NEW YORK • Slowing demand and waning consumer confidence have continued to wreak havoc on the global fashion industry.
Days after American Apparel filed for bankruptcy for the second time in 13 months, popular clothing brand Gap said it expected to shut about 65 company-operated stores this year due to sluggish sales.
High-end designer houses are also losing out on reduced foot traffic in malls. German fashion house Hugo Boss recently announced plans to eliminate two brands and slow down expansion, while a disgruntled investor suggested that Kate Spade put itself up for sale.
The woes of traditional apparel and luxury brands have been exacerbated in recent years as online retailers grow in popularity, especially among millennials, forcing these big names to rethink growth plans and device new strategies to cut costs and bump up sales.
Many, including Abercrombie & Fitch and Michael Kors, have posted disappointing earnings in the third quarter, leading to a drop in share prices.
The challenge for these brands has mostly come from fast-fashion chains such as H&M, Forever 21 and Zara which have grabbed a large chunk of market share by offering trendier clothes at lower prices.
Clothing companies have been hit particularly hard with brands such as Aeropostale, Quiksilver and Pacific Sunwear of California filing for bankruptcy in the past two years. American company Banana Republic recently announced it is closing all eight stores in the United Kingdom, and moving its operations online to its regional website.
Fossil also announced it would close down stores, as a poor showing this quarter forced the maker of handbags, jewellery, sunglasses and watches to narrow its focus and concentrate on fewer styles.
Retailers baulking at high rents have resulted in a fall in rental prices this year at popular retail real estate locales, from New York City's Fifth Avenue to Hong Kong's Causeway Bay shopping districts, according to a report by real estate services firm Cushman & Wakefield.
"The people in the luxury space, they got very spoiled, because there was a market of people who consistently spent," Ms Sarah Quinlan of MasterCard Advisors told AFP on the sidelines of the Financial Times' luxury summit earlier this year. "That market is no longer there."
A study targeted at millennials - those reaching adulthood in the early 2000s - found them to be more mercurial consumers whose brand loyalty could quickly shift. "To attract, excite and engage millennials will require a high level of branch investment," the study found.
The fading lure of luxury items among millennials is "not necessarily an income problem", Ms Quinlan said. Millennials prefer to spend on trips, dinners, outings and other experiences rather than on "stuff".
"They might buy one piece, if it's very special, it's very valuable, has a memory of a trip somewhere."
In the face of such consumer sentiment, companies are trying to recast themselves with different strategies including mergers and tie-ups to attract the young customer.
Some like Marks & Spencer have dialled back expansion and weeded out smaller brands in Europe. Others like Burberry and Coach are rumoured to be considering a tie-up.
Design educator Tim Gunn suggests that the fashion industry should consider making clothes for plus-size women as well.
"There are 100 million plus-size women in America, and, for the past three years, they have increased their spending on clothes faster than their straight-size counterparts. There is money to be made here," he said.
BLOOMBERG, AGENCE FRANCE-PRESSE