- Written by Natasha Frangos, managing partner at London accountancy firm Haysmacintyre
While the fashion industry has started to take its first tentative steps towards recovery after the pandemic, ongoing disruptions, increased cost of living and a spiralling economy are threatening to erode the progress. Business uncertainty is at an all-time high and customer demand and spending are hanging in the balance. So, is all hope lost?
Despite uncertainty casting a dark cloud over retailers’ outlooks, lessons learnt and measures put in place to aid recovery during and after the pandemic are still relevant in today’s climate. If anything, the resilience built and changes made during the first lockdowns should hold brands in good stead for crises to come.
Independent retailers will each have their own survival tactics based on the nature of their business, but there are some underlying tools that might be helpful as brands weather the storm and consumers think twice about how and what they spend.
Staying true to your brand
Remaining visible and standing out from competition to win and retain customers remains vital for today’s retailers. Consumers want to buy from brands that are true to themselves and the reasons they were created. Consumers are becoming ever wiser to performative activism and practices such as greenwashing are going to erode trust. Brands can no longer package their good as ‘sustainable’ without being able to show the steps in their production chain that make it so. Following through on promises might sound simple, but it really is the best way businesses can continue to encourage long-term custom.
Caution and agility
As industry costs continue to spiral, another tool in the fashion indie’s wheelhouse will be to plan all spending carefully. It is increasingly important to not overcommit, whether that is to stock levels, collection sizes or rent. The saying “cash is king” never gets old and having a clear view of cash flow forecast and headroom will enable businesses to make informed decisions about where and how they spend to obtain the maximum return and operational benefit.
In fact, some retailers have found success in stripping their collections back to a small number of core pieces that they know will sell (knowing their target customer), rather than risk large collections not selling and being left with excess stock they can’t shift. Storing stock is also expensive and brands may want to consider only ordering in what they absolutely need, so keeping a close eye on consumer behaviour is key. But this has to be finely balanced with the challenging delays that continue to be experienced in importing goods.
Another key challenge continues to be increased shipping costs, especially when retailers buy stock from overseas. High costs may make it more cost-effective for businesses to look into local producers and distributors, although this does come with a number of further factors for consideration, such as ensuring that local operations are in line with the brand’s quality and values.
Online or in-store?
Having to shut up shop over the pandemic has accelerated reliance on online shopping, with most brands now operating at least with a joint online and physical presence.
While a solely e-commerce model undoubtably cuts rent and energy costs – especially now there are a host of channels for indies to sell their products – there is still high value in bricks-and-mortar. A physical store provides an important touch point for customers – and that’s especially important now that a deeper understanding of consumer behaviour is required for making strategic decisions. What’s more, it also builds connectivity.
Customer service also remains a key differentiating factor for indies and well trained, quality staff encourage engagement and loyalty to a brand. As the war for talent also continues, brands have another challenge to hire and retain the best talent who live and breathe the brand. Retailers will need to seriously consider the competitiveness of their offers to employees and prospective employees to ensure they remain a great place to work.
Try before you buy
Boutiques looking to expand into new markets could also consider looking into short-term leases to ensure they are not tied in to rent for a long period. A further alternative for testing the water is to try using pop-up shops to see whether an area is successful before committing to a lease. As well as allowing businesses to scope out an area, they can also be a useful marketing tool for building up hype around a brand.
There is also potential to take an experiential approach, such as using technology and immersive experiences, to elevate a boutique business’ physical offering for consumers. This has the added benefit of creating buzz about the brand and can often lead to success on social media.
If brands have learnt anything over the course of the pandemic, it’s that a flexible approach is key. With this in mind, independent retailers should have a strategy but must keep in mind that we are living in times where change happens quickly. As such businesses should operate with some agility built into their plan, with a clear view of their cash headroom, giving some breathing room in case things go wrong.
Resilience, careful planning and staying true to the brand and connected to consumers are all key in these uncertain times.
Natasha Frangos is managing partner at London accountancy firm Haysmacintyre. She specialises in advising ambitious, scaling businesses operating in UK and globally in the creative, media and technology industries.