Discussions about the fashion industry thread

[LA Guy]

Interesting - are there also other factors that result in less unsold inventory there than here...e.g. more predictable/reliable customers, less competition (segmentation, obstacles w/ online competition), tax arbitrage selling overstock into US, narrower size ranges, etc.?

There is the same amount of competition online. I can think of at least 3 stores,and usually many more, carrying every single piece that I ever get from Japan. And this is excluding stores that I know have inventory, just not online. The difference is that the MSRP is enforced, and sales are truly end of the season (like it was in the 80s), and usually for no more than 20% off, so there is much less pressure to jump the gun. Anything over 40% off is invariable for things a few seasons old, so it's great for people like me who get fixated on old pieces and am willing to search google to the 25th page (I do this regularly), but that excludes about 99% of consumers.

One thing that I think helps is that seasonal stock, for the most part, seems to be bough very shallow, even at what one might consider pretty large retailers, and staples like standard jeans simply never go on sale. So, if you want a staple, with enforced MRSPs and shallow stock, there is pressure to buy immediately. If it's gone, it's gone.

I understand that there are very good reasons to not want to stock so shallowly. After all, if you sell out of a popular item, you are losing profits, but I think that if you assume that a popular item should sell through retail at say, 70%, you may already shooting yourself in the foot, since your actions to maximize profits leads to a calculation on the part of the consumer to decide at what price a certain item becomes a "buy" for them, rather than them having simply to choose between "buy" and "don't buy". That's just an unintended consequence of our retail model combined with the nearly perfect market that the internet has brought us.

 

[dieworkwear]

There is the same amount of competition online. I can think of at least 3 stores,and usually many more, carrying every single piece that I ever get from Japan. And this is excluding stores that I know have inventory, just not online. The difference is that the MSRP is enforced, and sales are truly end of the season (like it was in the 80s), and usually for no more than 20% off, so there is much less pressure to jump the gun. Anything over 40% off is invariable for things a few seasons old, so it's great for people like me who get fixated on old pieces and am willing to search google to the 25th page (I do this regularly), but that excludes about 99% of consumers.

One thing that I think helps is that seasonal stock, for the most part, seems to be bough very shallow, even at what one might consider pretty large retailers, and staples like standard jeans simply never go on sale. So, if you want a staple, with enforced MRSPs and shallow stock, there is pressure to buy immediately. If it's gone, it's gone.

I understand that there are very good reasons to not want to stock so shallowly. After all, if you sell out of a popular item, you are losing profits, but I think that if you assume that a popular item should sell through retail at say, 70%, you may already shooting yourself in the foot, since your actions to maximize profits leads to a calculation on the part of the consumer to decide at what price a certain item becomes a "buy" for them, rather than them having simply to choose between "buy" and "don't buy". That's just an unintended consequence of our retail model combined with the nearly perfect market that the internet has brought us.

Weren't the two links posted earlier showing that the same sale dynamic is happening in Japan?

The factors listed so far may explain why Japan hasn't experienced the same effect to the same speed, or maybe that they saw it start later, but it seems the problem still holds regardless of all these factors.

At least to me, that's what stood out. You have two cases that are different across a range of dimensions, but the one "treatment" (the internet and fast fashion) still has the same effect. That's the advantage of having two very different cases for comparison.

 

[LA Guy]

Weren't the two links posted earlier showing that the same sale dynamic is happening in Japan?

The factors listed so far may explain why Japan hasn't experienced the same effect to the same speed, or maybe that they saw it start later, but it seems the problem still holds regardless of all these factors.

At least to me, that's what stood out. You have two cases that are different across a range of dimensions, but the one "treatment" (the internet and fast fashion) still has the same effect. That's the advantage of having two very different cases for comparison.

er... I'll have to re-read those linked articles. You would not believe how scattered my brain is right now...

 

[jah786]

here is an interesting article about Private Equity and its relationship to retailing.
http://www.retaildive.com/news/private-equity-and-retail-a-match-made-for-striking/446836/

if PE works to speed up the decline of brands that have declining appeal and failing businesses, then all the better. the faster they leave, the better it is for those remaining.

 

[NGOStudio]

What do you guys think about the luxury market for small and indie brand in Japan, any article?

