The fashion industry is breaking the middle

Times are difficult for the entire German economy. And it is also understandable that everyone who can apply for government aid to survive the corona crisis. This applies in particular to the German fashion industry. Companies of Gerry weber via Bogner to Boss suffer particularly from the fact that all shops in Europe are closed.

The fashion industry is one of the big losers in the pandemic. Because if you no longer drive to the office, visit theaters, restaurants or go on vacation, you don’t feel like buying a new outfit – not even in the online shop. In the home office, part of the full wardrobe is enough, especially if you switch off the video function during the conference call.

The state-prescribed shutdown is bitter for the fashion companies. There is currently little hope that anything will change so quickly. Because the willingness to buy should hardly increase in the coming months. It can be expected that when life returns to normal, people will spend money on a lot, but not on new clothes. Short-time work or unemployment of hundreds of thousands put a considerable strain on the household budget.

However, the corona crisis is likely to be particularly difficult for some fashion companies: These are the companies from the middle of the fashion market. It meets well-known names like Gerry Weber, esprit and Tom Tailor or S.Oliver. All companies that offer mid-price t-shirts, dresses and trousers. In the past few years, they have failed to develop strategies to defend themselves against the brutal change in the fashion market.

Because they are attacked from two sides: from below by discounters like Primark, Kik and the grocery discounters Aldi and Lidl – and from above by premium and luxury brands like Marc O’Polo, Tommy Hilfiger and Gucci. A dangerous grip.

The trend to expensive or cheap in the fashion industry has been going on for some time. The discount and premium and luxury segments have been growing fastest for years. This trend is likely to be exacerbated by the corona pandemic. Either people spend as little money on clothing as possible, or they are willing to have their skirt and trousers cost significantly more. But they also demand more value for it: higher quality, perfect service, a better brand image.

Large retailers also under pressure

All providers who move between the two extremes have a hard time and lose market share. Many fashion companies are therefore trying to escape and try to upgrade their image and collection. However, this is expensive and takes a lot of time, as the example of Esprit shows. The company has been undergoing permanent renovation for years and has tried several times to improve its image with large advertising campaigns – with little success. A few days ago, Esprit had to register for self-administration.

For brands from the middle of the market, the situation is becoming more acute because important sales channels are also struggling with problems: what happens when the large operators of department stores such as Karstadt Kaufhof or Peek & Cloppenburg close branches after the corona crisis or downsize?

Because the big retailers themselves are under massive pressure to change their business concept in order to survive. It is no longer enough to set up a coffee bar, a mobile phone charging station or a cozy corner for the little ones to lure online customers back to their shops.

The buying experience must be in the foreground

They only come when retailers score with personal service, a selected collection that is not available on every corner and an intelligent combination of online and offline shopping. Above all, they must succeed in making their business a real meeting place, where it is not just a matter of selling jackets, handbags or sneakers.

The buying experience must be in the foreground, as Breuninger or the Kadewe Group demonstrate. The motto also applies in retail: he has to choose between expensive or cheap.
The fashion industry must not go any further when it comes to sustainability. It is not enough to compete with each other with new seals for green fashion. Instead of throwing more and more organic cotton onto the market, for example, it makes more sense to improve the quality of the collections – according to the motto: less is more.

That would also be an opportunity to reduce the discount madness in the industry to a healthy level. This would even help some fashion companies from the middle of the market to survive in the post-Corona era with new concepts.

More: After Adidas and Deichmann, other companies announce that they will pay less or no rent.


Leave a Comment