New Fashion Startup Bets Its Future On Off-Price Luxury

Fashion Startup Bets Future On Off-Price Luxury

It’s hard to find a retail fashion category that’s reliably successful these days. Brick-and-mortar discounters like T.J. Maxx are thriving despite social distancing rules, which is not the most stable success platform. Fast fashion already claimed a victim this week as Lucky Brand filed for bankruptcy, and H&M announced it was shuttering 170 stores across the globe due to the pandemic-driven digital shift.

“We can already see that the pandemic has caused changes in customer behavior that will accelerate the digitalization of our industry,” H&M Group CEO Helena Helmersson said during a recent conference call. “We have increased our customer base online, and many of our customers — in-store customers — are now multichannel customers.”

But even online, it’s hard to see a trend. Luxury fashion is recovering. Vintage fashion, at the same time, is having a moment. As hard as it is to handicap the category, a new online fashion startup called Affordable Chic – which launched online on Jan. 20 – is betting on just that: affordable luxury clothes for working and budget-conscious women.

Founder Marialuisa Garito says the idea for her company came from local research.

“Being Italian, I love beauty,” she noted. “Beauty in my country is not just style – it is also quality. Because of this, I faced a huge conflict: wanting to maintain style and high-quality clothing versus saving my money to provide music lessons, travel opportunities and other educational experiences for my daughters. What I noticed in the last couple of years in talking to my design clients and just in walking New York City is that women are often the main income sources in their families. Often, their demands are at home with the kids, so they have a deep knowledge of their budget. And when you have budgetary constraints, you try to address your money in a smarter way.”

Before coming online with Affordable Chic, Garito sold her inventory via office trunk shows and private events. It wasn’t just a move toward affordable luxury that brought her to the venture – it was what she saw as a lack of service from other retailers. Zara, she said, lacks the right quality. Other retailers had the quality, but charged twice the price of her daughters’ cello lessons for a dress.

“The value of the two things were imbalanced,” Garito explained. “There is a financial reason that women are having a hard time, and then there is another reason: the pandemic. During this hard time, I’m trying to anticipate the market. I believe there will be a trend toward affordable luxury, with ‘affordable’ being the key word. It will extend from fashion to furniture and will include other categories as well.”

New retail dynamics show that Garito is on to something. For example, a North Carolina-based brick-and-mortar chain called Off Price Luxury says it has successfully reopened in several markets, including Charlotte.

Chinese eCommerce behemoth Alibaba has just announced a new foray into off-price luxury fashion as well. Called Luxury Soho, the site will be part of its ever-growing Luxury Pavilion site, providing “various solutions for different scenarios,” Weixiong Hu, vice president of Alibaba Group and general manager of its Tmall fashion division, said this week. This includes “maximizing the life cycle of luxury products,” while enabling brands to “protect their premium image on [Alibaba’s] Luxury Pavilion.”

“Many luxury brands are traditionally hesitant to openly sell off goods via significant discounts (and, in fact, have fought with department stores and other third-party stockists for years on this very point, which has prompted many to essentially revert to a direct-to-consumer (DTC) model that includes almost exclusively selling at least certain types of products (i.e., non-licensed goods) by way of self-owned and operated channels),” says fashion trade magazine The Fashion Law. “However, the luxury market is not immune to the talk of discounting in the wake of the global health pandemic, particularly as their revenues take a marked beating, with the effects of closed stores and diminishing consumer confidence in the market only expected to worsen in the second quarter of the year.”

And while she is building Affordable Chic into other budget-friendly luxury categories, when asked to name her favorite designer, Garito’s answer is surprising.

“I like Brunello Cucinelli because I like his philosophy,” she said. “First of all, he is loyal to his employees. Second, he started with an obsession around quality. He traveled the world looking for a very specific type of cashmere. And he didn’t come from the fashion world – he was studying engineering, and then he dropped out of school to follow his passion.”

And now, Garito is hoping to follow in some more affordable footsteps.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.