What is the fashion business model of the future?

(Image sourced from Pexels and Unplash: @pexels and @unplash.co)

(Written and edited by Odwa Zamane)

What is the fashion business model of the future?

Hi everyone

Welcome back to the FRONT ROW MEDIA Blog with another installation of independent and thought-provoking fashion opinion. In this blog post, Odwa Zamane – editor of the FRM Blog – focuses on The fashion business model of the future and briefly discusses its implementation by certain up-and-coming independent South African fashion brands.

We hope that you find the piece informative, and continue to engage and provide us with your feedback on the content!

Introducing the concept of retail versus direct

(Image sourced from Shutterstock: @shutterstock)

Most fashion industry consumer markets, whether global or local, are generally split into two separate buckets: either retail (including wholesale) or direct.

Traditionally speaking, fashion has always drawn a clear (and necessary) distinction between the two customers, leading to the adoption of two separate business models, namely: 1) direct-to-consumer (i.e. "D2C") business models and 2) retail business models. A blend of both business models does exist, but for purposes of this blog post, I will only focus on the pure direct and retail business models.

Elaborating on the difference between a retail approach versus a direct approach

According to Chua (2020) of American Vogue, the direct-to-consumer approach is having long lasting effects on the consumption of fashion, hence why many brands are retooling their strategies in order to focus on direct sales.

On the other hand, many fashion industry experts, and publications, refuse to agree with the argument of an existence of a “retail apocalypse” – which can be briefly defined as the mass closure of fashion retailers across the globe, mainly due to financial issues such as bankruptcy. These experts and publications are stern in their beliefs that the fashion retail industry will not cease to exist, and that the inherent human need for a personal in-store shopping experience will continually be the saving grace for fashion retailers across the globe.

There becomes an added layer of context to this argument, as soon as you consider the economic point of view. For example, a first-world country such as China would be exposed to a more advanced fashion retail industry – largely due to an economic advantage over a third-world country such as South Africa, which we know continues to struggle from stubborn economic problems.

The question then becomes: is the pivot (in mindset) from retail, to direct-to-consumer, actually a good or bad thing? My immediate answer is: it depends on the combination of the a) fashion consumer behaviors within respective fashion industries, as well as the b) economic context in which that specific fashion industry exists in.

The rise of a “blended” business model approach in Cape Town

According to local fashion media publication Twyg (2020), the recent establishment of We are EGG – a local omni-channel retailer, aiming to redefine the retail landscape – is the country’s first attempt at personalizing the South African fashion retail industry, by making it more local and collaborative. Launched in December 2020, Twyg further mentions that across seven departments (including fashion), 80% of the brands on display are local.

(Image sourced on Instagram from: @weare_egg)

Honing into the fashion aspect of this local retailer, it manages to stock local fashion brands such as AKJP, Artclub and Friends, Float Apparel, Iconic Black, Orphan Street Clothing and Selfi, to mention a few. Many of the aforementioned brands were established as pure direct-to-consumer fashion brands, whom also own unique boutique stores across the country.

If anything, the COVID-19 global pandemic has shown us how important it is for local fashion brands to remain agile and flexible in order to survive – and the ability of these brands to morph their business models (from purely direct-to-consumer, to blended) in order to accommodate an increasing demand from retail, proves to me that our local fashion industry is moving towards the direction of economic progression.

(Image/video sourced on Instagram from: @thebemagugu)

Some recently established boutique fashion brands are still purely direct

An increase in the establishment of young and exciting boutique fashion brands locally, whom mostly adhere to pure direct-to-consumer business models, proves to me that it is still possible to establish independent brands, whilst selling outside of the boot of your car, or even directly through your website. The emergence of various fashion brands, such as the Cape Town streetwear brand BROKE, bears testament to this, and indicates the possibility of other up-and-coming youth fashion brands following suit.

(Image sourced on Instagram from: @wear_broke)