Merchant Innovation

Fashion Startups Can Do Without Department Stores

If fashion startups stay on track, it’s possible that department stores could go the way of the dodo.

That’s the thinking of some panelists who spoke in New York on Monday (May 4), including Jennifer Hyman, co-founder and chief executive of fashion startup Rent the Runway; Julie Frederickson, co-founder and chief executive of startup Stowaway Cosmetics; and startup investor David Tisch.

As reported by The Wall Street Journal, the panelists explored the notion that fashion brands increasingly seek a direct connection to consumers via subscription models and mobile apps, which could be pushing traditional department stores toward irrelevancy.

Hyman — who co-founded Rent the Runway in 2009 — pointed to examples like Netflix and Birchbox as companies whose success with subscription models paved the way for her company to implement its own last year.

“A huge part of our business is subscription,” she remarked, according to WSJ.

Tisch added, “A broad education is happening in the market, new ways of buying things and new ways of getting them delivered to you.”

As the WSJ shared, the panelists pointed out that the fashion startup boom is not doing away with physical retail space entirely; rather, companies are supplanting the need for department chains — and supplementing their mobile and online presence — by setting up their own brick-and-mortar locations. Rent the Runway is one such example, having opened a number of locations on the back of its initial eCommerce success.

What is also chipping away at the necessity of department stores, said the panelists, is the fact that consumers are increasingly favoring social media as a means for exposure to fashion brands and new styles.

"A huge portion of discovery of new products is now happening on Instagram and Pinterest for women,” said Hyman, according to the WSJ. “Pinterest and Instagram serve as virtual malls or virtual cataloging for every woman across the globe.”

Tisch referred to his mobile app Spring as another medium where fashion shoppers can discover new brands, as well as manage the packaging and shipping of their items.

Frederickson, reports the WSJ, concurred rather definitively with her co-panelists, stating outright that the new business models which startups such as hers implement are bringing about “the end of wholesale.”

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