The global economy is experiencing a downturn, and the fashion industry is feeling the effects. The sector is currently facing a challenging end to the financial year, with several negative trends impacting the industry. Brands are laying off staff and closing stores as they try to reduce costs and manage a difficult economic environment. In addition, there is a need for change at the executive level as brands seek to innovate and adapt to the changing market. The change also includes shaking up traditional industry formats and bringing in new leadership.
One trend that is negatively impacting the fashion industry is the widespread cost-cutting layoffs that are taking place. Brands including Everlane, H&M, PVH, and Nordstrom have all recently conducted layoffs, with DTC brands being particularly hard hit. For example, Everlane laid off 17% of its corporate employees and reduced staff in three of its 11 store locations. These layoffs are driven by a need to cut costs and address overestimating the total addressable market for DTC brands.
Also Read: Natalie Schramboeck – Influencing People Through A Cultural Touch
Another trend negatively impacting the fashion industry is the worsening economic outlook, leading to store closures. Inflation, a recession, and the war in Ukraine contributed to market disruptions and a worsened outlook for the first half of 2023. As a result, retailers are looking to build up cash reserves and reshape their value proposition, resulting in extraneous costs being focused on people and stores. For example, Macy is closing four full-line stores, while department stores, including Kohl’s and Nordstrom, are also set to shutter stores this year.
According to Dennis, if a department store retailer or brand lacks excellent value or demand, they are likely to face trouble. Brands such as H&M may be struggling less than Macy’s, Kohl’s, or JCPenney, which have had difficulty solidifying their market position. When the market experiences a downturn, the focus shifts to acquiring a larger market share.
Also Read: The Femme Fatale of Social Media – Priyanka Arya
The fashion industry is also contending with C-suite stagnation as brands look to make changes at the executive level to adapt to the changing market. Brands such as Lacoste and Gap Inc. are moving to a collective creative model. In contrast, others like MatchesFashion and Neiman Marcus have brought in new leadership to shake up traditional industry formats. This trend is driven by the need for fresh perspectives and a desire to increase representation in the fashion industry.
The fashion industry is facing several challenges as it looks to navigate a complex economic environment and adapt to changing consumer preferences. Brands must be agile and innovative to stay competitive and emerge from the current downturn in a strong position.