 

[happyriverz]

the internet has made comparison shopping too easy. Went to the only store in Chicago that stocks Craig Green yesterday and fell in love with these layered shorts. Searched Farfetch and found the same item for about $150 less

 

[bry2000]

I hope you at least thanked that shop in Chicago for their good work.

 

[clee1982]

Really hard for consumer to justify spending more when you can find less a single click away...

 

[LA Guy]

the internet has made comparison shopping too easy. Went to the only store in Chicago that stocks Craig Green yesterday and fell in love with these layered shorts. Searched Farfetch and found the same item for about $150 less.

So, this is the infamous "showrooming", and frankly, you can't blame customers. Something like Craig Green shorts aren't particularly inexpensive. It's not something most customers will just impulse buy, and if there is a the slight time delay between initial attraction and a purchase, your advantage is lost. Maybe it is a good idea for retailers to have a 24 hour price match on non-sale prices. That way, there is a distinct advantage for the B&M. If someone buys it from them, they can wear the piece immediately, and men are still Buy=and-Wear. And the customer can do the work of comparison shopping AFTER the fact. There could be a few extra steps put in the workflow needed to claim the price adjustment, that are not so onerous as to make the proposition an attractive one. For example, a screenshot that shows that the piece that you are looking for is actually available for purchase at the lower, non-sale price, requires a couple of additional steps. If someone finds something right away, they might do it, but they are unlikely to spend 24 hours doing just that. And you could, after some adjustment, probably figure out the time period so that the price adjustment on the sale is no more than 10-15%.

 

[dieworkwear]

So, this is the infamous "showrooming", and frankly, you can't blame customers. Something like Craig Green shorts aren't particularly inexpensive. It's not something most customers will just impulse buy, and if there is a the slight time delay between initial attraction and a purchase, your advantage is lost. Maybe it is a good idea for retailers to have a 24 hour price match on non-sale prices. That way, there is a distinct advantage for the B&M. If someone buys it from them, they can wear the piece immediately, and men are still Buy=and-Wear. And the customer can do the work of comparison shopping AFTER the fact. There could be a few extra steps put in the workflow needed to claim the price adjustment, that are not so onerous as to make the proposition an attractive one. For example, a screenshot that shows that the piece that you are looking for is actually available for purchase at the lower, non-sale price, requires a couple of additional steps. If someone finds something right away, they might do it, but they are unlikely to spend 24 hours doing just that. And you could, after some adjustment, probably figure out the time period so that the price adjustment on the sale is no more than 10-15%.

I mean, you can blame them. You just can't expect it won't happen. It's obviously not a very nice thing to do, but everyone does it.

I don't think price matching is the way to go though. Again, I don't think B&Ms should be competing on price. It's just a losing proposition. There's so much running against you -- sales tax, overseas VAT deductions, differences in fixed costs (even just labor), etc. Even if a store in San Francisco price matches something in Italy, I have to pay about $80 in taxes on a $1,000 jacket.

Advertising those pitches could even alert customers there are cheaper prices overseas. There are certain stores where customers aren't aware of FarFetch. Or you could be stuck in a position where you have to price match some absurdly low price because of some stupid loophole someone found, and then the customer gets indignant when they don't get what they want.

Again, going back to our early discussions, I think your best bet is to offer a combination of product and services that doesn't even allow a customer to comparison shop. Stop carrying some stock Craig Green thing. Have him make you a special model in an exclusive fabric. Or modify the design a little. Or frankly carry some other brand that allows you to carve out some other niche. Or whatever. But don't carry some navy jacket that someone is just going to buy from Bulgaria, where they pay sales associates 1/10th of the wages in San Francisco.

 

[Mulan]

I would imagine price matching also doesn't give your store that image of being a place for premium goods. You longer look like that high end - exclusive - luxury - boutique that you want to be known for. Isn't that also one of the reasons why many stores choose locations away from high street brands?

 

[clee1982]

I mean, you can blame them. You just can't expect it won't happen. It's obviously not a very nice thing to do, but everyone does it.

