London, UK —For multi-brand e-tailers, it is more important than ever to obtain a range of fresh labels to engage with new entrants craving consumers and stand out in the busy and highly competitive luxury e-commerce market from today. As major brands continue to focus on direct sales, emerging labels will only become more important to people like Matchesfashion and Net-a-Porter.
At the same time, the pandemic threatens to overwhelm many small fashion brands. Earlier this year, the British Fashion Council (BFC) predicted that if nothing was done to help them, 35 percent of the country’s emerging labels would fail before the end of the summer. On both sides of the Atlantic, fashion councils have raised money to help labels struggle, but nevertheless indie brands are facing a bleak reality. In recent weeks, New York-based Sies Marjan has been permanently closed and others are expected to follow suit.
Now Matchesfashion is committed to protecting the range of young brands that is so crucial to its strategy with a new incubator initiative: the Innovators Program. Under the new program, which builds on a content marketing franchise launched in 2017 under the same name, the retailer selected 12 designers for support, including preferential payment terms, business mentorship and £ 1.8 million in marketing support, including photo shoots, editorial articles and media coverage. Participating brands are also guaranteed orders for the coming year.
Matchesfashion is not the only retailer with an incubation program. Net-a-Porter and Moda Operandi have launched similar initiatives in the past, although after a year in 2018 Moda Operandi discontinued its incubator program in favor of a monthly content series, continuing to provide mental and marketing support to designers on an informal basis.
Most luxury e-tailers sell similar products, offer similar experiences, and operate in a saturated market where competitors are just a click away, often forced to use competitive discounts to drive sales.
“The problem before [luxury e-commerce players] is to look clear and special – not just a site you visit to find the lowest price, ”says Bernstein analyst Luca Solca.
Emerging labels are a key differentiator, meaning that retailers have a strategic interest in keeping small brands healthy. Matches in particular has built a reputation for selecting emerging, progressive brands and exposing them to a global audience.
The 12 brands of Matches selected for the debut of the revamped Innovators program include some of the most popular names on London Fashion Week women’s and men’s schedules, such as Halpern, Charles Jeffrey Loverboy and Wales Bonner, as well as emerging names such as LVMH award winner Thebes Magugu. Art School, Ahluwalia, Chopova Lowena, Stefan Cooke, Germanier, Harris Reed, Ludovic de Saint Sernin and Bianca Saunders are also part of this year’s program.
“If we don’t nurture and nurture that talent, how will fashion evolve and go into the future?” said Natalie Kingham, director of Womenswear Buying. “Especially in such a difficult time. Those small brands are extremely important for our industry. ”
Net-a-Porter’s seasonal acceleration program, The Vanguard, launched in 2018, will give new labels access to the retailer’s resources, expertise and global network in exchange for exclusive distribution rights. Moda Operandi’s now discontinued the platform program first launched in 2017 and saw the e-tailer brands grow like Johanna Ortiz and Brock Collection. Participating brands were free to partner with physical retailers, but pledged online exclusivity to Moda Operandi.
Brands that sign up for the Matchesfashion innovation program do not have to commit to exclusivity and can still sell to other retailers. But the company believes that it will pay off in the long run to form close ties with selected designers. In addition, greater financial security will allow designers to be more creative than play safe for fear of not securing future orders, said Damien Paul, director of Menswear Buying. “This … support we provide will hopefully encourage and motivate them to really take risks and push themselves,” he said.
All but one of the brands that Matchesfashion has registered for the Innovator program were already in stock at the retailer. Kingham says, “Their collections are growing, they are learning, their resale is getting better, new orders are increasing.”
For participating labels, they say they can really use the help now. When the coronavirus pandemic hit, unisex London label Art School lost 30 percent of its orders and the show was canceled in June. “This has been a real gift for us,” said Eden Loweth, who launched the brand in 2017 together with Tom Barratt. “An order from Matches means an investment of £ 30,000 in season for us [when Matches started stocking us] it doubled our turnover overnight. ‘
London based designer Michael Halpern hopes the program will provide important advice on strategy and upscaling its three-year namesake company. “I am not a company with a general manager, a CEO or a financial director. We are not there at the moment, “he said. “Having more support from Matches in terms of merchandising will be really interesting … because it’s not something we’ve focused on before.”
For Matchesfashion, the move comes at a challenging time. After heavy investment in a new East London photo studio, numerous global events, and an ongoing series of activities at the Mayfair mansion Carlos Place, the reatiler operating profit for the year ending January 2019 plummeted 89 percent, according to filings with Companies House. Last August, then-CEO Ulric Jerome abruptly left the company. Jerome’s successor Ajay Kavan, a former Amazon executive, joined in February.
Covid-19 has only created new pressure, driving down demand for luxury fashion as major brand names increasingly focus on expanding their direct consumer sales channels.
Then there’s the pre-pandemic criticism that Matchesfashion is chronically late in paying the same types of designers it wants to help now. In some cases, payment was six months past due, which can paralyze smaller brands that rely on orders from larger retailers like Matches to keep cash flow stable.
Matchesfashion said it has “worked very hard over the past four months to address the remaining issues”, adding that “now that we have introduced a new standardized payment approach, we are confident that we are back on track to be.”
To fund the Innovators program, Matchesfashion said it has allocated part of its marketing budget to invest in marketing assets such as editorial shoots, movies and campaigns. In the future, the retailer has committed to accelerate payment for participating designers and deliver half of all order invoices once the goods are ready to ship.
“It’s really about making sure these designers are supported,” says Paul. “We really believe they are the talent of the future and it is something incredibly important to us – and to the customer.”
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