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Reinvention today is based on three trends in retail: speed, convenience and scarcity. Speed to market of new fashion. Speed and scarcity driving the elevated streetwear market. Through drops and launches, vendors create demand via scarcity of product. We’re witnessing the beanie baby phenomenon on steroids, where customers are paying crazy prices, significantly higher than retail. Granted, a good portion of this is resold on the Internet. Through e-commerce, shopping becomes convenient.
Scarcity is created by vendors limiting delivery. Comme Des Garçons precludes oversaturation by limiting their accounts’ open-to-buy each season, just one example of how vendors are in control. But those retailers with hustle, who are fast to these prized vendors, are generating huge increases and capturing market share.
What’s interesting to me is how so many of the top luxury men’s stores completely missed this opportunity. Their customers are snapping up these coveted products at cool new stores and websites that appeal to the new wave of hip and youthful wealth. One of our retailer clients in its seventh year, coming into the business with no experience, is crushing it. They did it by rolling the dice on what became “it” brands, through great storytelling, and with knowledgeable and caring sales associates. They were not afraid of a $700 sneaker or a $300 T-shirt, and neither are their customers.
Speed and hustle involve a willingness to gamble without fear of failure. Not all collaborations work; some pop-ups are better than others. Butch Blum, a longtime successful retailer and now consultant, offers the following: “My experience with pop-ups has been mixed. The shops that
seem to work best are the ones located close to the store’s main entrance. A broad assortment of goods is important, as is a good supply of inventory to replenish bestsellers.”
One notable success story: Kith was founded in 2011, by 2017 was sharing a look book with Bergdorf Goodman and now has a store within Bergdorf’s. They know how to capitalize on each other’s markets, both demographically and psychographically. Understanding the crossover in product and customer following is critical. To best accomplish this type of collaboration, you need to be a strong, consistent storyteller on social media.
It goes without saying that today’s customers want convenience and new goods all the time. Expectations have changed: the Internet has trained us to shop 24.7.365. Studies have proven the longer the lead-time on delivering goods, the lower the sell-through and profit. A few deliveries a year does not give your customers reason to visit you regularly. Thanks to Nike and Adidas, young male customers are being trained earlier and earlier to want new goods. Ask any 16-year-old what’s on Nike’s next quick strike launch and he or she will respond with color and style. These are your next generation customers, in stores and online.
In sum, reinvention as an art form is a willingness to embrace and adapt to change, not fear it. Risk aversion steers you toward the status quo, even as the status quo is tumbling downhill.
Aleya Collections
LONDON, United Kingdom — The lifespan of fashion products is being stretched as pre-owned, refurbished, repaired and rental business models continue to evolve. Across many categories consumers have demonstrated an appetite to shift away from traditional ownership to newer ways in which to access product.
In fashion, the shift to new ownership models is driven by growing consumer desire for variety, sustainability and affordability and sources suggest that the resale market, for instance, could be bigger than fast fashion within ten years. In recognition of this consumer shift, start-ups will not be the only players making their mark in these segments — established fashion brands will accelerate the pace with which they embrace new ownership models to further their relevance to consumers.
In more and more categories, consumers are choosing to rent rather than own goods outright. Think of Spotify supplanting CD sales and downloads, Netflix replacing video stores and ZipCar standing in for car ownership among many young urbanites. This is a fundamental evolution in consumer behaviour and we expect it will have an impact in the fashion business in the years ahead.
New ownership models | Source: BoF-McKinsey State of Fashion Survey
This trend is partly driven by the young generation’s hunger for newness, while embracing sustainability. Research shows that the average person today buys 60 percent more items of clothing than they did 15 years ago.
But consumers keep that clothing for only half as long as they used to. For example, a survey done in Britain found that one in three young women consider clothes “old” after wearing them once or twice. One in seven consider it a fashion faux-pas to be photographed in an outfit twice. Simply put, young people today crave newness, and these cohorts are much more likely to embrace churn in their wardrobes. At the same time younger generations are more interested in sustainable clothing than older consumers. Rental, resale and refurbishment models lengthen the product lifecycle while offering the newness consumers desire.
Meanwhile, luxury brands are raising prices, significantly. Prices of fine watches and jewellery have nearly doubled since 2005. Tracking global prices of Louis Vuitton’s Speedy 30 handbag suggests an increase of approximately 19 percent per year since 2016. So, even consumers with six-figure incomes are looking to discounts and alternative models of acquisition for relief.
These demands are catalysing the successes of rental and pre-owned models. We expect that the ability of these players to satisfy a heightened desire for newness and an increased unattainability will bring them into the spotlight in 2019.
Luxury consumers can circumvent the price increases of the Speedy 30 bag, for example, through The RealReal, which was founded in 2011 and, as of May 2018, enjoys a $450 million valuation. It sells luxury brands, in gently used form, via a consignment model. The RealReal’s hook: top fashion brands, up to 90 percent off. It recently raised $115 million in a Series G funding round and plans to expand its brick and mortar presence in the US.
China’s YCloset takes a different approach, using a subscription rental model to grant customers access to an array of clothing and accessories free of additional charges. If the customer likes a particular piece, they have the option to buy it outright.
While established brands have traditionally turned a blind or scorning eye towards second-hand retail, they are now wading into the pre-owned and rental markets. For example, Stella McCartney launched a partnership with The RealReal in 2017, offering a $100 credit to consumers consigning her products on the platform. This can create a circular flow that encourages footfall in Stella McCartney stores, while building confidence in the quality and longevity of Stella McCartney products. Additionally, because of the circular nature of this partnership, it bolsters the corporate and social responsibility of the fashion brand.
Other luxury players, such as Richemont, have purchased resale or rental businesses outright, to take control of how their products and brands are marketed on the secondary market.
The number of brands getting into the rental, resale and refurbishment business will increase markedly.
Some players have ventured into refurbishment, taking advantage of its sustainability benefits. Eileen Fisher, through its programme “Renew,” takes back gently-worn products, and either refurbishes them or uses the materials to create new products all together. Patagonia pioneered an in-house repair and resale model by buying back their own products and selling those used items at a discount price. On its website, Patagonia asserts, “The single best thing we can do for the planet is keep our gear in use longer and cut down on consumption.”
Express is betting on the rental market, launching “Express Style Trial,” which allows consumers to rent up to three items at any given time for a monthly fee. In an interview with CNBC, Express’ chief customer experience officer, Jim Hilt, states, “The consumer who is more interested in access versus ownership is happening across many industries. We looked at this evolution and asked, ‘how do we participate?’” In New York, French label Ba&sh is offering free rentals over a weekend period as part of its North America expansion strategy.
Turning to the year ahead, we expect 2019 will be known for three developments in particular. First, the number of brands getting into the rental, resale and refurbishment business will increase markedly; established players will progressively regard alternative ownership as a force they need to embrace or at least test through new collaboration models with retailers or start-ups in the sector. This will require careful business model considerations and a clear choice between partnerships, in-house development or M&A. Second, we predict a notable increase in the number of “rental native” brands born exclusively for rental or subscription models.
We would also not be surprised to see a unicorn in this space soon. Finally, more consumers will see a growing proportion of their wardrobes made up of pre-owned or rented products, especially for high-value items and accessories. While traditional players need not yet be alarmed, it will be essential to fully understand the emerging signals of what consumers prefer to own versus rent.
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