HomeFEATURESFrom concept to closet: New Zealand’s apparel industry in 2019

From concept to closet: New Zealand’s apparel industry in 2019

Mercedes Benz Fashion week

Held at the end of August, New Zealand Fashion Week is an annual focal point for local designers and those interested in their products. But as Hemma Vara reports, the $3.8 billion apparel category is much bigger than these high-end independent businesses.

It’s never been easy to run a clothing label, but today’s designers and apparel retailers face a range of challenges. These include:

  • 1) Made in New Zealand. Is domestically producing apparel still commercially viable?
  • 2) The rise of direct to consumer (D2C) brands. How can retailers coax emerging designers into stocking their stores if they’re not interested in wholesale strategies?
  • 3) Consumers are becoming more conscious. Are the customers demanding sustainable fashion prepared to walk the talk?
  • 4) Technology is disrupting traditional processes. Do we really, truly all have to be selling online?

However, with every challenge comes an opportunity. Read on to discover how retailers and the designers that stock their stores are adapting to a new landscape where the customer is king.

Challenge 1): Made in New Zealand

It’s no coincidence that in the last few years, many long-time New Zealand fashion retailers have shut shop, or retreated to ecommerce only. In August 2019, 15-year-old cult occasionwear retailer Miss Crabb’s physical and online stores closed forever. A year before, the Andrea Moore label was placed into liquidation, citing issues with retail margins and bricks and mortar expansion. 

Ben Kepes, director of Christchurch-based outdoor and workwear apparel retailer Cactus Outdoor, acknowledges the difficulty in producing apparel in New Zealand. He points towards the staggering costs in comparison to manufacturing in Asia, and the lack of skilled workers. The cost-per-garment adds up, he says, explaining that this is ultimately borne by the retailer. Then the retailer must convince the end consumer of the increase in value. 

Auckland designer and retailer Turet Knuefermann (of TK Store and Knuefermann) has spent hours on the shop floor listening to observations and requests from her loyal customers. She says that although Knuefermann’s customers enjoy variety, perusing the racks of Zara and H&M for trending pieces, they always come back to her label for quality pieces that last a lifetime. 

Knuefermann’s experience is similar to that of designer Amber Whitecliffe, who explains that her customers purchase from her when they desire something unique. Whitecliffe keeps her runs low for this very reason. Whitecliffe says she focuses on timeless pieces that last rather than responding to trends. Recently closing her Parnell boutique, she has kept her online store live.

The solution: Keep it curated and leverage goodwill

Following on from Whitecliffe’s deliberate move to produce low runs, a key retail secret that local designers can unlock is offering a made-to-order service. Consumers are willing to pay for personalisation on special occasions, such as weddings – New Zealand designers including Ingrid Starnes, Juliette Hogan, Paris Georgia and Karen Walker have all rolled out bridal ranges recently.

A recent Newshub poll confirmed that the majority of pollers try to buy New Zealand-made products where possible. However, is this just a feel good sentiment? When shoppers are faced with a choice between price and quality, what else do retailers need to consider to come out on top? 

Buy New Zealand Made executive director Ryan Jennings says that across all retail sectors, the Made in NZ license holders who perform the best are the ones whose customers are willing to pay premiums for their brands.

Wellington ethical underwear label Nisa is a pertinent example of this success. Consumers choose to purchase Nisa lingerie at a higher price as they value the welfare of the refugee migrant workers that produce the garments. 

For retailers restricted by the limitations of small-scale onshore production, there is hope in the news that Cactus Outdoor purchased its large-scale manufacturer in July. Kepes acknowledges there’s a challenge in re-building the local production of apparel, and Cactus is fortunate to employ many skilled refugees and migrants. Optimistically for apparel production, Cactus is looking at starting an academy to train more people as garment technicians. 

Buy New Zealand Made’s Jennings has a solution for local designers or retailers who don’t have the capital up-front to scale. He points to the ability to crowdfund, allowing designers to capitalise on their customer relationships by securing prepaid orders. In turn, this enables the retailer to pay production costs up-front.

A model walks the runway during the Mercedes-Benz Presents Knuefermann show during New Zealand Fashion Week 2018 at Viaduct Events Centre on August 27, 2018 in Auckland, New Zealand. (Photo by Stefan Gosatti/Getty Images)

Challenge 2): D2C versus wholesale 

Designers are increasingly using digital infrastructure to leapfrog retailers and connect directly with their customers. By taking out the middlemen, including third-party suppliers, wholesalers and retailers, D2C retailers are attempting to own and control their entire value chains. 

The prime benefit of D2C is that it fosters the creation of a customer-centric product. Brands can access more significant insights and maintain more control over the customer experience, and they can also gain the ability to quickly change and refine production to meet the customer’s rapidly-changing desires.

