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    Home»Fashion»Fashion’s ‘disruptor’ isn’t so disruptive after all
    Fashion

    Fashion’s ‘disruptor’ isn’t so disruptive after all

    admin4By admin4August 23, 2022No Comments
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    Katherine Simpson suspended her Rent the Runway subscription when the pandemic began. But recently, the San Francisco-based union’s Communications Her Specialist has relaunched its service, letting you rent up to eight pieces of clothing and accessories for $144 a month. “We live in the city and my wife and I have very little closet space, so being able to return items that take up a lot of space, like outerwear, is very convenient for us,” she explains.

    I need her to rent the runway. By the end of 2020, nearly two-thirds of its 134,000 customers had abandoned monthly rental services, and the company had to cut costs by 51% and lay off or furlough half of its workforce. The 13-year-old company’s stock is now hovering around $5.34 from his October initial public offering price of $21 a share.

    It has also been accused of being a fast-fashion disruptor — “I’m going to put Zara out of business,” CEO Jennifer Hyman told online trade magazine Glossy in 2017. Next she is Gap (Everlane), owner of LensCrafters she is Essilor Luxottica (Warby Parker), Estée Lauder (Glossier), designer of her luxury her eBay (The RealReal). With sophisticated branding and a knack for attracting new customers on social media, these online native businesses are treated and funded like tech companies, promise huge audiences, and enjoy rapid growth and It promised lower operating costs than incumbents with expensive stores and “middlemen.” .

    A decade later, there have been a number of IPOs — online luxury consignment site The RealReal went public in June 2019, followed by peer-to-peer resale platforms Poshmark and ThredUp, and nerdy-chic eyewear maker Warby. Parker, Rent the Runway and Sustainability followed. Allbirds, the shoe manufacturer branded for 2021 — that vision has yet to come to fruition.

    Turns out it takes a lot of expensive infrastructure to disrupt Goliath

    “The big question is why so many people believed their story,” said Sucharita Kodali, principal analyst at Forrester. “People wanted to believe that Goliath could be destroyed and that all it took to destroy Goliath was a little bit of Silicon Valley money.”

    It turns out that disrupting Goliath requires a lot of expensive infrastructure. Everlane and Warby Parker realized early on that the cost they promised to undercut (stores) was necessary to reach the masses. According to The Vision, even during the 2020 pandemic, only 14% of adults bought glasses online. Council, and the vast majority of clothes are still bought offline.To make the rental model work, Rent the Runway has become the world’s largest dry-her cleaner. And while it only has a handful of stores, The RealReal has spent millions of dollars on warehouse space to store, photograph, and ship pre-owned luxury items for sale online. Meanwhile, the cost of acquiring new customers through social media is skyrocketing. As a result, none of these companies are profitable, and most are seeing growing losses.

    Rent the Runway’s numbers are improving, reporting a record 134,998 active subscribers in its most recent quarter. But less than 0.08% of women in the U.S. subscribe to the company’s service, which falls well short of the claim on its LinkedIn page that “women around the world will soon be subscribing to fashion.” of customers see no value in paying for clothes they don’t have. A former client complained about the logistics involved in returning rental works.

    RealReal founder Julie Wainwright, who became CEO in June © Getty Images for Vanity Fair

    Warby Parker founders Dave Gilboa and Neil Blumenthal © Getty Images

    Warby Parker, launched in 2010, is a similar story, promising to compete with EssilorLuxottica and selling a mid-range prescription frame (originally priced at around $95) online “direct to consumer.” . The company, which raised more than $500 million of his money from investors before going public and now offers eye exams and contact lenses in 160 stores, holds his 1% share of the market, according to the S-1 filing. have earned. Essilor Luxottica has his 20%. Warby Parker announced this month that he would lay off 15% of the company’s workforce and cut marketing costs. That’s because in the most recent quarter, his earnings were $149.6 million and his losses widened to $32.2 million. What is the proposed solution? Expands retail footprint to 900 of his stores.

    Merino wool sneaker maker Allbirds, whose shares traded at less than a fifth of $28.64 at the close of the first day of trading, announced layoffs and the closure of its activewear line this month as net losses climbed. to $18.1 million. Despite the overall growth of the second-hand luxury market, The RealReal’s profits have been sluggish, and founder Julie Wainwright took over as CEO in June. (Glossier founder Emily Weiss stepped down as beauty brand CEO in May.)

    With the exception of Rent the Runway, most of these companies got a boost during the Covid-19 lockdown. After all, they are very good at selling online. But those gains have proven short-lived, and as market values ​​fall and profitability remains out of reach, the disruptive potential it once seemed is no longer available. No. “They’re just digital-first retailers,” says Forrester’s Kodali.

    As long as these businesses can keep paying their rent, they can weather the US economic slowdown. One of his competitors, consumer online mattress company Casper, offers a cautionary tale. After two years of public trading, in November he was acquired by his private equity firm for just over half the IPO price. For now, incumbents can rest in peace.

    Lauren Indovik FT fashion editor

    See our latest stories first — follow us @financialtimesfashion on Instagram





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