Tariffs

Articles Worth Reading - Edition 7.2

Wholesale Channel Pressures

Investment Banking group Cowen dug a bit into the wholesale channel for retail & consumer brands

Article Explores:

  • Department store inventory levels

  • Competing channels

  • What’s missing

Notable Content & Quotes:

  • Inventory levels at department stores are reaching multi-year highs (worst level in four years) which will put pressure on de-stocking and markdowns

  • Financial performance at department stores is declining due to various competing channels and lower returns on investment within their digital group

  • Brands own DTC efforts, deterioration in foreign tourist traffic and increasing penetration of subscription and resale channels are negatively impacting department store sales.

  • Retailers continue to desire brands which provide differentiation, good quality to value propositions and timely and accurate fulfillment.

The Need to Evolve

https://www.businessoffashion.com/articles/opinion/op-ed-winner-takes-all-trend-raises-tough-questions-for-everyone-else?utm_source=daily-digest-newsletter&utm_campaign=1640109185718485&utm_term=11&utm_medium=email

Article Explores:

  • Lack of profitable fashion players

  • Benchmarks on company’s operating expenses

  • Need to invest in channels, segments and markets

  • Evolution of change needed

Notable Content & Quotes:

  • 80% of the “listed” (meaning: their financials are publicly available) fashion players are failing to make money

  • The top quartile of fashion players were seeing 11% revenue growth

  • Companies are investing in areas like e-commerce, infrastructure and marketing but only a few are getting a sufficient return on those investments.

  • Need to spend dollars wisely in brand-building, expanding channels of distribution and entering into new markets while also working on product/design to capture revenues.

Building a Brand Outside of NY & LA

https://www.businessoffashion.com/articles/professional/how-fashion-brands-strike-gold-outside-ny-and-la?utm_source=daily-digest-newsletter&utm_campaign=1640040329672748&utm_term=11&utm_medium=email

Article Explores:

  • Building a product line and following outside of the lights of NY & LA

  • Gaining the support of your local media outlets and customers to introduce the brand

  • Exploring more unique ways to gain awareness than through the typical higher cost paths

  • The upside & downside to being outside of the big talent pools

Building Fashion People into YouTube Creators

https://fashionista.com/2019/07/fashion-people-youtube-videos-strategy

YouTube is a social channel that has an incredible amount of new video content uploaded to it daily. The channel offers designers and brands a chance to show a bit of who they are to its current and potential customers in a low key and relatable way. It should not be overlooked as a key part of your social media outreach.

Article Explores:

  • Marc Jacobs doing a learn to drive and car shopping YouTube video

  • Naomi Campbell spending time between flights and sanitizing her airline seat

  • Vlogging in pursuit of views, likes and channel subscribers

Notable Content & Quotes:

  • Derek Blasberg, YouTube's head of beauty and fashion partnerships, has convinced the likes of Victoria Beckham, Naomi Campbell, Alexa Chung, Rosie Huntington-Whiteley and Marc Jacobs to start vlogging on a regular basis

  • Mr Blasberg has also masterminded some very clever partnerships:

    • Emma Chamberlain and the Dolan Twins, whose channels have more than 8M and 10M subscribers, respectively, sat front row at Louis Vuitton's runway shows for the past couple of seasons.

    • YouTube personalities Rickey Thompson and Jay Versace have hosted videos and livestreams for Alexander Wang

    • Liza Koshy, a YouTuber with a whopping 17M subscribers, hosted the 2019 Met Gala live stream for Vogue.

Influencer Fraud

https://www.businessoffashion.com/articles/professional/influencer-marketing-fraud-buying-followers?utm_source=daily-digest-newsletter&utm_campaign=1639849027650017&utm_term=11&utm_medium=email

As you would have guessed, people are finding fraudulent ways to catapult themselves to higher social media status to lure advertising dollars. You might have read as well that huge numbers of the reviews on Amazon and other online retailers are false even though supposedly “verified”. This will likely get worse and with it a mistrust by consumers. If you are a designer, you are of course bound to be biased on your own designs which is expected but at least your followers can see your product through your own eyes. If you have followed real estate, you have undoubtedly noticed many of the real estate agents putting into the description “what they like most” about that particular listing. Assuming you liked each of your offerings enough to put it on a line sheet than why not in your social meeting posting explain what “you” like most about that item?

