Wednesday, May 29, 2013

Right Brain, Left Brain | Clouds Looming Over Australian Fashion - BoF - The Business of Fashion

This is an excellent article from The Business of Fashion detailing the current pressure on the Australian fashion retail sector.

On my recent trip to Sydney for Mercedes Benz Fashion Week Australia, there was a lot of talk about the effects that the general economic downtown, the explosion of online retail shopping and the penetration of global fast fashion chains are having on the local market.

While the economic downtown is slight compared to what we have been dealing with here in the US for the past 5 years, it is starting to bite. In particular, independent boutiques are feeling the pinch. Many have closed. As such, the retail fashion market has contracted. Not good news for designers in an already relatively small market.

In search of markets, l can see even more Australian labels coming to the US earlier in their development.

The international online shopping explosion is also having an effect on the wholesale market.

In the past, Australian collections have been able to recycle their previous season's  collection for the US market, e.g. the Spring/Summer 13-14 styles can be offered again in the US for Spring/Summer 14 with some curating and updating if necessary. But with more and more Australian styles available online, the US buyers will resist writing styles that have been out for 6 months. Australian designers will need to internationalize their collections to allow the collection to be ordered in both hemispheres concurrently. Unless, of course, they have the financial power to design and produce new collections as required.

The upheavals in the fashion world continue globally with technology leading the way. The is much more to come.

Paul Brindley

It’s Time to Talk About Fashion’s Poor Payors – BoF – The Business of Fashion

This article is about the UK but it applies internationally.  As a fashion designer and manufacturer, you have to be very careful with the payment terms you accept from retailers.
Gone are the days of accepting Net 30 day terms just to get the order.  Do that, and you’re in big trouble, possibly fatal trouble.  I know a number of young designers who were forced out of business by returned orders.  Retailers can simply bounce the box if you don’t have payment before shipping.  It feels fantastic to write that order in September but it feels awful to sign for that returned box in February.  Cover your behind at all times.  It’s not “Trust No One”.  It’s more like “Trust Very Few”.
So what are some solutions?  Get references from buyers and check them, make sure your sales agent knows the buyer and trusts their payment hstory, get credit card details from the buyers at the time of writing the order, attempt to get a deposit from the buyers, insist on COD terms (if the references check out, do “COD hold 30 day” terms if required), and approach factoring and asset lending companies and explore your options.
Of course there are marquee retailers that will insist on terms; some will insist on up to Net 60 Days, and you may have to take back any inventory that doesn’t sell. However, the exposure and marketing cache of being carried by certain retailers can counterbalance the financial risk.  But remember these are the minority.
There is a big difference between sales volume and profitability.  A large part of that difference is cash management.  You have to get paid to have cash.  How will you pay your bills?  Pay for developing your next season?  Pay for sample lines?   Pay your sales agents?  Stand your ground and ensure that you are entering a transaction on fair terms.  If you don’t, you may not be around to write those orders next September.
Paul Brindley