While Shopify and other accessible ecommerce services now very accessible, it’s easy for emerging designers to set up their own websites and grow customer networks through social media rather than targeting stockists.

At scale, the D2C model favours players who can fund the entire operation, such as American footwear retailer Allbirds. The innovative woollen sneaker that Kiwi co-founder Tim Brown created with Joey Zwillinger was the starting point for a brand that took this hero product directly to consumers. Following global success, its seventh store worldwide in Auckland’s Britomart sees Allbirds’ strong design philosophy expressed through every detail, from the chairs designed for trying on shoes, to the easily accessible shoeboxes behind the counter.

Mass-market retail giant Kmart New Zealand owns its factories in Asia, allowing it to respond to trends by producing and selling its variations quickly. Kmart’s on-trend products create a talking point among consumers, to the point where online fan communities have been created to share purchases and new stock alerts. To further fuel its fire as a retail powerhouse, Kmart is open till midnight, so regular retail hours are not a barrier to in-store purchases. 

With a model this attractive luring both emerging designers and big brands away from the traditional wholesale arrangement, how can retailers hope to compete?

The solution: Stop, collaborate and listen

As a retailer and designer herself, Turet Knuefermann has some sage words of advice for retailers: be wary of holding too much inventory. For those stocking multiple labels, buy small and keep it exciting for the customer. Don’t let sale stock linger, as the customer will get bored. When it comes to wholesale of her own label, Knuefermann enables retailers to place in-store cash and carry orders with no minimums and offers next-day shipping. 

Retailers should also take note from New Zealand womenswear label Ruby’s general manager Emily Miller-Sharma. She says that by always analysing Ruby’s sales figures and listening to what its customers are asking for, Ruby can be responsive to simple customer needs. For example, if Ruby notices that the sales of a specific colour start to pick up, or slow down, the manufacturing team responds accordingly. 

Another ‘ah-ha’ tip for retailers is to produce collaborations with other brands to keep customers wanting something they didn’t realise they needed until now. Partnerships allow retailers to leverage off the other brand’s goodwill. Barbie x Missguided, Ksubi x Kendall Jenner and Ruby X Hello Kitty are examples of exciting collabs.

A model walks the runway during the Kate Sylvester show during New Zealand Fashion Week 2019 at Auckland Town Hall on August 26, 2019 in Auckland, New Zealand. (Photo by Graham Denholm/Getty Images)

Challenge 3) Here comes the conscious consumer 

Retail is typically designed to capitalise on what consumers want, and the past few years have signaled a growing trend in customers desiring ‘sustainability’. So, for apparel retailers, what does this mean for profitability? 

Sustainable fashion is focused on eco-friendly production, as well as slowing down consumption itself. For fast fashion retailers like H&M, slowing down production will negatively impact margins, so they instead look to eco-offerings to entice the conscious consumer to continue purchasing frequently. Country Road, Decjuba, Kmart, and H&M have all introduced garments made from eco-friendly textiles such as recycled polyester and bamboo into their offerings. The industry has also seen a wide uptake of sustainable shipping solutions, such as the delivery of online purchases in compostable packaging. 

A rise in scrutiny by customers brings new challenges for New Zealand retailers, who struggle to trace their supply chains from start to finish because of the unavailability of information from their suppliers. New Zealand-made brands cannot readily meet minimum order quantities for purchasing sustainably superior textiles as small production runs do not require hundreds of meters of fabric. Even so, Kiwi brands are opening themselves up to negative publicity if they do not step up.  

The solution: Demonstrate action

There is collective hope for local designer-retailers with the establishment of Mindful Fashion New Zealand (MFNZ) by Kate Sylvester and Emily Miller-Sharma of Ruby. MFNZ’s mission is to “to collectively strengthen the New Zealand fashion and textile industry by promoting long term sustainable growth through responsible business practice and industry investment.”

Miller-Sharma notes that MFNZ is a work in progress, “but one that I know is important and of great value to our industry.” Another designer, Maggie Marilyn, sums it up well when she describes her brand’s mission for sustainability as “progress not perfection”. 

Still, shoppers love trends and variety, and until their apparel consumption slows, fast fashion will continue to power ahead. The growing popularity of apparel rental services like Designer Wardrobe and secondhand retailers such as the recently-rebranded Recycle Boutique is indicative of a gradual shift. 

In the meantime, ethical fashion advocates are calling for a total rehaul of the fast-fashion model. These advocates point to ‘circular’ practices that attempt to close the gap between the creation of a garment and harm to the environment it can eventually cause, such as textile waste in landfill.  

Allbirds takes a different approach, carefully measuring the carbon emitted through its entire supply chain and offsetting it by purchasing carbon credits from third-party verified emissions reduction projects. Further, it’s working to develop projects that will avoid or reduce the creation of emissions in the first place.