I don't think price matching is the way to go though. Again, I don't think B&Ms should be competing on price. It's just a losing proposition. There's so much running against you -- sales tax, overseas VAT deductions, differences in fixed costs (even just labor), etc. Even if a store in San Francisco price matches something in Italy, I have to pay about $80 in taxes on a $1,000 jacket.

Advertising those pitches could even alert customers there are cheaper prices overseas. There are certain stores where customers aren't aware of FarFetch. Or you could be stuck in a position where you have to price match some absurdly low price because of some stupid loophole someone found, and then the customer gets indignant when they don't get what they want.

Again, going back to our early discussions, I think your best bet is to offer a combination of product and services that doesn't even allow a customer to comparison shop. Stop carrying some stock Craig Green thing. Have him make you a special model in an exclusive fabric. Or modify the design a little. Or frankly carry some other brand that allows you to carve out some other niche. Or whatever. But don't carry some navy jacket that someone is just going to buy from Bulgaria, where they pay sales associates 1/10th of the wages in San Francisco.

so you mean a world without commodities, you might as well turn back globalization and internet.

Ps not trying to sound snarky, but how do you have this happen in real other than 3 stores? Or you need offline only item, few brand tries but most end up not able to.

 

[dieworkwear]

so you mean a world without commodities, you might as well turn back globalization and internet.

Ps not trying to sound snarky, but how do you have this happen in real other than 3 stores? Or you need offline only item, few brand tries but most end up not able to.

Feel like we're retreading old ground, but again, I don't think there's a single answer to your question. There are many paths to the same solution, but that solution is about addressing the central problem. IMO, price matching doesn't address the central problem.

There are lots of examples of big companies getting out of the commodity problem. Hermes, Barbour, Supreme are all examples. There are lots of British companies selling made-in-UK waxed cotton jackets. Barbour sells most of them in that market because, if you want that look, having an "authentic" Barbour is important to a lot of customers. Barbour is not an offline only item, and they're sold in a ton of stores. Many of those stores are protected by Barbour distribution rules.

It's less about saying "X is the path for everyone" and more about identifying the core problem, then figuring which solutions address the core problem. This is like asking "how to developing countries grow the economies?" and expecting someone to tell you the answer. Each place will need to find their own solutions, but they're often tied together by having to solve the same issues. By understanding the core issues, you're better able to figure out which solutions are worth pursing. That's not the same as looking for silver bullets to growth/ development/ B&M strategies or whatever else.

 

[winston86dit]

Dieworkwear, I agree with what you're saying and have been saying in this thread about coming up with a distinguishing difference in brick & mortar. But, using Supreme, Hermes, and Barbour are hard if only because all three of those brands have something a lot of others don't, and that's heritage and/or street cred. I wouldn't say Supreme's ability to sell lies in their product, it's a combination of factors and I think it's the same for someone like Hermes.

Selfedge is a good example of a good, quality brick & mortar doing their own thing with a unique (to some) collection of brands. I say to some, because not everyone is going to view what they do as unique. After all, most of what they carry is jeans and button down shirts. But they have chosen to play in a certain niche and it's helped them.
I think part of the problem is that most stores can't pick a lane. They choose to stock their store too wide in hopes of getting 'more' customers. Or maybe they just like a **** ton of different brands and can't choose. Or maybe they just don't have much to say in general. There are still ways to be unique out there and playing into a certain niche is going to ultimately be the thing that can set a retailer apart.

Gone are the days of the department store being the trend-setters in retail. All of those places are now just competing on price with each other and with the new crop of online department stores (Mr. Porter, Ssense, etc).

 

[dieworkwear]

Dieworkwear, I agree with what you're saying and have been saying in this thread about coming up with a distinguishing difference in brick & mortar. But, using Supreme, Hermes, and Barbour are hard if only because all three of those brands have something a lot of others don't, and that's heritage and/or street cred.

That heritage and cred is all manufactured though. There's obviously a baseline for it, but tons of companies have been around forever and haven't been able to invent the same stories. It's not just that those companies have been around for a while (and honestly, Supreme isn't even that old). It's that they strategically put themselves in those positions.

J. Crew has been around since the early '80s, but they haven't been able to position themselves in the same way. Or to the degree they did (Americana prep), that aesthetic has somewhat died.