For the better part of 2022, the fashion industry was waiting for the other shoe to drop. We’re still waiting.

There was the glut of merchandise retailers and brands had amassed going into the year. Already high inflation hit levels not seen since the early 1980s. Russia ceased to be a viable market for most Western brands almost overnight when it invaded Ukraine. Interest rate hikes, a sagging stock market and round after round of tech layoffs all threatened to cool consumer demand for fashion. China’s economic engine faced its greatest threat in decades from the country’s Zero Covid policy. The UK and much of Europe teetered on the brink of what some economists predict will be a long, deep recession.

But throughout this period, there’s always been just enough good news to keep the fashion industry from spiralling into utter despair. The US has managed to dodge a recession so far (though in surveys a majority of economists regularly continue to predict it’s only a matter of time). China has loosened its Zero Covid policy, raising hopes that its massive market will swiftly reopen when the inevitable wave of illnesses subsides.

And most importantly, consumers don’t seem to share economists’ and fashion executives’ doom-and-gloom mindset. On Friday, the University of Michigan said its index of US consumer sentiment hit 59.7 in December, below a reading of 70.6 a year ago, but up from November and above economists’ average forecast. The Conference Board’s widely followed measure of how Americans feel about the economy rose to an eight-month peak in December, according to data published Wednesday. And a Wednesday survey from the Confederation of British Industry reported an 11-point uptick in consumer demand in December, up from a 19-point drop in November. Forecasters had been projecting a 20-plus-point decline this month.

Experts say the uptick can be attributed to easing inflation; In November, consumer prices rose 7.1 percent from a year ago, down from a 7.7 percent increase in the month prior.

Retail sales tell a similar story. The headline number, reflecting purchases of everything from televisions to watches to dish soap – fell 0.6 percent in the US and 0.4 percent in the UK in November compared to the month prior But UK clothing sales volumes actually rose 2.1 percent last month, while in the US, sales for stores specialising in clothing and clothing accessories dipped a relatively mild 0.2 percent.

How can the fashion industry prepare to face a market that can’t seem to make up its mind whether it’s in a downturn? Nike, which reported quarterly results earlier this week, is an instructive example of how to ride the economy’s ups and downs.

The activewear giant’s shares plummeted in September after it reported a typical pandemic mix of bad news, including late-arriving and off-trend merchandise and weak sales in China. The company was transparent about the painful rounds of discounting that would be needed to get rid of its excess inventory.

On Tuesday, Nike said it had made progress in whittling down its glut, and reported stronger-than-expected sales and earnings. Its stock soared, and now trades higher than it did in September.

Nike’s good news had a halo effect on the whole industry, with fashion stocks rising almost across the board. The retailer demonstrated that excess inventory can be a temporary problem, rather than a return to the bad old days of year-round discounting. Nordstrom, American Eagle, Vince and Urban Outfitters Inc. have also underscored their efforts to reduce inventory in recent earnings calls.

If retailers can improve their inventory position in early 2023, they will be in a much healthier position to for a strong year in general, analysts say.

“The bull case on 2023 remains centred on clean post-holiday inventory levels and margin visibility,” Wells Fargo retail analyst Ike Boruchow wrote in a note published Wednesday.

China’s reopening economy may be another tailwind. In November, retail sales fell 5.9 percent year over year. But some analysts are projecting some kind of recovery for next year as the country has begun easing its Zero Covid policy.

“Our base case forecasts mid-single-digit growth in retail sales in 2023, up modestly from a low base in 2022, which was heavily affected by ongoing pandemic restrictions and testing requirements,” credit rating agency Fitch wrote in a Nov. 24 research report.

It bears repeating that economists still say a recession is likely in most major economies next year, if not globally. That will be tough on fashion brands, even the ones like Nike that are moving past the pandemic’s disruptions. But for now, many retailers are focussed on the silver linings.

THE NEWS IN BRIEF

FASHION, BUSINESS AND THE ECONOMY

Nike reports strong revenue; shares surge. Nike’s revenue jumped 17 percent to $13.32 billion in the period, beating an average estimate of $12.57 billion. A profit of 85 cents per share for the second quarter ended November topped estimates of 64 cents, per Refinitiv data, Reuters reports.

Swiss watch exports jump to record high on US and Qatari demand but China slumps. Shipments rose 10.9 percent to a monthly record of 2.4 billion francs ($2.6 billion) last month, the Federation of the Swiss Watch Industry said Thursday. Exports totalled 22.9 billion francs from January to November, an 11.9 percent rise and on track for the industry’s best year ever.

Moncler Genius to relaunch with London showcase in 2023. The luxury outerwear brand’s “Genius” programme — which has seen Moncler roll out as many as eight capsule collections per year since 2018 alongside guest collaborators like Valentino’s Pierpaolo Piccioli, Crag Green and Simone Rocha — is returning after a pause in 2022. Collaborators are yet to be announced.

Superdry positive on second half as jacket sales surge to record. The fashion retailer reported first-half revenue growth of 3.6 percent, but struck a cautious note on outlook as the sector steers through rising expenses and a worsening cost-of-living crisis in the UK.

Tesco facing legal claim over worker conditions at Thai clothing factory. A group of migrant workers from Myanmar are alleging dire working conditions at a Thai factory which made clothes for Britain’s biggest retailer.

