H&M Third Party Branded Goods selling

To be a retailer today you need many fingers in many pies. Think a centipede Paul Hollywood and you’re getting some idea. So, it was with interest to hear the latest announcement from the world’s second largest fashion retailer, H&M. They’ve decided to start a pilot selling products from external brands.

While they have sold third party brands in some of their more premium chains before, it’s a first for the mother brand. H&M’s main, eponymous brand has been neglected and struggled as the company’s strategy was to roll out retail chains such as Arket, Weekday and &Other Stories.

The bottom end of the market is tough with margins continually squeezed. H&M’s huge undersold inventory, an undeveloped online offering and falling profits - for the eighth quarter in a row the Swedish fashion chain reported a decreasing profit, despite having recently achieved turnover growth - has taken its toll on this retail behemoth.

Left - Swedish fast-fashion giant is piloting a new strategy

It needs a new strategy and has clearly been watching the likes of ASOS and Zalando be all things to all people and expand rapidly.

A company spokesman said “The H&M brand will now develop our offer of external brands. The purpose is to complement our offer with external brands to add excitement and energy and we see great opportunities for growth and to find new customers,”.

You can charge more for branded product without the need to hold large amounts of stock. It also widens you target market, especially amongst men who still like branded items. While it’s not clear which brands will be sold, it’s likely to be dominated by sportswear. This is an area that has seen huge growth with the likes of JD Sports smashing their earnings. JD Sports’ last half-year revenues jumped 47% to £2.7 billion on the back of a 10% surge in like-for-like sales. Sportswear has higher margins and appeals to more age demographics.

One of the more traditional high-street retailers to make this third party brand strategy work is Next. Its ‘LABEL’ concept is now turning over £350 million in yearly sales with huge growth seen over the last few years. Brands such as River Island, adidas, Boss, Superdry and Fat Face sit alongside beauty and home. It’s the contemporary department store.

In their latest financial statement, they say they “continue to develop the business through the addition of new brands, increasing the breadth of offer with existing brands and (from early this year) offering items stocked in our partners’ warehouses through Platform Plus"

"‘Platform Plus’ allows our customers to order un-stocked items directly from our partners’ warehouses to be delivered through our network.

“In March this year we started selling items in this way with three of our partner brands. These items are offered to customers on a 48-hour delivery promise. Items are injected into our warehouse and then delivered through our courier and store network. For example, a Platform Plus item ordered on a Monday, is transferred to our warehouse by Tuesday and delivered to the customer on Wednesday.” they say.

“When customers order Platform Plus items with other items stocked in a Next warehouse (available in 24 hours) they can choose to receive one consolidated delivery, offered in 48 hours. Alternatively, customers can choose to split their delivery and have stocked items delivered in 24 hours. There is no additional charge for the split delivery. Currently, 50% are choosing to consolidate their order.”

Next says Platform Plus is more than a marketplace. “Platform Plus differs from many marketplaces because, rather than despatching parcels directly to consumers from third-party warehouses, items are inducted into our distribution network. The advantages of operating in this way are: We can consolidate orders into one delivery which can materially reduce distribution costs. Items can be delivered through stores which currently receive 50% of all our Online orders and we have visibility and control of all orders through our own trusted networks and tracking systems. This allows us to ensure quality of service and in the event of any delivery issues or queries, customers have one point of contact.

It seems to be working for Next with full price LABEL sales in the first half of this year up +26% and total sales (including markdown sales) up +29%. They expect full price sales in the second half top 2019 to be up around +13%, more in line with their original full year estimate of +15%. The expected slowdown in growth in the second half is mainly due to errors and stock shortages in their Lipsy - owned by Next - ranges which they believe will slowly be corrected.

Next Label Branded Goods selling

For the full year, full price LABEL sales are forecast to be up +19%. Total sales (including markdown sales) are forecast to be up +21% with net margins, after central overheads, forecast to be around 15%. 

In this retail environment this is very impressive. Sales are a combination of wholesale and commission, and although they make lower net margins on commission sales, they encourage their partners to adopt this model because they believe it generates higher sales growth. In the first half of this year commission sales grew by +32% compared to wholesale which grew by +18.5%. It's also less risky.