Brown says one day sustainability will be the norm, and we do not change now, history will judge us harshly. 

If retailers want to protect their longevity, all they can do is keep showing consumers how they are continuing to incorporate sustainability into their operations. They should also prepare to adapt as consumers’ mindsets in consumption gradually shift. The future of traditional fast fashion retail is unknown, and it remains unclear whether fast-paced apparel production will still come out on top in the next few decades. 

AUCKLAND, NEW ZEALAND – AUGUST 27: A model walks the runway during the Mercedes Benz Presents Paris Georgia show during New Zealand Fashion Week 2019 at Auckland Town Hall on August 27, 2019 in Auckland, New Zealand. (Photo by Michael Ng/Getty Images)

Challenge 4) Digital disruption 

The continuing theme with New Zealand apparel retail is listening to customers, and in the world of social media, this fosters the ability for an even closer line of communication between retailers and consumers. As shoe designer Kathryn Wilson puts it, “the strength of ecommerce is a global reach for the brand and the convenience for the customer.” 

However, the instore experience is still vital to Wilson. She otherwise “wouldn’t have the trust from the customer of our comfort and fit of the designs.”

The in-store experience is equally as crucial for Ruby, says Miller-Sharma.

“The essence of fun and enthusiasm is imbued in our clothes and our stores. And that sense of joy can be picked up by all of our customers”. 

So, should every retailer sell online? The answer is a resounding yes. A 2019 report by NZ Post found that the fastest-growing domestic sector in ecommerce is clothing and footwear. The report also directly correlates an increase in sales in apparel to the ‘buy now pay later’ offerings at online checkouts.

Consumers are tending to window shop online to compare prices and features before considering venturing in-store. They also turn to social media to assess how garments look on similar-sized bodies. So, retailers at least need an Instagram or Facebook account to act as a digital shop-front. With two-thirds of Kiwis visiting social media platforms each day, it’s a numbers game. 

With the rise in online shopping means an increase in customers who prefer virtual customer service over picking up the phone or heading in-store when a purchase goes wrong. Heritage New Zealand designer went one further at New Zealand Fashion Week 2019 by switching to a virtual runway, sending New Zealand’s first AI-powered ‘digital human’ fashion models out in shows which continuously launched online through the week’s duration.

Ecommerce tools make it easier for retailers seal the deal by, for example, targeting would-be customers with abandoned cart emails and reminding them of recently looked-at garments via in-feed advertising. Many retailers are lowering the barriers for online purchasing by designing their online experiences to include the smooth return of unwanted items.

There is also an increase in online purchasing features that mimic the experience of shopping instore, but at greater convenience to the customer. For example, several Kiwi retailers offer same-day delivery, or pick up in any of their store locations.

The solution: Integrate your bricks and mortar and online channels

Brick-and-mortar stores should not worry about their digital counterparts. They can drive their digital communities offline by creating real-life experiences through pop-up stores, VIP events, and in-store-only sales. And, if retailers aren’t sure what their customers want, they should ask, whether it is in-store, through an Internet poll, or via email questionnaire. 

Ruby is one example of a responsive retailer, ensuring that its product is available to the most number of people. Customers can request that garments are made in size 2 or 20, at the usual retail price. If a customer needs a zip with a large puller instead of a button for greater accessibility, Ruby will do this at no additional cost.  

Greater access to the internet in 2019 also brings with it a newer generation of consumers that are clued up on social issues, and who are increasingly engaging in social activism. Retailers can be proactive by incorporating better inclusivity and diversity in advertising. Only if this is carried out with authenticity will retailers avoid backlash from consumers.

In 2019, retail norms are changing. Apparel retailers can overcome challenges by building close relationships with their customers and responding to what their customers want. Although customers have the choice of variety, they will likely repeat purchase from those who provide a customer-centric experience. As retailers make design and purchasing decisions for the next season, they should first analyze their purchasing data, and think on their feet. And that’s a wrap for New Zealand Fashion Week 2019. 

Apparel by the numbers

The apparel category is a key part of the New Zealand retail industry. Not only does it set trends which stimulate trade and cross-pollinate other categories, it has financial heft, wielded by brands you might not necessarily expect – New Zealand’s largest listed retailer, The Warehouse Group, is also the country’s largest fashion retailer, owning 26 percent of the Kiwi apparel market.

According to Stats NZ’s latest retail trade survey, sales in the ‘Clothing, footwear and accessories’ category accounted for just over $3.8 billion in 2018. This represented a 0.4 percent loss from March 2017. The category accounted for 5.2 percent of sales across retail’s core industries in 2018. 

All images by Getty Images.

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