With the rising cost of clothing production and consumer spending driven by fears of a recession, it is a very tough time to be in fashion.
Recent research found that consumer interest in spending on "apparel, footwear and accessories" is the lowest it's been in years. Independent designers, already struggling to compete with the rock-bottom prices offered by fast fashion, now have to work even harder to justify prices and win over customers who are being more careful about spending.
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First established in New York City in 1930, Fashion Group International has been through many different economic cycles when it comes to supporting and promoting emerging fashion businesses.
Courtesy of FGI
Here's What To Do When 'Retailers Are Purchasing Less'
TheStreet talked to current CEO Maryanne Grisz about the challenges of doing so in this economy as well as what it takes to start and maintain a fashion business now. The interview has been edited for length and clarity.
TheStreet: What changes related to the economy have you observed in the fashion industry over the last year?
Grisz: Our retailers are purchasing less. The sales from retailers have lessened about 20% in purchasing moving into the next season and so everybody is looking to work together [to bring down costs.] Collaboration has been a way for young talent coming out of the pandemic and an essential way for brands to be introduced to different markets. The war in Ukraine has also certainly shifted the economic landscape in many ways.
In May, FGI held its 27th annual "Rising Star Awards" and recognized nine leaders in categories such as evening wear, casual clothing, accessories and sustainability. What do people new to the industry have to understand about the road ahead?
As artists, many creators enter the industry because they have a love for art or fashion or beauty or accessories or textiles. Creating samples is how most people start careers. The next piece that is so, so important is scaling. Once someone has a few orders or a lot of orders, the business side really kicks in.
It's usually that two- to four-year time period where the businesses are very vulnerable. That's really where the business acumen is so important [because] it's beautiful to create 10-15 samples but if a retailers purchases 50 or 100 pieces, do you have that fabric? How do you manage their production, where it's produced, the profit margin...? These are details that really need to be addressed when scaling up and that's why it's important for us as an organization to support these new businesses as they grow.
What are some things one needs to be aware of in order to stay successful in the fashion industry in 2023?
There's been a lot of disruption from economic scale and inflation. It is a constantly-changing landscape right now and everyone is trying to adjust to see where the new markets are. The retail landscape has been changing for many, many years but through the pandemic so many new distribution platforms have emerged. Instagram, TikTok and so Instagram and so many of these digital platforms that used to only be social are now closing business deals.
Both A Very New And A 'Very Old Way Of Doing Business'
How has the retail landscape changed in the last few years?
I'm seeing so many pop-ups; just look at New York City. Just because of the cost of real estate, pop-ups have been a way for both legacy brands and young brands to really test the market but some stay for much longer. While that one-on-one experience is a very old way of doing business, brand owners are really able to talk to their customers and get feedback. These pop-ups are really very essential in gaining information on how to mold their product for the market.
An old adage from the merchandising industry is getting the right 'product, placement and promotion.' This can come from the designer side or from the retail side. It's trying to make sure you're in the right place at the right time because it's a moving target right now.
So it's a little more complicated than the constantly-repeated "the mall is dead?"
What I'm seeing is that malls are becoming lifestyle centers. It's really speaking to what people need now in their life. It's not just a place to shop and put stores but a lifestyle destination. For some that's an easy term [to understand and embrace] and for some it's more difficult but it really just speaks to our changing consumer needs and lifestyle. The pandemic was a huge shock and not every business was able to adjust [...] but the goal is always to speak to and maintain your most loyal consumer.
