The CEO of a popular luxury brand rental company has revealed why so many designer clothing brands are collapsing in Australia.
Fashion enthusiasts were shocked when the Australian franchise of renowned fashion brand Dion Lee went into administration this week.
The much-loved brand, worn by megastars including Taylor Swift and Dua Lipa, is understood to have collapsed after a partnership deal with Cue Clothing Co fell through.
It follows the collapse of other fashion giants J. Crew, Neiman Marcus and Brooks Brothers, with Farfetch and Net-a-Porter also facing financial strife.
Bernadette Olivier, CEO and co-founder of The return – a designer fashion rental marketplace – told Daily Mail Australia the industry was “on the brink of collapse”.
Olivier said the rise of Chinese fast fashion powerhouses such as Shein and Temu only added to the growing pressure on designer brands.
Bernadette Olivier, CEO and co-founder of The Volte, a designer fashion rental marketplace, warned that the fashion industry was “on the brink of collapse.”
A model walks the runway during the Dion Lee Spring 2023 fashion show in 2022
“These new players, with criminally low prices and huge advertising budgets, have left an already fragile industry on the brink of collapse,” he said.
The CEO said a new trend of “online try-ons,” where influencers share their purchases with their followers to decide which items to keep, was creating waste.
“The rise of TikTok and the growing popularity of Instagram stories and reels have revealed new consumer habits,” he explained.
‘Consumers are turning online shopping into ‘online try-ons’, often posting their ‘hauls’ to their followers so they can decide which items to keep and return the most.
“Retailers have been slow to identify this trend and report that up to 50 percent of inventory sold online is returned, with a significant portion ending up in landfills or incinerated due to profitability.”
In the United States, the mismatch between supply and demand has resulted in up to 30 percent of the inventory produced never being sold.
The growing trend is costing the fashion industry up to $210 billion (A$318 billion), according to Boston Consulting Group.
“This overproduction not only poses a financial threat but also a rapidly increasing environmental threat globally,” said Ms Olivier.
The CEO said changes in customer sentiment, rapid declines in brand loyalty and rising regulatory costs were also adding to retailers’ challenges.
He encouraged brands to use data analytics and artificial intelligence to forecast their customers’ demands, which could then be better aligned with production.
Fashion enthusiasts were shocked when the Australian franchise of renowned fashion brand Dion Lee went into administration this week (designer Dion Lee is pictured in 2023)
Dion Lee’s Australian franchise is understood to have collapsed after a partnership deal fell through, with only Australian store operations affected.
“Improved development of virtual try-ons, accurate sizing, descriptions and images and the use of artificial intelligence to offer personalized recommendations based on previous purchases can reduce returns,” he said.
Olivier said it was important for brands to embrace the circular economy, as the resale economy is growing 10 times faster than the traditional clothing industry.
“Part of the integration should allow brands to benefit from these new business models, allowing retailers to generate revenue as well as produce and sell more clothing,” he said.
Antony Resnick, liquidator of the bankruptcy company dVT Group, was appointed administrator of the Australian Dion Lee.
Major clothing brand Cue Clothing Co has reportedly ended its partnership deal with Dion Lee and also canceled its investment in the business.
Cue Clothing Co first became a partner with Dion Lee more than a decade ago and the company was a shareholder in the business. The Australian reports.
It is only understood that Australian store operations have been affected and customers can still access the company’s online website.
The company, founded in 2009, has six stores in Australia and 160 outlets around the world, including a store in the United States which opened in December last year.