Squeezed by the market, contemporary brands are fighting back

Contemporary brands are getting lost in the fashion industry’s current shuffle, in which direct-to-consumer brands are entering department stores, luxury companies are becoming more inclusive and streetwear styles are consistently the most-wanted of the season.

For shoppers, the contemporary category’s longstanding value proposition of “quality clothing at accessible price points” is losing out to the speed, beliefs, backstories and cachet being offered by direct-to-consumer brands and those at farther ends of the price spectrum. In order to compete, contemporary brands are borrowing from other sectors by, for example, taking increased ownership of their sales and elevating their products to be better positioned in store, and in the eyes of customers. 

“There’s kind of a squeezing of the middle,” said Brian Lee, associate director of luxury research at Gartner L2. “Consumers are turning away from contemporary brands toward the extremely cheap or higher-luxury brands.”

Moving closer to direct-to-consumer
A common strategy for contemporary players is moving closer to a direct-to-consumer model by pulling out of wholesale channels. Looking at 20 top brands in the contemporary space, Katie Smith, retail analysis and insights director at Edited, found retailers are stocking less product, with inventory down 12 percent year-over-year in October, and 10 percent in August and September. At the same time, their price points fell 2.4 percent. 

“Do we get squeezed? Yes. Is that a bad thing? No,” said Janice Sullivan, CEO of 22-year-old contemporary brand Rebecca Taylor, explaining that everyone in the industry is feeling new pressure to better serve customers, and it’s pushing brands to evolve for the better. “It’s forcing us to be on our toes.”

For the past two years, Rebecca Taylor has been transitioning its retail strategy to align with initiatives by the wholesale partners it’s long relied on like Saks Fifth Avenue, Neiman Marcus and Nordstrom, as well as meet customers in emerging channels, including Rent the Runway, subscription services and its own website.

“You have to be small enough to be flexible and big enough to handle the technological challenges people are throwing at you,” she said. “We are — and, right now, that means improving our direct-to-consumer business.”

At the same time, Milly co-founder Michelle Smith the brand is building up the direct-to-consumer business. Milly.com is the brand’s fastest growing retail channel, with sales up 80 percent from last year.

Aside from competing with other fashion sectors, Michelle Smith said she’s also working to differentiate from brands in the crowded contemporary space, which has grown from eight to 10 brands when she launched in 2001 to hundreds. “I’m thinking about designing product that means something and speaks to my customer, who’s being bombarded with options” she said, before making like a direct-to-consumer brand and pointing to her brand’s story: Her collection is made in New York and infuses her trained eye in luxury.

Aligning with higher-end brands
Anine Bing, the L.A.-based advanced contemporary brand of a former blogger, launched in 2012, has taken the less-is-more approach in terms of wholesale partners in order to avoid brand dilution, a direction brands including Coach and Michael Kors have been vocal about taking in recent years to up their cachet. “We’re super picky,” she said. “We don’t ever want to be in every store on every corner; we’d rather be in too few stores than too many, and it’s very important what those stores are and what brands are sitting next to us.”  

Today, that’s a smart strategy for maintaining customer interest. Lee pointed to Gartner L2 research, showing that, from 2016 to 2017, mid-market contemporary brands saw site traffic drop “significantly,” in the double-digit percentile. In the same time period, traffic to luxury brand sites increased 10 percent. Community growth and interactions on Instagram told a similar story, with contemporary brands earning a 31 percent hike in followers, versus 47 percent for prestige brands.

Sullivan said Rebecca Taylor is also taking a cue from luxury brands by slowly backing away from promotions. “Each new year, we commit to doing a specific, fewer number of days on promotion, and we stick to it.”

Jennifer Zuccarini, the founder of 6-year-old lingerie and ready-to-wear brand Fleur du Mal, said that, if she were selling exclusively on wholesale channels, she’d likely raise prices to ensure peak brand alignment in stores. (The brand — which now sells at retailers including Bergdorf Goodman — is working toward a goal of 80 percent of sales on e-commerce.) “Contemporary is definitely not a place where we see ourselves,” she said.

Catering to fans and followers
Katie Smith said the rise of heritage-driven marketing and also streetwear, which is hinged on exclusivity, are also having adverse effects on the contemporary segment.

The growth of luxury resale retailers, which have a strong sustainability message, are a factor, too. “Why would a consumer buy a new product when they could get a ‘better’ one for the same price, with better resale value down the line?” Lee said.

As a result, brands in the space are working overtime to speak to customers’ evolving tastes and win them over.

To give customers “what they want, where they’re shopping,” Bing has taken a see-now-buy-now approach to her collections; styles are immediately available for purchase as they’re released, across channels, including in wholesale stores.

She, like Michelle Smith, has also answered the demand of her customers wanting a children’s-size version of her line. Bing launched a children’s line in March. Michelle Smith’s children’s and tweens’ lines have been available since 2011; she said it’s helped with brand loyalty: Customers get to know the brand, and stick with it.

Amy Smilovic, founder of advanced contemporary brand Tibi, launched in 1997, said evolution, done right, is key: “We are always curious about what’s new and pushing ourselves to find creative stimulation in what we love,” she said. “So what you get one season may — should — be totally different than the last season, but there is always that same line of identity that runs through it no matter what. That’s what’s critical to success today.”

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