As of August 2019, they have four clothing brands operating on Platform Plus and plan to add at least ten more later this year, with more to follow in 2020. 

Last month they also agreed a licensing deal with Ted Baker to create and sell Ted Baker children’s products. They intend to launch the first collection in Spring 2020.

Right - Next's Label sales over the last four years

Next, thanks to its Directory, has fine-tuned its delivery and database over many years and is trusted by its customers. H&M, on the other hand, doesn’t quite have the online reputation, but, being able to return to store could be a massive positive for consumers.

It will be interesting to see how fast and big they go with this concept and the brands they decide to stock. Third party branded goods allows for a faster turnover of brands and product, less risk, especially under this commission model, and the subsequent cool and elevation that can rub off on a tired umbrella brand.

Consumers are addicted to newness and H&M needs to try something new. This idea has the potential to work, though it is getting increasingly competitive, it just needs to judge when the sportswear trend will finally end, which brands connect with their customer and what the next big trend will be.

Tuesday, 24 September 2019 11:31

Menswear Product Of The Week The Half Kilt

fashion menswear product of the week COS half kiltSomething in fashion will always come along to push you out of your comfort zone. It’s a good thing. After seeing the SS20 pleated dresses for men at Louis Vuitton - pictured below - I thought I was ready for some pleats. Add in the kilt tradition, plus Dior’s now signature side sash and the timing feels right.

fashion menswear product of the week COS half kiltCOS has this half kilt - a full kilt would probably use too much fabric and be too expensive - but it gives you that Dior side-sash look. 

An Asian man stopped me in the street in this and asked me if it was ‘cultural’. Must be the red hair!

You do really need to get the matching trousers, but it’s something dressy, yet different and would look great at a dinner or smart winter party.

Left, Right & Below Left - COS - Pleated Wool Kilt - £115

Disclosure Trousers & Kilt #Gifted by COS

Below - Dior Men, Below Right - Louis Vuitton SS20

 

 

 

 

 

 

 

fashion menswear product of the week COS half kilt

fashion menswear product of the week COS half kilt

fashion menswear product of the week COS half kilt

Friday, 20 September 2019 15:41

Label To Know LIHA

Review 
Liha beauty Nigerian tried testedWhat does Cheltenham and Hackney have in common? (This isn’t a joke!) It’s LIHA; a new beauty brand blending together the rich botanical life of West Africa with traditional English aromatherapy and folk remedies.

Left - LIHA founders, Abi & Liha

Founders, Liha (Cheltenham) and Abi (Hackney) met at University in 1998 and have been close ever since. Whilst Abi was travelling the world as a professional athlete, competing in two Olympic games, Liha was setting up an art publishing business.

The Yoruba (Nigerian) tradition making beautifying oils, soaps and lotions from the nuts, tree bark and plants that grew in abundance was a skill that was traditionally learned by all young women. Liha’s mother is an English aromatherapist, so she naturally started to blend the two disciplines together. Whenever Abi would travel she would bring back different ingredients- especially that good Nigerian Shea from her father’s town. Nigerian Shea butter is the ultimate African beauty secret. Used for centuries by people to protect and regenerate the skin, its potency lies in its naturally high concentration of vitamins A and E.

Review 
Liha beauty Nigerian tried testedNatural, organic and vegan, this skincare brand uses coconut and shea as its base layering on the scents such as tuberose, English rose and African palmarosa. Their four staple, multi-purpose products are handmade in small batches in Cheltenham and Hackney. 

Available at net-a-porter.com and lihabeauty.co.uk 

Right - Liha Gold Shea Butter – 120ml - £20

 

Friday, 20 September 2019 12:32

Tried & Tested Moschino Toy Boy

Review 
Moschino Toy Boy best rated tried testedMoschino’s latest men’s fragrance is a spicy, woody amber. Containing top notes of Italian bergamot, pink berries, elemi, Indonesian nutmeg, pear, cloves, heart notes of Neoabsolut Orpur rose, flax flowers, cashmeran, magnolia and base notes: Haiti Orpur vetiver, ambermax and sylkolide.