THE BUSINESS OF BEAUTY

Revlon’s bankruptcy plan would wipe out stockholders, hand ownership to lenders. The company entered a restructuring support agreement with a critical lender group and its official committee of unsecured creditors on Monday, filings show.

PEOPLE

Christine Centenera appointed editor-in-chief of Vogue Australia. The renowned stylist and current fashion director of Vogue Australia will replace Edwina McCann in the publication’s top job.

MEDIA AND TECHNOLOGY

Amazon may be responsible for allowing Louboutin knock-off ads, EU court says. Louboutin brought two cases against Amazon in 2019, saying the company regularly displayed advertisements for red-soled shoes put on the market without Louboutin’s consent.

Compiled by Joan Kennedy.

Online shopping can be quite the undertaking these days, but it’s not for a lack of options.

If anything there’s too much choice, between the ever-growing number of e-commerce marketplaces, direct-to-consumer brands and traditional retailers investing in their web presence.

Recently, I was trying to find an outfit for an event, casually browsing my favourite retailers between Zoom calls and deadlines. But a few hours and 50 tabs later, I had shopped myself into a frenzy without anything to show for it.

This week, Shoptrue, a new e-commerce start-up, announced it would address this very problem: It wants to be a one-stop destination for online fashion shoppers, a marketplace with over 2,000 brands (the range includes Nike and Valentino) from which consumers can choose through “a personalised experience” fuelled by artificial intelligence. The startup is currently in beta mode and will fully launch next year.

Shoptrue was created by Romney Evans, the founder of True Fit, a size recommendation tool used by a number of online retailers, including Bloomingdale’s and Lululemon. Ensuring the right fit is part of Shoptrue’s formula, which combines the discovery component of online shopping with a recommendation function. Users will take a style quiz before they get started on the site, and the more they interact with listings, the more curated their selection will be.

“It’s curated for you and by you and that distinction is unique,” Evans said. “It gets smarter as you interact with it, and it improves your chances of being inspired.”

In theory, an end-all, be-all destination for online shopping that shows consumers exactly what they’re looking for would be a blessing. But Shoptrue isn’t the first to promise an end to endless scrolling. So far, no retailer has been able to come close to delivering on the promise of personal curation.

After taking Shoptrue’s personal style quiz, the listings that come up for my feed still seem wide-ranging and generic. One of the top results for dresses on my feed is floral even though I had indicated I don’t wear any prints in the questionnaire. But Shoptrue is designed to understand users more as they interact with the platform. Eventually, users will be able to “like” and “dislike” products.

Nailing personalised styling will be a tough task. Stitch Fix is case in point: the fashion company pioneered the subscription model, touting a highly personalised styling service through a combination of AI and human stylists. But more than a decade after it launched, Stitch Fix is losing its active customer base while operating at a loss since 2020. In its most recent quarter, Stitch Fix lost 370,000 active clients, or 9 percent of overall shoppers from the year prior.

Shoptrue’s pitch also is reminiscent of The Yes, the shopping app launched by former Stitch Fix executive Julie Bornstein in 2019. It too involved a personal style quiz and AI-driven recommendations. Last year, it was acquired by Pinterest to boost the tech company’s own e-commerce ambitions, and was quickly shut down by its new owner.

There was also Spring, an early player in mobile fashion (it launched in 2014) that raised more than $100 million. It was acquired by the retail start-up ShopRunner in 2018, and shut down a year later.

Spring and The Yes are among the highest profile among countless other apps and shopping services hoping some amalgamation of discovery, personalisation and service will turn them into the next Amazon.

But despite steadily growing e-commerce sales, it’s hard for new retail platforms to break through.

“You really need a clear value proposition in terms of acquiring and retaining customers,” said Cowen analyst Oliver Chen.

The main problem these new apps face is that the space is already saturated with marketplaces, from Farfetch and Net-a-Porter to Macy’s and Amazon. These are well-established retailers that have had years, sometimes decades, to build a loyal customer base. And even they have at times struggled to sell clothes profitably on the internet.

For discovery, consumers automatically turn to Instagram, Pinterest or TikTok. Each is trying to introduce more shopping features — most recently TikTok, which appears to be developing an international e-commerce fulfilment system, according to job listings.

“People have sticky behaviour,” said Chen, “and consumers have limited appetite for multiple apps.”

That’s not to say it’s impossible for a newcomer to make a splash. Currently, the top downloaded shopping app in the US is Temu, a Chinese marketplace for ultra-affordable fast fashion and other cheap products that launched in September.

Following Temu, Amazon, Walmart, and Shein top the chart. The popularity of these platforms indicate that when it comes to being incentivised to download something new, the most enticing factor just might be price. That’s not to mention, another reason why Temu is so popular is because it has invested heavily in social media marketing. Other startups might not have the resources to do the same.

Still, the online shopping experience is far from perfect, which means there’s white space for companies like Shoptrue. While its selection does include mass brands like Crocs and Adidas, Shoptrue said one of its major assets is being able to gamify the consumer experience. On Shoptrue, users can build collections, or “shops,” of listings based on a theme or occasion that they can share with friends — akin to playlists on Spotify.

For now, I’ll stick with my routine: Open up a dozen e-commerce websites and see what’s on sale.

Skin care brand Malin+Goetz sees tiny stores as the key to its big ambitions.

The brand, a gender neutral line of personal care essentials, looks for spaces as small as 400 square feet, or about the size of a typical hotel room. Each of its 15 stores sells a slim assortment of moisturiser, shampoo and other products, colour-coded by category to make it easier to navigate.

“We tend to want to be your local neighbourhood apothecary,” said Brad Horowitz, Malin+Goetz’s CEO. “I wouldn’t say we have a flagship approach.”

The strategy is a good fit for a minimalist brand that urges customers to “uncomplicate your regimen.” It also reflects a new reality where retailers face rising labour costs and soaring rents on the most coveted blocks, even as sales per square foot have declined since the rise of e-commerce. Brands still see value in physical stores as a way to attract customers and showcase their products, but are thinking differently about everything from where a store is located to how it looks and what it stocks.

Up-and-coming brands often opt for small stores in trendy neighbourhoods instead of flagships on the busiest streets. Many brands look for their physical spaces to serve as many functions as possible, from building brand awareness to serving as a mini-warehouse for e-commerce orders. Generating sales still matters, but it’s no longer the only factor in a store’s success.

“Costs are 40, 50 percent higher compared to 15 years ago,” said Barrie Scardina, head of retail services, America, at brokerage Cushman & Wakefield. “Overall when you think about store fixtures and staff, everyone wants to maximise productivity.”

Brands are also opening fewer stores as they expand, compared with the pre-internet rise of chains like Gap, which at its peak operated thousands of stores worldwide. Vuori, a rapidly growing activewear brand that last year secured $400 million in funding from SoftBank, has a plan to reach 100 locations by 2026 (it’s about a quarter of the way there).

“We have taken and will continue to take a conservative approach to opening stores,” said Anthony DiMaggio, Vuori’s vice president of development. “A lot of it has to do with being at the right location. If we find a market that we’re interested in, we don’t just grab the first available spot.”

Below, BoF unpacks new ways of approaching brick-and-mortar, from how to make smaller spaces work to choosing the appropriate post-pandemic location.

A New Flagship Paradigm

Not all that long ago, it was common practice for a sizable retailer to have multiple flagship stores — typically that means 10,000 square feet or larger — in a single market. In New York, for instance, this might look like a flagship in Soho and another on Fifth Avenue.

These days, one big store per city is enough for most retailers. Vuori’s new 5,000-square-foot location in Soho, for instance, its first in New York, plays the flagship role for the brand, carrying everything from running shorts to coats to deodorant. Additional locations in the market could be smaller and in neighbourhoods rather than more commercial areas, DiMaggio said.

Even though retail vacancies remain high, brands are taking their time to find the perfect location.

Since the early days of Silk Laundry, founder Katie Kolodinski knew she would eventually open a store in Los Angeles, one of her biggest markets. Eight years after launching the line, Silk Laundry finally found the right space on Melrose Boulevard, slated to open next year. It will be the brand’s sixth store.

When brands do opt for bigger spaces, the goal isn’t just to showcase more products. Silk Laundry, which typically operates stores under 2,000 square feet, is considering opening larger locations so it can more easily host in-store events, such as poetry workshops and fabric dyeing tutorials.

“With one large store we could do two smaller stores and enter two markets instead of one, so which one do we do?” said Reece Rackley, CEO of Silk Laundry and Kolodinski’s husband. “We’re actually comfortable with both approaches.”

Staying Local

At the height of lockdowns in 2020, neighbourhood stores turned out to be a resilient segment of physical retail. That remains true even as the world has fully opened back up.

“You’re having a lot more focus on high value neighbourhoods that may not be overrepresented in retail,” said Jonathan Schley, a broker for CBRE.

Schley said in his native Los Angeles, this means neighbourhoods like Silver Lake and Pacific Palisades have become unlikely retail hotspots, rather than the usual blocks in West Hollywood or Rodeo Drive. French label Officine Générale, for instance, is opening its first LA store in Palisades Village, an outdoor shopping development in Pacific Palisades.

Malin+Goetz’ entire retail strategy is based on staying local, in addition to some spots in tourism hubs. Its two Brooklyn stores are in Williamsburg and Cobble Hill, for instance, and it has four stores in London: Islington, Covent Garden, Spitalfields and Canary Wharf.

Size Doesn’t Matter

When bedding brand Parachute began its foray into retail, it also prioritised location above everything else, said founder and chief executive Ariel Kaye. (Parachute introduced a loungewear line in 2020).

“In the early days, most of our decisions were guided by looking to be opportunistic and wanting to be in specific neighbourhoods and only jumping on an opportunity that was available if it fit our criteria,” Kaye said.

The brand’s first stores were all on the smaller side, between 700 to 1,000 square feet. Since they carried fewer products, the brand used imagery and in-store online orders to serve customer needs. It has since opened bigger spaces, but no larger than 4,575 square feet — the size of its largest store in Nashville.

“We can easily fill a 5,000- to 7,000-square-foot space but we choose not to,” Kaye said. “We want people to really know the products and experience them in a smaller setting … We also like to host events and workshops and speaker series.”

Beyond its tiny stores, Malin+Goetz has other ways to present its products to customers, from its website to wholesale retailers and partnerships with hotels and restaurants. A few hundred square feet is plenty to get its message across, whether it’s in New York, London or Hong Kong.

“The white space we own was always uncomplicated, urban, and gender neutral, and this hasn’t changed in the last 18 years since we were founded,” Horowitz said.

Especially after the pandemic, he added, “There’s such a hunger for simplicity.”

The monsoon rain began in June. By the end of summer, huge swathes of Pakistan were fully submerged. More than 1,500 people have died in the devastating floods, and hundreds of thousands of people have been left homeless. Water only began to recede in the worst-affected southern Sindh province this week, officials said.

The disaster has wiped out crops across the country, dealing a critical economic blow to the world’s fifth-largest cotton producer and a major textile manufacturer. Nearly half of the country’s cotton fields have been washed away, planning minister Ahsan Iqbal told reporters.

The situation in Pakistan is the deadliest in a wave of extreme weather linked to climate change that is contributing to exceptional volatility in fashion’s supply chains. For now, cotton is at the epicentre of upheaval.

“With climate patterns becoming more erratic there is serious risk on the supply of cotton,” said Rui Fontoura, an expert at Textile Exchange, a sustainable fibre-focussed non-profit organisation.

In India, the world’s largest cotton producer, rainfall and pests caused such a dent in supply that the country has had to turn to imports. In the US and Brazil — the world’s third and fourth cotton producers, respectively — drought has ravaged crops.

The issues aren’t just climate-change related. A US law that went into effect this summer tightened a ban on imports from China’s cotton-producing Xinjiang territory, where the Chinese government is accused by Western nations of detaining Uighur muslims and other ethnic minorities in forced labour camps.

Together, India, China, Pakistan, Brazil and the United States make up the top five growers of cotton. Coinciding trouble in each and every region spells unprecedented disruption for the textile industry.

Preparing for the Unknown

The worst of the shortage won’t be felt until 2024, according to Textile Exchange’s Fontoura.

But retailers can prepare today by stocking up on supply earlier, strengthening their relationships with suppliers, leveraging data to better predict demand and investing in the circular economy to reduce dependence on new production. That’s the case across the supply chain, with the forces buffeting cotton part of a wider climate of uncertainty.

For instance, Zara-owner Inditex told analysts on an earnings call Wednesday that it will temporarily increase production to mitigate potential supply chain disruptions in the next six months.

Chief executive Oscar García did not point to a specific segment in the supply chain, but said that the decision involves manufacturing in Asia, the Financial Times reported.

In the case of cotton, experts don’t yet know the full impact of this summer’s climate disasters, or of restrictions on imports from China. The European Union proposed its own ban on products made with forced labour this week.

Broader global instability is feeding into the climate of uncertainty. Fluctuations in the oil price as a result of Russia’s invasion of Ukraine, for instance, has kept demand for polyester low. That could in turn put more pressure on cotton demand at a time of restricted supply.

Still, there are ways to account for the unknown. Using data analytics to better plan for and manage inventory is one solution, though a product that could predict the future on all fronts of the supply chain doesn’t exist yet.

“Improving flexibility and agility should be a priority for this year,” said Sheng Lu, associate professor at University of Delaware’s Fashion and Apparel Studies department.

Lu recommends, for example, cultivating strong relationships with suppliers and vendors so that even if disruptions occur, brands can rely on their partners to come through.

“In the long run, it’s about how to make the industry more sustainable,” he said.

THE NEWS IN BRIEF

FASHION, BUSINESS AND THE ECONOMY

Gap and Ye are ending their partnership. Gap Inc. notified employees in an internal email that it would wind down the deal with West, who had said he wanted out of the arrangement.

Burberry reschedules show, London Fashion Week updates schedule. All shows and events that had been scheduled for Monday, Sept. 19, the day of the late Queen’s funeral, will be rescheduled, the British Fashion Council, London Fashion Week’s organising body, announced on Monday. Burberry has already announced it would reschedule its show for Sept. 26 at 12 pm.

Prada CEO says no decision yet on dual listing in Milan, reports Reuters. A dual listing in Europe would help Prada widen its investor base, as some investment funds can only put money in European or US stocks.

H&M sales miss estimates as retailer falls behind rival Zara. Revenue dropped 4 percent excluding currency shifts in the three months through August, the Swedish retailer said Thursday. Analysts had expected a decline of 1.4 percent.

Inditex’s first half sales surge ahead of potential slowdown. In its first results since Marta Ortega took over as non-executive chairman, the company said revenue for the period rose to €14.84 billion ($14.82 billion) from €11.9 billion a year earlier. It booked a net profit of €1.79 billion from €1.27 billion last year.

Rent the Runway tumbles after unexpected drop in subscribers. The company said its active subscribers fell to 124,131 in the second quarter ended July 31 from nearly 135,000 in the prior three months.

Zara billionaire bets $700 million in move into US logistics. Ortega family investment company Pontegadea bought five logistics centres in the US states of Tennessee, South Carolina, Virginia, Pennsylvania and Texas from Realty Income Corp. for about $722 million, in a deal reported by Spanish daily El Pais on Tuesday and confirmed by a Pontegadea official.

H&M, Decathlon to dial back sustainability claims to avoid Dutch greenwashing crackdown. The two retailers have promised to “adjust or no longer use sustainability claims on their clothes and/or websites,” and ensure consumers are better informed, according to a statement by The Netherlands’ Authority for Consumer Markets.

Chiara Ferragni’s manufacturer to take on Just Cavalli. OTB is set to exit a licence agreement with Italian brand Roberto Cavalli for its junior line Just Cavalli.

EssilorLuxottica, Armani renew deal. The companies said they’ll extend their current cooperation deal for 15 years, continuing to focus on development, production and global eyewear distribution under the Giorgio Armani, Giorgio Armani Privé, Emporio Armani, EA7 Emporio Armani and A|X Armani Exchange brands.

EU proposes banning products made with forced labour. The EU proposal highlights the 27.6 million people the International Labour Organisation says were engaged in forced labour in 2021, 11 percent more than in 2016.

Everlane raises $90 million in debt. The basics brand just bagged a fresh round of funding to shore up its expansion plans. The direct-to-consumer company, one of the earliest digital native start-ups in apparel, has secured $65 million in revolving credit and an additional $25 million loan, its financial partners announced Thursday. Modern Retail first reported the news.

THE BUSINESS OF BEAUTY

Revlon to pay executives $36 million in bankruptcy bonuses. Revlon’s chief executive officer Debra Perelman could collect as much as $10.6 million, the company said in court papers seeking approval of the bonus programme. Under the proposal, eight senior executives would receive as much as $36 million, should the company hit certain financial and other metrics.

Makeup prices are soaring as social events eclipse tight budgets. Prices for makeup, perfume, bath and nail products rose 2.3 percent in August from a month earlier, the largest increase since December 2006.

Puig increases stake in Indian beauty and wellness brand Kama Ayurveda. The Spanish group has increased its stake in the company to a majority share, strengthening its foothold in the fast-growing Indian beauty and personal care market. The financial terms of the deal were not disclosed.

PEOPLE

Reed Krakoff joins John Hardy, named strategic advisor to L Catterton. The former Tiffany executive has joined the artisan jewellery brand as its creative chairman, a newly created role that will see him become a minority equity stakeholder in the business. Krakoff will also act as strategic advisor to the company’s majority shareholder, LVMH-backed fund L Catterton.

Ssense appoints first chief customer officer. Daniel Habashi will lead the e-commerce company’s marketing, retail and personal shopping divisions as it targets sustained growth. He has served on the board of Aritizia, as a regional general manager for TikTok, and the chief marketing officer of Soho House.

Coach taps Lil Nas X as its latest ambassador. The Tapestry-owned brand announced during its NYFW show that the American musician is the latest addition to its ever-expanding team of ambassadors.

Fila taps Haider Ackermann for latest collaboration. The Colombian-French designer will design a one-off collection of menswear, womenswear and accessories for the sportswear giant. The collection will debut with a fashion show in Manchester, UK on November 17.

William Klein dies in Paris. The legendary street and fashion photographer has died in Paris, aged 96, his son said in a statement to French news agency AFP on Monday.

Prada cuts ties with Chinese star held in prostitute scandal. Chinese actor and singer Li Yifeng, who was detained on prostitution charges as the government continues a crackdown on the entertainment industry.

MEDIA AND TECHNOLOGY

Walmart is rolling out its new virtual try-on on a mass scale. The feature will be available on more than 270,000 women’s clothing items.

Compiled by Joan Kennedy.

It’s been a tough year for Gap Inc.

A collaboration between its namesake brand and Ye has had an anticlimactic retail rollout, while Old Navy sales are retreating. Even Athleta, the once fast-growing activewear label, is seeing sales level off.

Hope has come in the form of two unexpected quarters for the American’s retailer’s fourth brand: Banana Republic, a mall chain known for generic wear-to-work button-up blouses and floral dresses — the same ones that could be found in an Ann Taylor or Express — that became almost entirely obsolete during the pandemic.

But the tides are turning. Banana Republic sales were up 9 percent in the quarter ending July 30 — helping to send Gap Inc. shares 6 percent higher following the otherwise bleak earnings report. In the quarter ending April 30, sales grew even more dramatically compared to last year, rising 24 percent while Gap and Old Navy were both down double digits.

Rebounding sales are the payoff to a grand reinvention of the Banana Republic look that began a year ago, under chief executive Sandra Stangl and then-chief brand officer Ana Andjelic. The idea was to eschew the brand’s inoffensive offering and replace it with an undeniable point-of-view. The result was “Imagined Worlds,” an adventure-themed campaign that re-introduced Banana Republic’s origins as a safari apparel maker with sharply styled and tailored products like utility jackets, cargo pants and wide-leg trousers.

The look — part-bohemian and vaguely imperial — wasn’t for everyone. But that was the point. Banana Republic had been so bland for so long that it became imperceptible to consumers. Now, its British Army-inspired trousers and suede fisherman vests stand out in a sea of boring chinos and tops.

“The rebranding has been very successful,” said retail consultant Robert Burke. “It’s become very focussed on silhouettes and some nostalgia, and it’s a look that hasn’t been addressed by any other brands in this price point.”

Maintaining that upward trajectory is going to get harder for Banana Republic as the novelty of its new look wears off. Andjelic left the brand last November, but her fingerprints are still on much of its new collections. Banana Republic has not hired a new chief brand officer. Instead, chief Stangl and her team of design creatives are paving the way for the next chapter of the brand’s turnaround.

In addition to the new look, Banana has cut back on promotions to just two sales per year and some seasonal promotions, like Black Friday. The average unit price has increased — a pair of pants cost around $100 and leather jackets upwards of $500 — and it has introduced new categories such as BR Baby and BR Athletics, a capsule collection of classic collegiate sports attire. The brand is relaunching its shoes and handbags offering this week and has increased its assortment of cashmere garments.

More than half of Banana Republic’s sales come from its lower-priced Banana Republic Factory segment, where prices are at least half off compared to retail.

The brand has benefited from the surge in demand for occasion wear, whether that’s dresses for parties or suiting for meetings that have returned to conference rooms over Zoom, according to Janet Kloppenburg, retail analyst at JJK Research Associates.

But that demand may not last as consumers finish restocking their closets.

“I think they’re doing a nice job but it’ll take another year for us to get into a normalised environment, where people aren’t rushing to refill their wardrobe for special occasions or work,” said Kloppenburg. “But they’re very much on the road to success.”

Lessons From a Lifestyle Veteran

Under CEO Stangl, the brand has also revamped its retail strategy. Dozens of unprofitable stores will be shuttered as part of Gap Inc.’s plan to close 350 Gap and Banana Republic stores between 2020 and the end of 2023.

Stangl recently unveiled a whole new website too, an image-oriented e-commerce experience similar to that of accessible luxury furniture brand Restoration Hardware, where she served as an executive before coming to Banana Republic in 2020.

Stangl, in fact, is taking several cues from Restoration Hardware to inform Banana Republic’s transformation. For instance, Restoration Hardware is known for its experiential retail, with striking store interiors and bars inside certain outposts. Some Banana Republic stores now offer beverage services, according to Stangl, with most now offering at least San Pellegrino to shoppers.

Stangl has expanded in-store styling services to every Banana Republic store and is exploring tailoring capabilities in five locations.

“We have the opportunity to help our customers with their personal style and putting the pieces together,” said Stangl. “That’s the experience we’re working on creating.”

Banana Republic could one-day be a full lifestyle brand, she added. Next month, the brand will launch an art vertical, where shoppers can buy photographs and prints from an assortment of artists, priced between $800 and $3,000.

“I remember the first time I walked into a Banana Republic store, I think it was 1996. It was during the holiday season, and they had gorgeous red trench coats, [but] at that time there were cashmere throws, bed linens and table tops, too,” Stangl said.

If it makes sense to one day offer these homeware categories again, then perhaps the brand will, she added.

What Lies Ahead

Some say Banana Republic has only accomplished the easy part of a turnaround. Maintaining its momentum now will be much more difficult than refreshing its assortment, said Andjelic, who left the company to pursue other opportunities after only nine months with the brand.

“A true brand refresh requires more than just changing the marketing [material] and that transformation, if it has indeed been made, takes longer to yield results,” between three to five years, Andjelic told BoF.

“Changing the brand creative without changing the underlying marketing, business, and operational approach is just putting lipstick on a pig,” she said.

More critically, Gap Inc. desperately needs a refresh for its namesake brand and Old Navy.

Banana Republic remains a fraction of Gap’s overall business. The company posted $16.7 billion in sales in the year ending on January 29, 2022, and Banana Republic accounted for about 12 percent of it, or $2 billion. Banana alone cannot mount a full turnaround for Gap Inc., but there are lessons that the executive team could learn from Banana Republic’s success so far.

“From a customer standpoint, Gap is complicated because it’s so much bigger,” said Burke. “But Banana shows you the importance of clear messaging, strong imagery and competitive price points … It’s not trying to be everything to everybody, and I think that’s very important.”

It’s been 18 months since Kate Spade’s creative director exited. The brand isn’t looking for a new one, chief executive Liz Fraser tells BoF.

“I really don’t think this is the kind of brand that should have one person at the table,” Fraser said. “The best thing for us was to revert to our origin story, which was a collaboration of creatives.”

The Tapestry-owned company, which saw sales increase 22 percent in the fiscal year ending in August, has instead hired two design veterans to help fill the role vacated by creative director Nicola Glass.

Jennifer Lyu, from Tory Burch, will be Kate Spade’s new head of design for leather goods and accessories. Tom Mora, a former creative director at Cole Haan, will be head of design for ready-to-wear, footwear, jewellery and everything else.

Lyu and Mora will work alongside a newly created team of marketers and branding experts, a committee that would replace the role of a creative director. “This new structure enables the storytelling and the product to develop naturally together,” Fraser added.

For years, Kate Spade had troubles growing. In the late aughts, under then-creative director Deborah Lloyd, the brand became a licensing powerhouse, launching myriad products in the home space. It turned out to be a winning strategy. But by the time Glass, Lloyd’s successor, left the company in March 2021, it was struggling to recover in the aftermath of the pandemic, even when its competitors experienced a dramatic boom in demand.

The key thing again and again in handbag land is balancing creative with merchandising and inventory management.

Now, with her new team in tow, Fraser has brought back some of Lloyd’s tactics, pursuing the strategies that made Kate Spade a runaway success decades ago, including product category expansion and the relaunch of archival pieces, like its famous box-shaped Sam bag from the 1990s.

“The key thing again and again in handbag land is balancing creative with merchandising and inventory management,” said Oliver Chen, a retail analyst at Cowen.

Return to Form

In its most recent previous iteration, Kate Spade, under Glass and then-chief executive Anna Bakst, backed away from its signature novelty pieces — bags in the shape of fruits, animals and a champagne bucket — and reduced its homeware offering.

Handbags today make up the majority of Kate Spade’s total sales, but the goal is to ramp up the share of other products again, such as clothing and licensed products like bedding, stationery and kitchenware, which will be Mora’s primary objective. The brand currently has more than 30 product categories.

By offering a wider array of products, the brand can capture the customer at various stages of life, Fraser said. “For instance, if your graduation gift is Kate Spade jewellery, we know you’re more likely to put Kate Spade on your bridal registry,” she added.

The brand has also slowly reintroduced novelty pieces, which make up 8 percent of total assortment but are the main attraction for many of its most loyal customers. The task at hand for Lyu will be to incorporate novelty and a strong core collection with a sense of cohesion.

“It needs a balance of fun, interesting bags that people can collect and then a solid core collection too,” said Chen. “And then figuring out the right strategy to pursue licensing will drive brand heat and relevance.”

Opportunities for Growth

In addition to a revamped product assortment, Kate Spade will continue to raise its handbag prices by a low double digit percentage, after a 15 percent increase last year.

“If you put the product out there that she likes, as long as we’re at an accessible price point, she’ll pay,” Fraser said.

The brand is also anticipating growth in markets like Europe and Southeast Asia. Soon, it will be launching a new store concept in its Chengdu location in the coming months and will roll it out to other outposts.

If you put the product out there that she likes, as long as we’re at an accessible price point, she’ll pay.

This week, it will showcase its spring 2023 collection at New York Fashion Week, returning to a presentation format instead of runway, which was favoured by Glass.

“We’ve done a lot of soul searching and we looked at what are the strengths of Kate Spade, what is that magic, and what are the things that we are especially good at,” Fraser said.

Another apparel giant is venturing into the fast-growing, but crowded underwear category.

Athleta, the activewear brand that has emerged as a rare bright star in Gap Inc.’s portfolio, will be launching an intimates collection called “Rituals” on Sept. 20 on its website.

Underwear is a promising category — NPD Group predicts a two-year average growth rate of 9 percent — but competition is steep. Athleta will be challenging not only retail giants like American Eagle Outfitters’ Aerie, but also formidable new entrants in the market, including Gen-Z-friendly Parade, period underwear startup Knix and Kim Kardashian’s Skims.

Meanwhile, Victoria’s Secret, far and away the market leader, is in the middle of a turnaround that has seen the brand shed its overtly sexual marketing in favour of a more diverse, body positive image.

Athleta’s managers knows the challenges ahead. The San Francisco-based brand briefly sold underwear in stores and online in 2018, but the customer response was lacking. It pulled the small assortment within a year.

“What we found in the first launch was that the product wasn’t perfect,” said Ebru Ercon, Athleta’s vice president of design. “Often with performance brands, you’ll iterate and iterate until you get it right.”

This time around, the collection, which includes three styles of underwear and two bras, was tested by more than 100 women for fit and quality. While the bras are not suited for high-impact activity, each product is designed for prolonged everyday wear.

These pieces differ from what competitors offer because of their performance-driven fabric and construction, Ercon added. The seams on the underwear, for instance, are glued together rather than sewn, achieving more ease of movement. Prices will also be slighter higher than that of mall chain competitors: bras cost $59 to $69 while underwear is $16 per pair.

“There’s no fussy trims, there’s nothing there that doesn’t need to be in here,” Ercon said.

Activewear in Flux

The launch comes at a critical time for Athleta. After a banner year in 2021, interest in the brand’s activewear offering has waned this year as consumers opt for dressier styles. In its most recent quarter, Athleta sales grew 1 percent compared with the same period in 2021 while comparable sales — a measure of retail performance across stores and online channels open at least one year — dipped 8 percent.

This figure doesn’t exactly bode well for Gap, since Athleta has historically outperformed its other brands: Gap, Old Navy and Banana Republic.

Expanding categories is a strategic way to combat softening sales growth, said Jane Hali, chief executive of her namesake retail consultancy.

“Activewear isn’t dead but it’s moved direction,” she added. “We could always use good underwear.”

Athleta said the launch was in response to requests from customers for underwear. On its website, 15 percent of searches by customers are for the garment, according to the company.

“It’s not that we’re getting into the market because there’s a business opportunity, it’s intuitive to our customer need,” said Ercon. “She loves the comfort of our [athletic] products and she wants to have intimates that feel just as comfortable.”

The Post-Pandemic Factor

For activewear brands like Athleta, it’s critical now to meet the customer where she is, and that’s travel, social events and returning to the office.

That doesn’t necessarily mean Athleta should offer gowns and work accessories. Rather, the brand is observing the blurring of lines between work and life as a result of the pandemic, Ercon told BoF.

During periods of work-from-home, consumers learned how to multitask during the day. They exercised during work hours and took phone calls while dropping off their kids.

“From those insights, we found that [the customer] really needs versatility,” Ercon said. “She needs underwear she could wear to yoga in the morning or on a run, and then she could wear it throughout the day and it’s all about making it easy for her.”

This mentality colours Athleta’s approach to its overall fall assortment, offering dressier pieces like blazers and tops with a performance flair — thumbholes in the sleeves, seamless elastic ruching — while also using running tech fabrics to create trousers.

More so than any other activewear brand, Athleta shows that “they can do it all,” Hali said. “They want to be the go-to for most apparel, with sleep, swim, pyjamas and travel.”

In partnership with LVMH, the New York-based fashion organisation will host its 15th anniversary fashion show and awards on Sept. 6.

This year, in addition to its annual showcase of Black-owned brands, Harlem’s Fashion Row has created an award in honour of Virgil Abloh. His wife, Shannon Abloh, will present the accolade at the show.

According to the organisation, the award “celebrates like-minded individuals who embody Virgil’s spirit, brilliance, and vision, through invaluable contributions to culture, community, and innovation,” it said in an announcement Monday.

The recipients include actress Issa Rae, womenswear designer Sergio Hudson, fashion writer Robin Givhan, stylist Ade Samuel and Janet Jackson, who will be awarded the “Icon of the Year” award.

Learn more:

At Fashion Week, Signs of Stalled Progress on Diversity

Some Black creatives say they’re worried the industry is already moving on from its recent focus on racial injustice, leaving them to carry the load.

The already cutthroat US resale market is about to get even more crowded.

By early next year, Vestiaire Collective plans to shut down Tradesy, a US rival it acquired in March, the company told BoF. That’s part of a major American push for the Paris-based Vestiaire, which is betting lower commission rates and a global inventory will help it make inroads in a market it has repeatedly tried and failed to crack for nearly a decade.

“We’re thinking very very big in terms of the market,” said Tracy DiNunzio, founder and chief executive of Tradesy, who is now the CEO of Vestiaire Collective, North America. “We’re in a sky-is-the-limit mode.”

The move comes at a time when the US resale market is in flux. The RealReal is America’s biggest luxury-focussed resale platform but it has struggled to narrow losses. Earlier this week, the company reported $53 million in losses, or 34 percent of its total revenue, in its most recent quarter. Leading competitors, including ThredUp, also operate in the red, while eBay is profitable but has struggled to brand itself as a destination for fashion lovers. DiNunzio said Vestiaire is on a “clear path to profitability.” The company did not offer a timeframe or provide details of its current finances.

All of these resellers are competing for a limited pool of customers. While resale has rapidly entered the mainstream, a divide is forming between the enthusiastic buyers and sellers and everyone else. More than 40 percent of consumers have never purchased anything in the resale fashion market, according to a 2021 survey conducted by BoF Insights.

Vestiaire believes its global footprint gives it a vital edge over its competitors. By connecting listings from all over the world, buyers have access to a wider supply while sellers can reach a bigger pool of potential secondhand shoppers. It also mostly operates via a peer-to-peer model — sellers photograph, package and ship their own items rather than shipping them to a central warehouse — which it says allows it to charge lower transaction fees. Vestiaire charges a 15 percent in the US for items over $100, compared to The RealReal’s tiered system that ranges from 80 percent commission on clothing under $50 to 20 percent on handbags over $5,000.

Many of those potential new clients are difficult to acquire, either because they view resale as too cumbersome or have concerns about counterfeits.

“There’s a chunk of the market that we’re never going to tap, unfortunately,” said Graham Wetzbarger, an authentication expert and luxury-resale consultant. But he added that Vestiaire’s global footprint brought something new to the table.

“This is the first shakeup of the US territory in a while,” he said. “The businesses that will win this category are those that will scale internationally first.”

An Authentic Experience

The downside of peer-to-peer resale is it requires more work for customers. The RealReal, for instance, offers pickup and drop-off service for sellers and authenticates every listing to reassure buyers they’re buying the genuine article.

But taking possession of secondhand goods is expensive for the platforms, which must pay for storage and typically authenticate and photograph each item themselves. The RealReal pointed to labour shortages in its earnings report Tuesday.

Vestiaire authenticates all international transactions and purchases over $1,000. For under $1,000 listings within one market, buyers can pay $15 for authentication, or get their purchase shipped directly from the seller.

These options were implemented under CEO Max Bittner, who took Vestiaire’s helm in 2019. Back then, the platform operated more like The RealReal. Bittner pivoted to a more asset-light model in order to boost margins.

“We have this big global market that has different regions with different tolerances for fee structures,” DiNunzio said. “We have a lot of ways to optimise for profitability.”

Coming to America

Vestiaire’s acquisition of Tradesy cements its presence in the US, which has been tenuous in the past, said Wetzbarger. Vestiaire announced its entry into the country as early as 2014 but failed to seriously compete with other players in the market.

In another survey conducted by BoF Insights, Vestiaire Collective was not in the top 10 resale platforms of which US consumers were aware, though it was on the list for shoppers in the UK, Germany and France. Even so, the company said the US is its biggest market.

Vestiaire is well-capitalised to invest in growth. To date, it has raised more than $600 million in funding, according to Crunchbase, including $209 million from the SoftBank Vision Fund 2 last fall, which valued the company at $1.7 billion, and a $215 million round in 2021 that included Kering as a lead investor.

Vestiaire is exploring other ways to grow. Partnerships with brands, for instance, could one day be a significant revenue driver for the company, DiNunzio said. And to more effectively court buyers, white-glove pickup or dropoff services like that of The RealReal could be a possibility in the future too.

Going global, ultimately, is a high-risk, high-reward play.

“There’s incredibly high potential for this company … but in order to get there, we’re going to have to successfully work across the globe, and that brings with it all these little rabbit holes of complexities,” DiNunzio said.