By Vogue Business
This article was originally published in Vogue Business October 12, 2020. While the article is more than a month old, we felt the content was still timely. Pre-order, made-to-order, on-demand manufacturing, whatever you call it, will likely play a role in the future of the sewn products industry.
When Haeni Kim set up her dress label, Kitri, in London in 2017, the decision to start as a direct-to-consumer business selling online raised a few eyebrows. Three years on, business models such as hers are attracting lots of attention as small luxury labels despair of the traditional fashion system and search for more efficient ways of operating.
For an increasing number of brands, it is no longer sustainable to make clothes that might or might not sell. The traditional model of selling through multi-brand retailers has been called into question as these retailers struggle for survival in a bleak Covid-19 landscape. Likewise, the traditional fashion season model — of inundating consumers with new looks all at the same moment — invariably plays to the advantage of the big players.
While Kim has not entirely forsaken wholesale (she sells to Selfridges and Brown Thomas), Kitri avoids fashion week and puts a heavy emphasis on pre-orders and made-to-order directly to customers. This approach helps minimise waste and creates an equilibrium between supply and demand. “We’re not just banking on the fact that people are going to love everything that we make all the time,” she says.
Kitri produces monthly collections and weekly drops. New pieces are released in strictly limited runs, which allow the company to gauge customer interest and demand without overproducing. Once a style has sold out on the site, Kitri encourages pre-orders and delivers the product to the customer within eight weeks.
The pre-order model is also working well for Telfar and Khaite, two New York labels that have built accessible luxury brands. New York-based fashion designer Misha Nonoo made a big shift back in 2016, quitting fashion week and terminating all her wholesale relationships. “I found it to be an endless loop of chasing my own tail. A buyer would come to the showroom and they were so reliant on looking at a spreadsheet, as opposed to knowing their customer,” she explains. Today, the brand produces all pieces on demand and delivers to the customer within 10 days.
Pre-orders, where customers pay upfront for products they will receive days or weeks later, are not new in fashion. For decades, brands have hosted trunk shows where customers can order and receive a product weeks after it is shown on the runway. Luxury e-commerce company Moda Operandi championed this approach online and has doubled down on its trunk show business during the pandemic, hosting a series of virtual shopping events where clients enjoy early previews of collections and interact with designers in real time.
In the Covid-19 era, it’s a smarter way for brands to release their collections, says Thomai Serdari, a luxury marketing professor at New York University. “There is so much risk in the market today, and consumer behaviour is unpredictable. [Pre-orders] allow for better planning, production investments can be more accurate, and brands can also better measure consumer tastes and preferences, which is information they’ve lost if their retail partners are not there.”
Susie Cave, who founded womenswear label The Vampire’s Wife in 2014, named after an unfinished novel by her singer-songwriter husband Nick Cave, has declined to stage fashion shows, favouring monthly, direct-to-consumer digital drops. The brand, which sells to Net-a-Porter, MatchesFashion, Selfridges and Dover Street Market, plays by its own rules, choosing not to release imagery before its collection arrives in stores — an approach that has attracted the attention of bigger luxury players such as Celine and Christopher Kane.
This approach turned out to be a lifesaver for the company during the first wave of the pandemic. Retailers were cancelling orders, pushing back deliveries and asking brands to slash prices, says Leonardo Lawson, who joined The Vampire’s Wife as president in 2019. “Almost every wholesale partner we had were sending out blanket emails saying, we have to make reductions and do discounts. They were concerned that the customer might be fatigued by the time the pieces arrive in store, because they would have already seen the collections in January, February or March.”
Lawson pushed back: “Well, actually, the customer hasn’t seen our collections, so everything we’re going to deliver is going to feel fresh no matter when it’s delivered.” He adds: “And because of that, we didn’t have to take the cancellations or discounts that our wholesale partners were asking for.”
The Vampire’s Wife sales doubled within 12 months, with direct-to-consumer sales tripling globally, the company says, without disclosing precise figures. The label, which launched as a 100 per cent wholesale business, is now 55 per cent direct-to-consumer and 45 per cent wholesale. “The goal is for direct-to-consumer to be the main bulk of our business, because we can control the production, control the deliveries and move in a way that works for us. Having that flexibility has helped us buoy this pandemic,” he says.
This approach is garnering a following. Progressive New York label Hood By Air announced its return in July, three years after founder Shayne Oliver hit pause. The revamped brand is focusing on direct-to-consumer and producing clothing outside of fashion’s seasonal, wholesale-oriented system, setting an agenda for each year through an activation or event that launches “collectible fashion products”, according to the brand’s press release.
Fashion weeks, it seems, are under pressure. “Fashion weeks are historical windows on the calendar, but it doesn’t necessarily fit with either the brand’s internal calendar of product development or the customer’s expectation of notice,” Mark A. Cohen, director of retail studies at Columbia Business School, says. “Brands are now walking away from the restrictions that the industry has placed on them, and they’re also walking away from their wholesale partners — many of whom are either out of business, consolidating or struggling — and increasingly going direct to consumers. This may put fashion week at risk, but it doesn’t put fashion at risk.”
The pre-order model isn’t without complexities. Brands have to deal with potential delays, customers’ irritation when styles are sold out, and the perennial issue of returns. “Customers are buying off a photo and the fit might not be exactly as they had imagined,” says Nonoo. Return rates for dressy items also tend to run higher than a casual assortment, because the fit is harder for shoppers to predict, adds Kitri’s Kim.
An overhaul like this also needs significant investment. “This way of working requires leadership and a willingness and capacity to invest. It requires intense organisation, money and taking responsibility for processes that others have not provided,” says Cohen.
But a shift is in progress, putting “a lot of pressure on retailers to really demonstrate what their added value is”, according to Steve Dennis, a retail consultant and former strategy director at Neiman Marcus. “Big fashion houses are continuing to invest in expanding their direct-to-consumer capabilities, and [smaller brands] are being way more selective about who they distribute with.”
For small to medium-sized brands, these new strategies may be here to stay. “Times are changing and brands need to be focused on actual consumer preferences, opposed to prospective preference,” says Columbia Business School’s Cohen. “They can’t afford to be indulgent, and if they are, they better have deep enough pockets to support that kind of behaviour.”