Is the Fashion Industry in Crisis Mode? š¬
- Rachel Erickson
- Jul 21, 2024
- 5 min read
INDUSTRY INSIGHTS
A mere 12 days ago, on July 9, 2024 a new article about Nike came out from Alex Bitter of Business Insider Magazine.
Its title: āNikeās Trying to Pivot. Itās Not Working Just Yet.ā
Throughout the article, it discusses the various ways in which Nike has tried to save money and improve its stock price over the last year, all with very few results. Their plan has included multiple rounds of layoffs, the re-hiring of past top executives and major changes to their most popular product lines.
THE TRICKLE-DOWN EFFECT
When those of us who keep a keen eye on these kinds of situations start seeing articles like this about Nike, our ears perk up.
One of the giants in the apparel industry, Nike is the brand that so many of us aspire to be like. Theyāre the brand that other multi-million dollar brands benchmark against, and they always seem to be untouchable.
So what does it mean for the rest of the fashion and apparel industry, specifically the performance apparel industry, when we hear news like this?
REALITY BITES
Well, first, itās important to note that Nike has probably survived the turmoil of 2023 and 2024 longer than most of us. The number of brands that Iāve seen close their doors, sell off their remaining inventory and call it quits in the last year is quite staggering.
Inflation rates here in the US are making it harder and harder to maintain our standards of living. Iāll even admit that, before last year, I couldnāt have told you what a dozen eggs cost at the grocery store. If I needed eggs, I just bought them and didnāt mind too much about the cost. Today, the national branded organic free-range eggs cost $6.49 at my grocery store, the store brand version costs $4.99 and the non-organic dozen sit at $3.99. I scrutinize the prices now because my grocery bill went up by about $75.00 per week year over year, and I donāt have kids or pets to buy food for every week. I canāt even imagine what others are now spending just to feed their families.
So when it comes to fashion, our industry has become a bit of an after-thought. People everywhere are trying to figure out how to buy groceries that donāt break the bank. How can we expect them to go shopping for new outfits?
FAST FASHION
I canāt write this newsletter without mentioning the rise in fast fashion because of all this change in our global economy. When people do want or need a new outfit today, they turn to the most cost-effective option.
Brands like Temu and Shein are seeing astronomical profits by making 7,000 new styles (not individual garments - STYLES) per week! Quality control is at an all time low and our consumers think that wearing a garment 3 times makes it āold.ā 8% of everything we make right now ends up in a landfill because it falls apart faster, and we just continue this cycle over and over again.
A MISSION AND A RESPONSIBILITY
At Unmarked Street, Iāve always been vocal about our ultimate mission to be outspoken about these issues and help to make change in our industry.
But we need everyoneās help to get it done. Those of us in the apparel world who are trying to manufacture ethically, work with circular fashion ideas, demand better options and educate our friends and families about our work are going to be crucial to the change we need to see. So donāt give up!
I know thatās hard to say when weāre all pinching pennies right now, trying to figure out how to get out of the red in our businesses. But I truly believe and know in my heart that giving up is not an option. We cannot allow the fast fashion companies of the world continue to behave in this way.
OK, IāM OFF MY SOAPBOXā¦
So how do we survive?
How do we help our brands and our businesses stay afloat until things turn around for the industry? (Because they absolutely will!)
Last week, we put out a podcast episode talking all about this.
In this episode, youāll hear:
Make sure youāre bringing in more money than you are spending.
My huge goal for the year!
Think about your ROI on anything that you do in your business and really hone in on your brandās messaging.
Hard truth: You will not always have new customers coming in.
Lock down those systems and processes, yes, even the boring stuff, so you are prepared for that growth in the future.
Check it outā¦
Our podcast can be found on Apple, Spotify, YouTube, Audible and any other listening platform that you prefer!
YOUR TARGET CUSTOMER IS KING
The lessons that Nike is learning, and is also then subsequently teaching to the rest of the market, is that we all need to lean into our core target customer more than ever. Always an important topic and the very first lesson that I teach in my online course, knowing your target customer is everything for a brand.
For example, Nike has seen tremendous growth over the years in their lifestyle apparel and shoe categories, but their core target customer is that elite athlete (specifically a runner) searching for the best of the best in performance gear.
Theyāre admitting publicly now that their strong sales in performance apparel and shoes canāt outweigh the decline in the lifestyle category, and this is one of the big contributors to their difficult situation.
Budget and Spend Wisely
Every business book Iāve read recently starts with the simplest of lessons:
āTo succeed in your business, you have to make more than you spend.ā
At Unmarked Street, weāre making some really difficult calls right now for our company. Weāve had to stop paying for a few services and subscriptions to bring our expenses way down, which means that our team is putting in a lot more effort every day to make up for those losses. But itās my goal this year to be profitable. Even if itās just $1.00 more than I spent, we are going to do it.
Slow Down to Speed Up
We are taking the time to stop developing new products for our top clients right now at Unmarked Street. Instead, weāre putting a big focus on process.
Seems counterintuitive, right?
Truly, this is the ideal time to build your brandās standard operating process manuals, build an ideal timeline and calendar and put a solid plan in place for the next 5-10 years. Because when (not if, but when) everything starts to change and turn around, you must be ready. You must be prepared. You must be able to automate and speed up your development work when that time comes. And if you just continue to work in chaos, putting out fires every day, you will not be ready to take advantage of the market when it improves.
You Are Not Alone
On Monday, I reserved an office space to go do my Q3 and Q4 business planning. Armed with sticky notes, sharpie markers, white boards and folders full of notes, I put my headphones on and put a plan on paper.
We know itās tough out there right now, and if you need help to get your house in order, build that process manual or map out your 5-10 year business plan, we are here for you.
And in the spirit of saving as much as you can right now, I realize that you might not be looking to hire someone to come help with these tasks. But you can get all of the information you need in our course at a fraction of the cost.
Sending you all of my best as we all continue to weather this storm.
āThis, too, shall pass."
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