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Brand market report: Brands move with the times

Industry leaders met to discuss the innovative ways brands are adapting to industry changes.

With prolonged economic constraints at home compelling UK fashion brands and retailers into tackling overseas markets, and the growth of digital channels changing how consumers interact with brands, the branded fashion sector is undergoing a rapid evolution.

It was with this in mind that Drapers brought together a panel of delegates from brands and retailers to discuss the findings of our Brand Market Report in association with retail software provider K3. We surveyed more than 100 brands across all sectors and market levels for the report, and despite the tough economic climate found that nearly 81% of them said their turnover for 2012 was up on the year before, with 93% forecasting a rise in turnover for this year.

However, due to the impact of the unseasonably cold weather on recent sales, many of the fashion businesses at the Drapers breakfast discussion at the Haymarket Hotel in London, were less optimistic.

Katy Ingram, commercial director at Gray & Osbourn, said it had been “a pretty mixed picture” for the womenswear catalogue retailer, due to snow at the time it started selling its summer collection. However, she added that business is “definitely picking up now” and that part of the answer has been tackling discounting.

She explained: “One of the things we’ve been working really hard on over the last 12 months is pulling back all the discounting, because our customers are prepared to pay the right price for things they want.”

Paul Brennan, merchandising director at designer womenswear etailer Net-A-Porter, said retailers are competing on price to avoid “getting burnt on inventory”, but warned that the resulting discounting “erodes” their value position. Brennan said brands, especially in the luxury arena, need to “keep educating the customer” on their value in areas such as service. “We are a luxury fashion business.

It isn’t luxury if it’s on markdown,” he added.

Despite the difficulties faced by many at the table, Katrina Nurse, finance director at Topshop and Topman, said the young fashion chains experienced one of their best years ever last year, largely down to successfully capturing the chino trend, highlighting the difference a strong and well-communicated product offer can make.

However, she added that the like-for-like comparison was difficult 12 months on, as there is no new trend coming through.

Nurse said: “We’d like to think it’s going to be great this year, but it is very much driven around new initiatives such as international expansion, growth online, and new store openings. Growth has to come from new ideas and opportunities.”

With a reduced spend on the high street, fashion brands and retailers are looking to entice the consumer with constant new product. This was shown in our report, which found that 43% of brands now offer more drops per season to differentiate themselves from rivals. Simone Williams, ecommerce manager at womenswear chain East, emphasised the appeal of new product and said the retailer has a drop every couple of weeks throughout the seasons, as its “customers react incredibly well to newness”.

She added: “Because we target a slightly older demographic, trends aren’t as relevant for us. We try to follow key colour trends, key shapes, and move the product on but it’s not about trying to do that first [trend] move.”

Dominie Cripps, head of brand at Joules, added that seasonal product is disappearing and that the lifestyle retailer has had to increase its number of drops, partly due to the weather. She said: “The early spring has had to be more winter, and vice versa with the July drop. You can’t rely on it being high summer anymore.”

Drapers’ Brand Market Report found that 71% of the surveyed brands sell internationally, and this was one of the hottest topics at the breakfast. John Scott, head of international business development at Debenhams, said British fashion brands have been travelling globally for 10 to 15 years and are more robust than those from other countries.

However, not every British brand has true global reach. Douglas Hood, owner of brand management consultancy Outside Looking In, explained there are brands and global brands. He said: “There are brands that just don’t travel; they’re beautiful, but they don’t work. We’ve got to say to ourselves this is a global brand, or this is a UK brand.”

Retailers and brands may also need to adapt their product to different markets. Antony Comyns, head of ecommerce at shirt retailer Hawes & Curtis, said fashion retailers have to account for different cultural expectations, such as in the US where the label on the shirt has to be visible, while pricing differences between territories are also an issue.

Comyns continued: “If I can get £150 for a shirt in the US and £50 here, how do we manage that? It’s a fast-moving trend [international] and no one really has the answer in how to channel that.”

Establishing a truly multichannel business structure was one of the main objectives for the brands we surveyed, with 44% describing themselves as at least partly multichannel. Attendees, meanwhile, stressed the importance of making content channel appropriate.

Brennan said the mobile app is core for shopping and that Net-a-Porter is now designing all of its online content to work on tablets, and is also launching a magazine for consumers’ “relaxing time”.

Forty per cent of maternitywear brand Isabella Oliver’s business comes through mobile, but head of brand Helen Townshend said its print catalogue remains vital, as it “drives business to the website and acts as an acquisition tool”.

She added: “We’re looking to make our catalogue a luxury item for our customers. If it looks beautiful, then it is not seen as a catalogue that comes through the door and goes straight in the bin. It becomes a ‘stay piece’ [something they keep]. Like the Toast [lifestyle retailer] catalogue, I consume it in a different way; I take it to bed at night and it’s my ‘me’ time.”

However, in order to run a successful multichannel business, it’s essential to have the right IT solutions in place behind the scenes. When our survey asked brands which IT solution would come to play the greatest role this year and next, 25% of them cited software that supports multichannel functions, and 25% said ecommerce functions.

Tony Bryant, head of business development at K3, said businesses need to implement a platform that “is agile enough to meet future retail aspirations as they emerge”, but also that supports immediate challenges, especially fulfilment. He added: “In multichannel, the model is moving from replenishment to store, to now fulfilling anytime, anywhere, any product [direct to the] consumer. The whole logistics model changes; whether it be a brand with a large store base, or in ecommerce, because that consumer is collecting product from any channel they choose.”

With increased labour costs in the Far East significantly impacting the cost benefit of manufacturing in countries such as China, attendees were also keen to discuss their changing manufacturing strategies. As a result, production in the UK has become more attractive, with 53.1% of the brands surveyed manufacturing some product on these shores. Arcadia-owned Topman has turned to UK manufacturers, especially for its accessories.

Nurse said: “People thought we’d done that because it’s about speed to market, but actually the margin was very good. We would source more from the UK if we could but the suppliers can’t get the financing.”

Made in Britain also appeals to consumers who value provenance. Brennan said this is especially true in the luxury sector. “It resonates with the consumer, it’s a nice selling point and it also helps justify spending more.”

Though some consumers may equate high quality with manufacturing closer to home, many of the attendees commended China. Cripps explained there is a “false stigma attached to China” around the belief that Chinese factories make inferior quality products.

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