Can independent fashion designers survive post-Matches?

Last week (21 May), women’s occasionwear brand The Vampire’s Wife, founded by former model Susie Cave (pictured above), announced it would cease trading.

The company said that despite a period of positive growth and sales, “the upheaval in the wholesale market has had dramatic implications for the brand”.

Also in May, luxury womenswear label Roksanda was sold to Damian Hopkins’ The Brand Group in a pre-pack administration.

The brand appointed FTS Recovery directors Marco Piacquadio and Alan Coleman as administrators on 10 May shortly before the sale, which was attributed to “recent volatile market conditions”.

It follows the collapse of the two designer labels’ key stockist, Matches, which was put into administration by Frasers Group in March. Frasers bought Matches’ intellectual property last month in a deal that did not include its staff or stock. It is unclear what its plans are for the Matches brand.

The demise of retailers Matches and Farfetch – the latter purchased by South Korean retailer Coupang last December – has left independent brands facing turmoil. Industry insiders say designer labels need to protect cashflow to weather the storm and rethink how they manage their wholesale strategies.

FTS Recovery’s Piacquadio said the recent events “point to dark days ahead for the UK fashion industry”. He said: “Designers are facing a trifecta of increased costs, depleted sales figures and unpaid invoices. Unfortunately, it is usually the smallest independent brands that are hit first, and worst. They are often forced to depend on increasingly expensive loans, or to watch as their operating capital and cashflow runs dry.”

A source from a fashion industry body echoed this: “The main challenge facing brands is cashflow, especially the smaller independent brands where Matches would make up 30-40% of their sales and they haven’t been paid for orders delivered months ago.

“That was the challenge facing Roksanda and many other brands are in the same position. Some have said they would struggle to make May’s and June’s payroll.”

The administrator’s report for Matches shows The Vampire’s Wife and Roksanda were owed £32,250 and £8,876 respectively. Besides overdue payments, the brands are likely to have been impacted by stock issues and more importantly the loss of a key sales channel, coupled with the decline of Net-A-Porter and Farfetch in the wider market.

Drapers’ source continued: “The challenges across the wider luxury ecommerce sector are playing into the struggles. The VAT-free shopping issue is also affecting the independent brands who may only run one retail outlet in London and don’t have a global retail presence. And small labels have found it harder to grow their market overseas following Brexit. It’s death by a thousand cuts.

“In the immediate short term, we will probably see more independent labels going into administration. Beyond that, we will see more acquisitions so brands need to be investment-ready [to present themselves to investors].”

Juls Dawson, managing director of fashion agency Just Consultancies said brands have been hit by “a shrinkage in number of wholesale partners in the market to sell to and now a general election which will impact consumer confidence”.

One manufacturer that has worked with labels including Roksanda and Christopher Kane thinks the luxury industry is “imploding” but that it does offer an opportunity for businesses to reconsider their wholesale strategies.

“[In Matches’ case], brands have found themselves owed money for autumn/winter deliveries and still asked to supply for spring/summer. How does that make sense? That needs to change,” he said.

“There is more to come. If a brand is not in a good position financially and relies too much on wholesale, its investors aren’t going to invest any more. Brands should go back to producing less, keep control of their stockists, make sure they get paid for the stock on the terms they agree and do it slowly.”