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True Religion files for bankruptcy

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High-priced denim jeans maker True Religion has filed for bankruptcy protection and announced it would be closing at least 27 stores.  (BOB CHAMBERLIN / TNS)

Fast fashion’s continued domination in addition to the popularity of yoga pants/leggings has helped finish a 15 year run.

Consumer purchasing habits have changed due to the great recession.  However as consumer spending has increased with the improved economy, tastes have changed.

But that growth has reversed in recent years. Sales of super premium jeans — brands like 7 For All Mankind, True Religion, Joe’s Jeans and Hudson — fell 8 per cent last year, according to market research firm Euromonitor International. Overall, jeans sales grew slightly in 2016 after two years of declines, as Americans traded down to lower-priced brands like Levi’s, H&M and Forever 21.

Instead, buys are increasingly filling their closets with yoga pants and leggings, which they’re wearing not just to the gym, but also to run errands and meet up with friends. True Religion’s $319 skinny jeans have been replaced by Lululemon’s $98 yoga pants.

Read the full article here.

Last year, surf brand Quiksilver has faced a similar fate and I laid out a strategy that it could use to save its brand.

On a related note yoga brand Lululemon is selling board shorts (in the ad shown below) to expand their product categories to meet the ever-changing demands of their market.  Food for thought.

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Adjusting to market demand

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This is what allowed Zara founder, Amancio Ortega to become the richest man in the world (for at least a couple days).

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Fast fashion:  Customers wanted the latest fashion, yesterday.  Zara’s competitors were taking too long bringing the latest designs to market.  Other retailers try to decide what to make, then produce it.  A push-model of product development.  For example, GAP and H&M will take 5 months to make, design, and distribute new products.  Zara listens to what their customers are asking and buying.  A pull-model of product development that takes Zara 3 weeks.

Of course it’s not as easy as just asking what each customer wants.  Lots of times, people don’t know what they want until it’s shown them.  Henry Ford once said if he asked what his customers want, they would’ve responded with, “a faster horse.”  Also, changing from a push-model to a pull-model requires overhauling a company’s supply-chain.  Raw materials purchases buy 6 months out or more.  Trying to get a refund on 100 gallons of dye is not as easy as it sounds.

Although Zara is not considered inexpensive, lower-market competitor Forever 21 has taken it to the next level.

Cheap:  In addition to fully embracing fast fashion, Forever 21 offers their products at very low prices.  This has allowed Forever 21 to have revenues of $4.4 billion in 2015.

 

Take away

So how do you incorporate market feedback in your business?  Generally, smaller companies have an easier time making adjustments because it is a more agile company with more one-on-one contact with vendors and customers.  In business school I asked billionaire Leonard Lavin, founder of Alberto-Culver (maker of Alberto VO5 hair products) about his education background.  He said he had an MBWA.  Master By Walking Around.  This meant, he walked around his business and talked to his employees, his customers, his vendors.  He conducted market and industry research everyday.  If you don’t take the time to talk to your customers, it might be detrimental to your company’s success further on down the road.

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