Alexandra Pisco

EU Legislative Interests

Alexandra Pisco Re: A Brief Note on the State of Independent Fashion 04/07/2024 Europe has a long history of creativity and craftsmanship in fashion, and this is due in large part to its independent fashion sector. Most of Europe’s biggest luxury houses began as independent fashion brands. Independent fashion is at the root of European fashion and creativity. The heritage it built is what established Europe as the center of the fashion world. To this day, being a European fashion brand carries an attractiveness sought after the world over. In the textile & clothing industry, 99.8% are Micro and SMEs, according to Euratex. This is broken down with 67% being clothing companies and the remaining 33% textile companies. Unfortunately, the times are very challenging for the SME independent fashion sector. Some of these threats are due to macro events in the world economy, such as slowed growth in most consumer industries. But many are due to the nature of the fashion business. For example, the business model up to now has required a constant cash flow that puts very heavy pressure on a business’s treasury. Many brands are exploring new business models, such as pre-orders and direct to customer, but the issues of cash flow remain a big challenge. Cash Flow For these independent/SME brands, the issues of treasury are one of the biggest threats to their longevity. This situation can make them vulnerable to foreign buyers/investors. There are a growing number of Chinese investments groups that are approaching independent European brands and offering to enter the companies, and solve their cash flow issues. There are also the cases of foreign manufacturers offering to buy into their European client’s brand. Many of these investors end up taking up a majority stake in the brands. If a growing number of brands continue to find themselves with this as their only option for the survival of their brand, it would be a major loss for European fashion. Distribution There are also the issues of distribution. The retail sector has seen very difficult times, and this has led to reduction of multi-brand stores and boutiques. These independent multi-brand retailers are a very important link in the distribution chain of an independent brand. The large conglomerates have taken over most of the global retail real estate with their own branded stores. For the few multi-brand retailers that remain, the European ones being the hardest hit, it becomes harder to include independent brands. The big brands insist on minimum purchases, that can be a heavy financial weight on these independent retailers, further complicating the buying of independent brands for their stores. With these conditions from established brands, plus the decrease in consumer purchasing, retailers have treasury issues as well, and further pressure smaller brands to accept being paid later. This adds more pressure to the cash flow issues for independent brands. As the number of multi-brand retailers continue to diminish, the options of distribution lessen for independent brands. Online retailers have become an important distribution channel for independent brands. When the online retailer Matches announced it would be closing, the effect was immediate and continues today. Matches was one of the few big online retailers that bought from independent brands (as opposed to taking product on consignment which many retailers impose on PME brands). Now these brands find themselves with product being kept by Matches but not paid for. And even worse, they are not releasing the product back to the brands but instead are selling these products online at enormous discounts. https://www.businessoffashion.com/articles/luxury/matches-frasers-administration-independent-brands/ Industry Clout/Exploitation The smallest percentage of the industry (the fast fashion and luxury conglomerates) already controls most of the sourcing, manufacturing and distribution, both in Europe and globally. The l

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WORTH Partnership Member of the Steering Committee https://worth-partnership.ec.europa.eu/europes-largest-creative-incubator-showcase_en

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