't think it's a zero-sum game - "Get Big or Get Out".

With that being said, I think it's extremely challenging for retailers to scale from mid-sized to big in the current landscape. The industry is fragmented and too many players are competing for the same customers which squeezes out margin. Once the industry consolidates, it will be clearer who the leaders are and where their weaknesses lie. This will create opportunity for mid-sized players to make a play for the top spots.

 

[clee1982]

what did Need Supply carry exactly (aesthetics wise), did a quick browse, feels like a very crowd "theme" to be niche, guess they have to pivot or go big (and they decide the later)

 

[UrbanComposition]

This is SO important in retail. A good store should feel like a place you can drop by just to talk about the clothing or say hello and hang out a bit even if you have no intention of buying anything. So many stores open with this in mind but as they grow the idea becomes lost or watered down. Your client base is your crew, your supporters, and many end up becoming friends with the owners or staff. To lose sight of this in 2020 means your chances of being around much longer are fairly slim.

Gotta say I love that mentality. I like the guys at the SF store so much I bring them matcha (when next door is open) whenever I stop by. Next time I’m in NYC I’m going to bring Amaro to drink with @gdl203 and @conceptual 4est on the rooftop. And even though it’s more expensive than any other place in the city I bring alterations over to Ryan at Tailors Keep just because it’s a cool place to hang and shoot the breeze. As a matter of fact the only stores I’ve been to in the past few months are run by people or staff that I’ve connected with personally. I couldn’t wait for them to open to see them again. Even overseas purchases, I’ve bought little things here and there but really tried to support the people I know like Scott and Tony in London. I don’t want anyone to lose their livelihood, but especially nowadays I spend my money supporting people I actually know. All that based on interactions I had with them pre-COVID.

 

[kjb]

i'm a bit conflicted with this, as i love browsing stores and talking with the people at the shops. but knowing the occupancy restrictions in NYC for retail shops, right now at least for me it feels hard to take up space in a store with no intention to buy something. i feel like that spot could be used for someone who has a stronger desire to purchase. especially if the store asks for appointments to visit.

granted everyone's got a different perspective and i'm sure most places wouldn't mind it but it still weights enough on me where i've put off plans to visit places just because i'm not currently in a position to buy something outright.

 

[UrbanComposition]

i'm a bit conflicted with this, as i love browsing stores and talking with the people at the shops. but knowing the occupancy restrictions in NYC for retail shops, right now at least for me it feels hard to take up space in a store with no intention to buy something. i feel like that spot could be used for someone who has a stronger desire to purchase. especially if the store asks for appointments to visit.

granted everyone's got a different perspective and i'm sure most places wouldn't mind it but it still weights enough on me where i've put off plans to visit places just because i'm not currently in a position to buy something outright.

I’ve found that if you say outright that you just want to see what’s new and catch up, most employees in small shops like Self Edge are cool with chit chat until a customer comes in, and then they switch gears. I used to work in retail and, although there were those who seemed to have nothing better to do than have an extended chinwag, I liked seeing the regulars who stopped by, even if they didn’t buy anything. There’s definitely a right and wrong way to browse.

 

[Mariokartfever]

I’ve found that if you say outright that you just want to see what’s new and catch up, most employees in small shops like Self Edge are cool with chit chat until a customer comes in, and then they switch gears. I used to work in retail and, although there were those who seemed to have nothing better to do than have an extended chinwag, I liked seeing the regulars who stopped by, even if they didn’t buy anything. There’s definitely a right and wrong way to browse.

I worked in retail but it was at Abercrombie and I had to say "do you wear our jeans" to everyone who walked into the store regardless of who they were. Got fired for not saying it.

 

[blacklight]

Century 21, Off-price Pioneer, to Shut Down

The retailer is taking its insurers to court claiming its owed $175 million in business interruption insurance.

wwd.com

 

[gdl203]

They really missed the digital transition big time

 

[cb200]

With a Big CFDA Fashion Award Win, Kerby Jean-Raymond Shows What's Next

Since the very start of Pyer Moss’ launch in 2013, the label has been concerned with building a narrative that speaks about heritage and activism

www.highsnobiety.com

"The platform will merge fashion, art, music, philanthropy and wellness to “form an ecosystem of creativity that reimagines how consumers discover and interact with brands.”

Will be interesting to see how this is executed and what gets created and who is doing the creation and or curation.

 

[LA Guy]

With a Big CFDA Fashion Award Win, Kerby Jean-Raymond Shows What's Next

Since the very start of Pyer Moss’ launch in 2013, the label has been concerned with building a narrative that speaks about heritage and activism

www.highsnobiety.com

"The platform will merge fashion, art, music, philanthropy and wellness to “form an ecosystem of creativity that reimagines how consumers discover and interact with brands.”

Will be interesting to see how this is executed and what gets created and who is doing the creation and or curation.

I'm sceptical. That copy makes me skeptical. At the end of the day, if the UI/UX is not better, and doesn't better facilitate commerce, it will probably not work.

 

[clee1982]

They really missed the digital transition big time

+1, I think I browse their website (and Marshall) once, it's hard to use, and not everything is on it (especially the good stuff)