NYMag has posted this article about Gilt Group and how it afects the fashion industry, my friend Bekah so kindly pointed it out on her blog, and like Bekah, I have been pondering the article and wondering what it all means. Link to the article here and my thoughts are below.
During the peak of the recession, a huge meltdown in the fashion industry occurred. After years of flying high on the hog (re: my jeanification of the t-shirt article), designers had, in my own estimation, gotten greedy. It is apparent to me now, only after MUCH trial and error (more than a girl of my limited means should really be doing, but that’s beside the point) that a hefty price tag doesn’t necesarily buy quality. J. Crew marked up their prices substantially in the mid part of the decade, with not an ounce of quality improvement. Simply, their branding technique was to make their clothes more “upscale” by slapping a higher price tag on it.
The first thing to go in a recession (or the first things that SHOULD go) would be cutting out unnecesary purchases. That means vacations, jewelry, clothing- anything you don’t immediately need. Especially luxury items. Sure you may NEED a winter coat, but the cute Gap peacoat will do this year and you can scrap the Lanvin fur trimmed camel hair.
Enter PANIC mode in the contemporary fashion market. A friend of mine works as a buyer at Bergdorf Goodman and relayed that their sales during the holiday season of 2008 were so abysmal it was the cause for sheer hysteria. What happened was her retail outlet purchased the same amount of clothing (as based upon their solid numbers for 2007), and when the crash fell on Wall Street they were left with mountains of stock. In short: no one saw it coming.
So what do they do? MOVE THE MERCHANDISE. As many of you may remember, prices were slashed that year to insanely low prices at big department stores. The CFDA (Council of Fashion Designers of America) President at the time, Diane von Furstenberg was LIVID over the fact that Bloomies and Bendels were marking down her designs to such bargain basement prices. No one ever said DVF wasn’t an intelligent woman. She built a huge empire based upon a comfortable and flattering dress design and has been in the business for years, after dipping out for awhile and building an immensely succesful comeback. Was she upset about the fact that she wouldnt see high profit dividends that quarter? Not a chance. She saw into the future. The problem is- once someone pays $100 for a $400 dress, they never want to pay $400 again.
Enter Gilt Group. An online Sample sale retailer that hosts high end contemporary flash sales, Gilt Group has captured the frenzied attention of bargain hunting women (and now men) across the country. With most contemporary lines (think 5f at Bergdorf’s) $400 cocktail gowns marked down to the $150 range, it seems, DVF was right. I find myself using Bloomingdales as a road map for what I should be looking out for. This Alice + Olivia top is cute for the summer; leave the store and find it somewhere else cheaper.
Just the other day I was in a boutique on the street I work on. A Parisian woman sells high end contemporary sportswear and has an adorable collection of cocktail dresses. I was truly shocked to find this several-seasons old Walter dress in her shop for over $300. Why was I shocked? Because I had just sold the same dress to a consignment boutique two blocks away. And they were selling it for $60. Sure, I had worn it once or twice but without a rip, tear, stain or spot on it, how sick would you feel if you shelled out 1/3 of your month’s rent for a dress you could have purchased down the street for a night out? I often see the same thing on eBay. As I have begun cleaning out my closet, I have sold numerous cute items with tags on that were a few seasons old for ridiculously low prices. It’s a beautifully reciprocal relationship as you are able to sell quality merchandise to the seller at low cost to them and you personally are able to clean out your closet and get a little money back for something you were never going to wear. Win-win.
Maybe this is my tiny wallet speaking, but I am kind of pleased that fashion is going through this experience Earl Jeans were originally in the top tier of price points but recently came back as a much more affordable brand. Kudos to them. The $150-200 per pair market is oversaturated with everyone and their brother trying to design the new “it” jean. Newsflash: they are just jeans! They cannot be THAT creative if you want them to sell in the mainstream. Don’t get me wrong; I worship fashion and appreciate it in the same way that art lovers can stare for days at a beautiful painting. And those who are truly talented and create artful pieces deserve hefty rewards for their efforts. I am not referring to the thousands of dollars spent for actual couture pieces that are hand sewn in Europe with extraordinary attention to detail. But I do feel that those “designers” who are asking us to pay $300 for a flowy peasant blouse might need to take a different approach and increase their overall profits by crunching their profit margin and delivering goods that stand in line with their costs. If a blouse costs $300? Make it worth it. In a time when many company’s have “cut the fat”, I have a feeling retailers will do the same for fashion designers and hopefully will downsize some of the designers who have been sleeping on the job.