"It has never evolved at the speed it’s happening now," said Andrew Rosen at the 2016 Fashion Tech Forum on Thursday in Brooklyn, addressing the many changes presently affecting the fashion industry. "Globalization has disrupted companies’ understanding of their business platform." The founder and CEO of Theory, who is also the CEO of Helmut Lang and an investor in Rag & Bone, Alice + Olivia and Proenza Schouler, took to the stage to discuss the globalization of fashion, the changing role of wholesale and what he looks for in young brands before making an investment. Rosen was joined by Lew Frankfort, the founder of venture capital firm Benvolio Group and former executive chairman of Coach (where he oversaw the brand's growth from a $6 million business in 1979 to an over $5 billion business in 2013).
Rosen and Frankfort's conversation was full of insight and advice about the challenges facing fashion brands today, but they both repeatedly stressed the importance of singular purpose, passion and total authenticity. For more of their best takeaways for young founders and creatives trying to find a place to grow in today's over-crowded fashion industry, read on for highlights from the panel.
Brands are not scaling to the point where they used to scale.
The consequence of a worldwide market place is that brands aren't scaling to the volumes they were able to in the past. "The competition is fiercer. The amount of brands that are going to own the big chunks of the business may be less," said Rosen. "I think companies have to have a point of view and philosophy about how big they want to get."
Wholesale alone isn't enough, and department stores should not be a brand's only partner.
Frankfort believes there will be "further consolidation in department stores and specialty stores because of the convenience and availability of products online." Brands that are reliant on wholesale accounts need to be careful, especially if they don't also have a direct-to-consumer option. "[Department stores] are not necessarily long-term partners. They may say they are, but the reality is they want you on an exclusive basis, or near-exclusive basis, but if you don't sell well, they're going to move you out. I can say this since I’m no longer affiliated with Coach — which still has a strong and important wholesale business — but you cannot depend on it," he said. Rosen agreed, to a point: "Although I agree that there are way too many department stores and department stores are not necessarily your friend, I do believe that they serve a very valuable purpose," he said. Third-party retailers can provide exposure and authenticity to an emerging brand that is much harder for them to earn on their own.
Focus the business on product, brand and consumers.
"All three areas need to work in harmony and in tandem, you can’t let one of those go," said Frankfort. Rosen himself comes from a strong wholesale background, and has had to turn his focus from being brand-centric to consumer-centric. "That's a big shift for the companies that I’m involved with," he said, adding that it has to be a company-wide effort. "Also, we have to change the way our companies are organized... to move quicker, to include more people working simultaneously, not being siloed."
Always fear failure.
"For us at Coach, we never drank our own Kool-Aid — we always operated with a drive for excellent and a fear of failure," said Frankfort. Rosen shares that fear of complacency. "I think it is very dangerous when companies believe they are doing it all right," he said. "I think companies have to constantly challenge themselves and that fear of failure is something that I can totally relate to."
If a brand's creative lead doesn't understand business, he/she needs to find someone who does.
"A great idea is only about 5 percent of what you need to have a profitable business," said Frankfort. "For a business to be successful, it must be commercial. Otherwise, at the end of the day, it just won’t sustain." Rosen agreed, adding that one person doesn't need to lead on both fronts. "I think Lew and Reed [Krakoff] were a perfect example of that as they built Coach," he said. "I do think that today, with what is going on, companies need more than just design creation in-house. I think that they have to reach outside of their house and collaborate with like-minded kinds of companies and experiment with things that are outside of their core competency. It's very expensive to develop that internally and it's much more, I think, [the way] the world is today anyway."
Less is more, so edit the product assortment down
"I think everything has to be more curated," said Rosen. "I believe very strongly that brands have to look at their product offering and only make the best and most relevant product. I don’t think it's like the old days where you just make everything and it sells; consumers just aren’t shopping that way." A brand also needs to be nimble enough and close enough to the consumer to be able react and scale. "People look at the companies today, after they are more mature, and say, 'I want to be that company,'" said Rosen. "But that's not the way the company started. Generally, [they started] with a singular product and I think that's the most important thing."
Prioritize achieving profitability sooner rather than later
"Even if you can get funding, whether it's through crowd-sourcing or friendly relatives and friends, it’s more important for you to really think through what that business might look like in three years or five years, and whether your underlying proposition is valid," said Frankfort. "Do I have a distinctive concept? Is it sustainable? Do consumers want it? Will they embrace it? Can I bring it to market at an acceptable price? How do I actually distribute that product? What kind of guarantees do I provide? How do I innovate beyond the single idea? How large can I scale it?"
Homepage photo: Jason Kempin/Getty Images for Nordstrom