Retail is an industry dominated by trends. Whether it be the latest season’s fashion, embracing technology, innovative growth strategy or the next big concept in brick and mortar, the businesses that are built to last are also built to adapt. Those who can shift to accommodate the latest styles, consumer tastes and tech advancement without seeming to skip a beat will prove to have staying power.
Not all trends are positive…and sometimes shifting too quickly can spell imminent death to a business. With Halloween upon us, we thought it was a good time to talk about a retail trend that in the last few months has — at least from the perspective of the industry establishment — played out more like a horror film than a fairy tale. For large brands like Gap and Macy’s, perhaps nothing is more terrifying than the paradigm shifts brought about in the retail industry by…fast fashion.
The retail industry has certainly felt the effects of fast fashion. Very often, its own designer labels are the source or inspiration for styles that are produced en masse with quick development times and — here’s the killer of a difference — offered at a fraction of the cost of those items that begat them.
Fast fashion could, on one hand, be viewed as a response to changing norms; at the same time, one could argue that companies in the space have actually been integral in establishing the new paradigm — ironically, it’s all happened almost too fast to tell either way. Its characteristic short development and manufacturing times, and a tendency toward replacing popular items in stores rather than replenishing them, have trained consumers to make more impulsive buying decisions knowing that must “get it now” or it will very likely be gone tomorrow.
Regardless, this model has gained traction in recent years due in part to millennial consumers who show less brand allegiance and opt instead for the ability to express their changing personal style more fluidly, and it has helped to disrupt the retail status quo.
Chains like Zara, Forever21 and H&M have made their mark by offering new styles as quickly as every three weeks and offering designer knock-offs at significantly lower costs. This strategy demands that development and manufacturing times, in turn, be shrunk to a tiny bit of what they once were in traditional retail models. This operational shift in particular has sent competitors scrambling to figure out how to compete.
Long-standing retailers like Gap, J. Crew and Macy’s have struggled in recent months, thanks in part to their attempts to keep up with the new fast fashion paradigms. As these brands try to convert longer design, development and manufacturing cycles into short turnaround times and keep up with the quickly cycling styles that shoppers now expect, they are often doing so at the expense of their brand’s core quality proposition.
J. Crew experienced consumer backlash when the quality of its sweaters came under fire. It was an occurrence that plainly articulated the reality that established brands can’t have their cake and eat it too. If they are willing to sacrifice quality for faster fashion cycles, they must also be willing to reduce price — a truly horrific notion that many of the big players are struggling to reconcile.
Not all of the major chains are getting butchered like Camp Crystal Lake counselors by fast fashion, however. Unlike its sister companies under the Gap Inc. umbrella (such as the namesake chain and Banana Republic, Old Navy has managed to flourish — making up, in the past few quarters, nearly 40 percent of the company’s overall profits in 2014. Stefan Larrson, who spent 15 years at H&M, has been credited with transforming Old Navy from a dowdy discount brand into a symbol of affordable fast fashion and the jewel in the cap of the Gap Inc. crown. Putting less of a historical emphasis on quality, and more on lower price points, Old Navy was positioned far better than the rest of Gap Inc.’s portfolio to weather the fast fashion storm.
If fast fashion is the psycho killer in a horror movie populated by major retail clothing chains, Old Navy just might be “the final girl” — but she’s not out of the woods just yet.
The recent departures of creative leadership at all three aforementioned Gap labels after extremely short tenures (just over a year in most cases) — including Larrson, who is now CEO at Ralph Lauren — suggests that instability may undermine the strides that the corporation has made in adapting to the scary new norms in retail.
While fast fashion is a story that is still unfolding, one aspect in particular makes it a horror story: there will be casualties. Wet Seal, for example, a long-standing teen fashion label, is just the latest in a long line of brands to file for bankruptcy in recent months.
And that’s how you set up a horror sequel, guaranteeing that fast fashion will strike again.