TheChicGeek says, “Sinitta once sang, ‘He’s my toy boy, toy boy, I’m out with my toy boy, toy boy, Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, Sunday night,’ well, it kept her busy, and Moschino’s Jeremy Scott is having some serious leather boy fun with his one.

The fragrance is a sparkling rose surrounded by notes I can’t quite put my finger on. There are lots of ingredients here that I don’t recognise. 

Review 
Moschino Toy Boy best rated tried testedIt’s camper than Katy Perry dressed as a chandelier and that makes it all the more interesting. It’s the opposite of the imagery and while a reflection of the bottle, the fragrance feels pink in colour.

I love what Scott does at Moschino and his playfulness was made for fragrances and especially the packaging. The choice of model and styling really works for this.” *puts chaps on*

Left - Moschino Toy Boy - 100 ML  - £85 Exclusive to Selfridges

Right - A look that never gets old - Jhona Burjack in the advert for Toy Boy

Disclosure - A sample product was gifted by Moschino to review

fashion menswear product of the week Fred Perry Nicholas DaleyFred Daley has a ring to it! Fred Perry has teamed up with British designer, Nicholas Daley, in their first collaboration. Taking inspiration from his parents’ club nights and their role in igniting reggae sound system culture in the UK, Daley has exaggerated Perry’s signature polo shirt with his 70s styling.

Daley’s mix of Caribbean and Scottish heritage is blended here in a boxy fit shirt with thick intarsia hem and sleeve details.

Left & Below - Nicholas Daley X Fred Perry - Striped Knitted Shirt - £175

fashion menswear product of the week Fred Perry Nicholas Daley

George Asda Second Hand clothes

We’re halfway through #SecondHandSeptember and how are you doing? The idea, from Oxfam, was to pledge to not buy anything new for the 30 days of September. Oxfam says every week 11 million items of clothing end up in landfill and ‘throwaway fashion’ is putting increasing pressure on our planet and its people - it’s unsustainable and this is their way of making people think and act differently.

An already under pressure high-street isn’t taking this boycott lightly and many are starting to gravitate towards selling second hand clothing themselves. High street brands and retailers are piling into the second hand market trying to looking like caring, sharing and responsible custodians of the fashion industry. Offering to sell not only their’s, but other’s second hand clothes, often for charity, this is a new take on pop-ups and a perception of giving back and closing the loop on the fashion cycle.

Left - The George at Asda 'Re-Loved' pop-up in Milton Keynes

George at Asda has just unveiled their first in-store ‘Re-Loved’ charity clothing shop running for 4 weeks from 2nd September. Located in Asda’s Milton Keynes store it features donated second-hand clothes from a number of different brands, as the retailer looks at ways to encourage customers to reuse, repurpose or recycle their unwanted clothes. The move is part of a drive by George - the UK’s second largest fashion retailer by volume - to improve the environmental impact of its clothes and operations, following the launch of its new sustainability strategy and first range of recycled polyester clothing in the spring. 

Melanie Wilson, Senior Director for Sustainable Sourcing at George, said, “By trialling our Re-Loved pop-up shop, we hope to help create another route for unwanted clothes to find a new home and encourage people to think again about throwing away that top or those jeans they no longer love.” All proceeds from the shop will go to Asda’s Tickled Pink campaign, which supports Breast Cancer Care and Breast Cancer Now.

As a whole in the UK, the average lifetime for a garment of clothing is estimated as 2.2 years. Extending the active life of clothing by nine months can significantly reduce its environmental impact. The value of unused clothing in wardrobes has been estimated at around £30 billion. It is also estimated £140 million worth of clothing goes into landfill each year.

Many brands and retailers are starting to looking into the second hand market as the world is challenged with ever growing mountains of discarded clothes and unsold inventory. It was reported last year that H&M had an incredible $4.3 Billion in unsold clothes. Places like Topshop and Urban Outfitters have had vintage sections for years, and Marks & Spencers has its pioneering ‘Shwop’ scheme, which motivated consumers with vouchers, but to be actually selling second hand clothes alongside new is something new and the next logical step. The stigma around second hand is changing. It’s cool to wear older clothes and a badge of honour not to buy something new. Yet, consumers still get want to get that retail fix.

