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Bernadette Olivier, chief executive and co-founder of fashion rental platform The Volte, says the current challenges faced by fashion retail are a “perfect storm” that she likens to the global financial crisis of 2008.
She says COVID supercharged the e-commerce sector, while Facebook and Google marketing mean that brands have never had more exposure to their audiences.
“Brands thought that a bigger audience meant increased demand, and this resulted in chronic oversupply everywhere.” According to Olivier, oversupply issues are exacerbated by online returns, which become an additional cost for labels as many cannot be resold, further impacting revenue.
She adds that many department stores and retailers have failed to adapt to an evolving retail landscape. “There are lots of brands that have relied on these multi-brand retailers like David Jones and Matches and Farfetch, and they are all failing. And so all of a sudden these brands have a huge channel that’s just disappeared overnight.”
In the case of The Vampire’s Wife, which cited “upheaval in the wholesale market” as having “dramatic implications for the brand”, these developments seem to have been particularly impactful.
Olivier says dupe culture and the dominance of fast fashion sites like Shein, which continues to announce rising profits despite a downward trend in the sector overall, have also had a huge impact on fashion retail. While stars may no longer be able to drive sales of specific brands, they certainly can spark imitations.
“If you went on TikTok, there would be a trending hashtag about Taylor Swift wearing that Dion Lee corset [at the Superbowl] and within 24 hours Shein would have duped it.”
Walker agrees that consumers are less likely to be loyal to a brand in tight economic times. Add to this the increasing ease with which shoppers can purchase a garment for less on sites like Shein, and you can see how independent labels might not be as likely to reap the benefits from a celebrity endorsement today.
What’s perhaps surprising about Dion Lee’s collapse is that business appeared to be doing well. The brand, which has six stores in Australia, opened its first international store in just December last year. Prior to this, Cue boss Justin Levis told the Australian Financial Review“Dion Lee just a few years ago was a $20 million business, and it is now at about $40 million. Within the next year and a half I’m predicting that to be a $60 million business.” Just last month, the designer presented its Fall collection to a front row of Chinese buyers in Shanghai.
Walker says it’s difficult to judge what went wrong with Dion Lee without knowing the details, but theorises the brand may have faced narrowing margins, and with the loss of Cue, lacked enough capital to continue.
He adds that voluntary administration does not necessarily spell the end for Dion Lee. “Businesses often go into administration to regroup, rethink through their business strategy and check other creditors. It’s not bankruptcy. It’s just essentially a time-out.”
“It’s not good for the brand image,” he continues, “but they may well restructure again.”
“You’ve got to have available capital to buffer the storms. So some of these businesses go pretty close to the edge with the available funds they have.”
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What does the collapse of these two high-profile brands mean for the future of fashion retail?
“We’ll continue to see openings, and we will continue to see closures,” says Walker.
“I think the closures will outweigh the openings for the next six to 12 months, and then I expect to see interest rates starting to move down. I think then the economy will be more stimulated than it is at present.”
Olivier hopes for greater regulation to protect small and independent businesses from behemoths like Shein, and sees the rental and resale market as the future. Her rental service The Volte collaborates with designers who earn royalties when their clothes are loaned out.
“That’s been something we’re really pioneering, is how do brands earn from the circular economy and other revenue streams aside from just simply selling more things, because that’s not sustainable.”
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