Article Explores:

  • How individuals are fraudulently building their social media status

Notable Content & Quotes:

  • individuals are hiring “click farms” to like or comment on posts

  • On average, influencers who buy likes spend $49 for 1000 followers on Youtube and $34 for 1000 followers on Facebook. The rate is even lower on Instagram, though, with influencers being able to pay as low as $16 for 1000 followers.

  • There are vending machines in Russia that sell Instagram likes

  • In one survey analysed by Cavazos, a University of Baltimore professor and economist, 25 percent of followers of 10,000 influencers surveyed were fake.

  • Groups of influencers who team up to like and comment on each other’s content in order to boost the engagement rate and game the Instagram algorithm so that it becomes more visible to followers.

Articles Worth Reading - Edition 7.1

Vietnam’s Apparel Industry Braces for Cost Surge

https://asia.nikkei.com/Economy/Trade-war/Vietnam-s-apparel-sector-fears-cost-surge-as-tech-giants-move-in

Article Explores:

  • Rising costs of labor in Vietnam

  • Tech giants moving into Vietnam creating a labor squeeze

  • Vietnam may be next target for US placed tariffs

Notable Content & Quotes:

  • Major apparel companies are halting or significantly slowing down any expansion in Vietnam

  • With a population of 95 million and close proximity to China, Vietnam has long been a popular destination for the apparel industry hoping to seek lower production costs.

  • Wages in Vietnam have increased 4 fold in the last 10 years with a governmental directive to increase minimum wages by over 10% yearly.

  • "A lot of companies are moving to Vietnam, but Vietnam takes advantage of us even worse than China. So there's a very interesting situation going on there," Trump said during an interview with Fox Business.

REVOLVE’s Web Attributes

https://www.cowen.com/capabilities/investment-banking/

Article Explores:

  • Cowen’s equity research team explored REVOLVE’s web base attributes

  • Survey results of how REVOLVE’s web-based customers interacted with their web platform

Notable Content & Quotes:

  • REVOLVE’s identified attributes are (1) Engaged Customers (2) Aspirational (3) On-Trend (4) High Satisfaction

  • REVOLVE’s web customer is highly engaged with their web site

    • 35% shop the site once a week

    • 32% are on the site daily

    • 20% visit bi-weekly

    • 12% visit the site once a month

    • 2% visit infrequently (once in awhile)

What does REVOLVE’s web-based customers shop for?

  • 29% Clothes to go out in (excluding work & everyday clothes)

  • 26% Clothes for everyday wear

  • 26% New product discovery

  • 18% Work clothes

Virtual Reality Clothing

https://www.businessoffashion.com/articles/fashion-tech/virtual-fashion-digital-products?utm_campaign=a830fada87-can-influencers-save-the-fur-industry&utm_medium=email&utm_source=Subscribers&utm_term=0_d2191372b3-a830fada87-416999661

Article Explores:

  • Do you kids spend money on-line to dress their avatar in a unique set of clothes or armor (called skins)

  • Is the world of virtual clothing to try on continuing to surge forward

  • Are we starting to see merger of virtual clothing and social marketing?

Notable Content & Quotes:

  • Epic Games’s Fortnite, the popular online game that has over 250 million global users, reportedly earns $300 million a month selling skins.

  • Apps that allow users on Instagram and Snapchat to alter their appearance are wildly popular, and several brands have also started using augmented-reality technology to let shoppers virtually “try on” clothing and shoes.

  • “Some kids can’t afford Gucci in real life, but they can in the digital world. It works as an entry point”, said Akash Niham, the CEO of virtual avatar startup Genies.

  • Carlings, a Scandinavian fashion brand, debuted a 19-piece virtual collection in November 2018 that sold for €10 to €30 (roughly $11 to $34). Shoppers who bought the virtual products submitted photos, which the brand turned into 3D images.

  • Some brands are already creating digital images for Influencer Instagram posting to identify the interest level before producing the item.

  • Companies like Ann Taylor, BetaBrand and Hugo Boss, which use virtual clothing to partially replace sampling in the design process, as does the fashion supply chain company Li & Fung.