Wanted to expand on my LinkedIn post. I think this framework will help a lot of fashion brands who are wondering “why am I not growing”?
But first, I want to thank this week's sponsor: Inventory Planner by Sage. If you're still doing planning in a spreadsheet, you're leaving money on the table. Inventory Planner's software is informed by decades of retail expertise to help you maximize the ROI of your product assortment.
To maximize your brand’s scale, you need to transition through these three stages of growth:
Stage 1: Finding White Space In The Market
The brand identifies a combination of price point, product, use case, distribution & aesthetic that is not being served by the current market.
Important point: this needs to be an unidentified need. Brands at this stage are essentially capturing in-market demand. For that reason, winning customers is almost 100% product-driven. “Brand” hardly matters at all.
Examples:
- Victoria’s Secret made lingerie shopping more pleasant, with product that hit a midpoint between 100% functional and novelty sex shop lingerie.
- Lululemon developed yoga apparel that was performance-focused, not "crunchy"
- Theory and Vince pioneered the “contemporary” market–product that was designer-informed and elevated, but below a designer price point
- Thom Browne made suits for guys who needed to appear professional but wanted to signal that they were creative/not “suits”
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Stage 2: Turning Your Whitespace Into A "Lifestyle"
At this point, the brand flips from direct response (capturing in-market demand) to brand (creating demand). This is typically when a brand becomes either a “lifestyle brand”, a status symbol or a trend setter.
This stage can be incredibly beneficial for the bottom line if managed correctly. Consumers are willing to pay more, and mimetic desire creates word of mouth.
Some brands can get really, really big in Stage 1 and never transition into Stage 2. Other brands flip from Stage 1 to Stage 2 early, then burn out when their “moment” has passed.
It’s really, really hard to stay in Stage 2 forever. The most “evergreen” Stage 2 strategy is becoming a mass status symbol.
Examples:
- Victoria’s Secret PINK becomes a status symbol for high school and college girls
- Juicy Couture becomes a status symbol for “yummy mummies”
- Ralph Lauren makes preppy style accessible, modern and aspirational
- J Crew becomes part of the “fashion conversation” thanks to Jenna Lyons and starts to set broader trends
Stage 3: Turning Your Awareness/Distribution Into A Platform
At this point, the brand has more awareness and physical distribution than the competition. In a way, the brand flips back to capturing in-market demand, but shooting for the entire market vs a niche.
Instead of setting trends, the brand uses its customer base as a filter to interpret mass trends. The brand becomes a curator for the audience it built up in steps 1 & 2, using broad trends to convert casual/low-awareness shoppers.
To do this successfully, the brand needs one or more of the following:
- Broad owned physical distribution (a lot of stores)
- High mental availability, either due to brand power or time in the market
- Transitioning from mono-brand to a multi-brand curator/marketplace model
Again–it is really hard to maintain steady growth in Stage 3. When you’re “king of the hill”, everyone is trying to knock you down. Stage 3 brands also stumble when they try to maintain ownership of an age range (eg. 18-25) instead of following their audience as it ages.
A lot of brands fumble Stage 3 by diluting their POV. Successful Stage 3 brands aren’t trying to be everything to everyone. They’re trying to be everything to a broad but specific market.
Examples:
- Abercrombie & Fitch ditching the preppy, exclusionary status branding and becoming a curator of good enough clothing for millennial lifestyles
- Nike (before John Donahoe!) giving the stamp of “victory” to almost every athletic use case, distribution channel and price point
- Fashion Nova becoming the one-stop shop for thirst trap girlies everywhere
How Fashion Brands Fumble The Transition Between Stages
Using this framework, here are a few of the most common reasons that brands struggle to grow:
Running The Wrong Playbook
Many brands stumble when they spend too much time looking at and copying their perceived “competition”.
Most brands start in Stage 1–especially bootstrapped brands. Stage 2 and Stage 3 brands have the cash for “sexy” marketing tactics. But their objectives are different from a Stage 1 brand, so their tactics often do more harm than good.
Similarly–Stage 3 is trying to capture and defend market share. Stage 2 is trying to create “brand heat”. Two different objectives require two different strategies.
Maxing Out Demand/Failing To Differentiate In Stage 1
Theory and Vince are great examples of this issue. They served the needs of their target customer really well. But neither brand developed a signature aesthetic or even outward-facing branding elements.
Eventually, competitors moved into the space these brands had created. Both brands have been through cycles of growth and decline over the past decade, but are treading water from a revenue and scale POV.
Overstaying One’s Welcome In Stage 2
Repeat after me: no “hot brand” stays hot forever. In today’s warp speed trend cycle, that’s more true than ever. Even Supreme stopped being cool.
Brands that spend too long in Stage 2 without an exit plan inevitably run head-first into revenue decline and margin erosion. And what’s harder than making a brand “hot”? Revitalizing a brand that used to be “hot” to its former level of cultural relevance.
Diluting Unique POV In Stage 3
This one is tricky. Sometimes brands get so big in Stage 2 that they feel the pressure to “talk to everyone” in Stage 3, in order to maintain growth momentum.
If you want to become an “everything for everyone” store, you need three things: physical ubiquity/2-day shipping, low prices, and an assortment that spans multiple use cases.
Basically, an “everything store” has to save people time and money to be worthwhile. Your store has to consolidate multiple shopping outings and do it cheaper. