Fashion industry: Main trends and related investment potential
Whereas in the past, fashion trends were set by designers at their own shows, today the opposite is true – customers themselves determine what they expect from fashion. Fast fashion is increasingly becoming the target of criticism, as people expect sustainability, quality and a perfect shopping experience across channels. If they want to survive, and better yet prosper, both major and small fashion-industry players must respond accordingly. And those brands that have long played a role in shaping current trends or are quick to adopt them represent interesting investment potential.
The fashion market in the Czech Republic and Slovakia
If we look at the Czech market, customers are starting to focus more on higher-quality and sustainable clothing. Though price is still important to Czechs, surveys show that 27% of Czechs plan to buy sustainable fashion in the coming months and so far in 2020, the price-comparison platform Glami has registered a ten-fold year-on-year increase in the number of clicks on products labelled as sustainable. In addition to that, fashion holds the largest share (29%) in e-commerce overall.
Online fashion shopping also has the largest share in e-commerce (approximately 37%) in Slovakia, where price is currently the most important factor in the decision-making process. However, the number of customers who prefer high-quality products despite the higher price continues to grow, with 76% of Slovaks willing to pay more for sustainable fashion.
Unlike in the case of traditional industry, here we are referring to the digitalisation of shopping. The online-shopping trend, which is driven primarily by the younger generation, has been bolstered by the Covid-19 pandemic. McKinsey estimates that in 2021, the digital segment in the European fashion industry will grow by up to 30% compared to 2019. Together with the desire for great service, the manner in which a brand handles the overall shopping experience will be important. It is possible to capture the customer’s attention in the online environment, especially on mobile devices, only if a brand differentiates itself through its product range, community and first-class service during purchase and delivery.
In the Czech Republic and Slovakia, we have pioneering companies that uncovered this trend long before the pandemic. For example, the streetwear retailer Footshop sets itself apart with its approach to customers, as well as with its exclusive collaborations with the best-known brands. It was the first shop in Central Europe to acquire its own model of Adidas sneakers and is building a strong community around itself. The success of the brand, which last year raised more CZK 75 million on the Crowdberry platform for its further expansion (and is now seeking additional funding), is illustrated by its planned 30% growth, the acquisition of rival retailer Queens and the launch of its new FlexDog project. In addition to that, Footshop is preparing a mobile application for its customers.
The issue of sustainability and criticism of fast fashion have been resonating in society for some time. More than one global fashion brand has gone through a crisis when it was revealed that they were engaging in the mass burning of their products or that the manufacture of their clothes involved enormous consumption of natural resources. Consumers are increasingly seeking a sense of meaning and emphasis on ecology in their clothing. The concept of circular models, i.e. the possibility of selling back unused goods, which has already been adopted by online fashion leader ZALANDO, is gaining in popularity.
Sustainability has been one of the pillars of the Czech company Freshlabels since 2015, though it first introduced sustainable fashion to its customers in 2010. Because there is still a large degree of fragmentation of approaches and information on the market, last year the company also launched its own transparent sustainability rating system. Due to its emphasis on quality and product design, Freshlabels is the clear choice for all urban travellers, who also value its über-friendly e-shop and customer service. Following its success in the Czech Republic, this fashion shop intends to expand westward. You can have an influence on whether it succeeds, as the Freshlabels investment opportunity is currently active.
Another company in the Crowdberry portfolio, Isadore, is also contributing to a more sustainable society. Isadore offers the possibility of jersey subscription – cyclists simply choose a jersey, rent it and return it after a certain period of time. Isadore then has the jerseys cleaned at a certified ecological dry cleaner and provides them to other customers. Jerseys that are no longer suitable for riding get recycled.
Change in customer behaviour
Another important trend is the change in how customers have begun to regard fashion shopping. In addition to sustainability and the shift to online shopping, consumers are also changing what they buy and where they buy it. During the pandemic, sales of casual clothes and sportswear increased significantly at the expense of luxury accessories and formal wear, and this trend is not expected to change in the near future. People are also much more aware of how brands have responded to the current situation, how they communicate in a crisis and, for example, how they help the community around them. At the same time, however, customers will very quickly discover if a brand is doing any of this out of selfish motives.
The aforementioned Isadore offers a great example of how to build relationships with customers. In 2020, this Slovak cycling apparel manufacturer rapidly responded to the pandemic by producing face masks, but it has focused on community relations since its establishment. The company produces jerseys in its founders’ hometown of Puchov, from where they are exported worldwide. Besides the quality and style of the jerseys, the cycling community also values the sustainability of the jerseys and their packaging, as well as the assistance that Isadore provides to its community, whether by employing local people or through its support for a children’s home.
What do these brands have in common? Apart from the fact that they have undergone (or are currently undergoing) investments from Crowdberry investors, they are among the first to adopt trends that impact the fashion industry. Therefore, all of them have top-quality e-shops and special brick-and-mortar flagship stores, while placing emphasis on sustainability and renewability, as well as building a community that is united by more than just a passion for fashion brands. Their success and expansion to foreign markets are proof that the fashion market also has something to offer to investors.