So, how can brands and retailers make money from this?

Olly Rzysko, CMO & Retail Advisor, says, “Ultimately, every second hand unit sold in the market is another brand new item a retailer isn’t selling. In a declining market, executive teams won’t like that and are responsible for protecting those sales. Second hand clothing is having a surge and it proves to be a logical route on paper.”

“Retail is hard right now and a number of elements are playing a factor in the growth of second hand.” says Rzysko. “Depop and Ebay are doing very well. They are ultimately taking sales from the high street, specifically taking sales of new product away from the retail brands. These businesses are making nothing when people are reselling their product and that will be challenging to accept. Depop particularly has kept its head down and built a sizeable business with only ASOS responding in the form of their Marketplace platform.” he says.

George Asda Second Hand clothes Oxfam Oxford superstore“Most brands experience double digit returns and some of these cannot be sold (as new) on for various reasons. Repairing product or repurposing them enables the returns to be more valuable and not a complete loss.” says Rzysko.

“Many stores right now are larger than required (having been built for a Bricks and Mortar landscape) and filling that space with low cost stock is crucial to prevent cash being tied up with inventory. Vintage / Reclaimed / Second Hand is a great way to fill these spaces.” says Rzysko. “Critically, it ensures the customer returns to the store at a time where footfall is in the decline.”

Right - Oxfam's new 'Superstore' in Oxford

“I think for a lot of brands it can work for their customers. It can also bring in new consumers to a brand where pricing may have been prohibitive before and serving as a gateway into the brand just like Outlet shopping does.” says Rzysko.

Besma Whayeb, Ethical Fashion Blogger, Curiously Conscious, says “With more and more shoppers conscious of the impact that fashion has on people and the planet, second-hand fashion is becoming more sought-after, as well as fashion retailers who outwardly show their sustainable practices.”

“There’s many ways retailers can promote second-hand fashion or circularity: many high street retailers already provide take-back schemes, inviting shoppers to return items when they’re finished wearing them, which they then use the materials for in new pieces or sell on to third-parties.” says Whayeb. “But when it comes to preserving the items (rather than dismantling or disposing of them), they could look at selling them as pre-loved pieces. There are already many independent second-hand and vintage resellers, however I don’t see why many brands don’t provide a second-hand section in their own stores and resell pieces they’ve previously made. This needn’t be a full-scale or full-time operation either; pop-ups to show they’re being more circular could be a promising first step.” she says. “I believe it’s a combination of lip service, taking advantage of the growing demand for sustainable fashion, and when (hopefully) they see positive results, it will become a more permanent fixture.” says Whayeb.

George at Asda says its concept is just a trial to see how customers respond to the concept. They’ll take feedback and learn from the trial to see how customers have responded to it. But, won’t these new schemes take away from the charity sector?

“It is not our intention to take away support from other charities. This charity shop continues Asda’s long-term commitment to fundraising for vital breast cancer research and support,” says a spokesperson for George.

Charities like Oxfam are fighting back though. The charity has just opened their first ‘superstore’ on the outskirts of Oxford. About 12 times the size of the average Oxfam shop at 18,500 sq ft, and run by 150 volunteers, it also works as a community space and includes an on-site café housed in an Oxfam water tank. They hope initiatives like Second Hand September will convert more people to second hand clothing. An Oxfam spokesperson said, ”We are delighted by the overwhelming positive response to Second Hand September and the huge public support it has received.
"The campaign is raising awareness about the harm fast fashion has on planet and people. Clothes that too often end up in landfill are frequently made by garment workers paid poverty wages in harsh conditions. Second Hand September is encouraging people to think twice about their shopping habits. There seems to be a real appetite for change, which some brands are responding to – but more needs to be done.”

The more clothes we have, the less we’re wearing them. This makes the majority of second hand almost like new. Second hand shopping is becoming cool and for brands it could be a good way of dealing with returns and old season stock while trying to look responsible. Fashion is addicted to volume, whether it is fast or not, so while consumers might not be buying anything new, they’re at least in your store buying something.

Below - The cafe inside a water tank in Oxfam's new mega charity shop

George Asda Second Hand clothes Oxfam superstore Oxford water tank


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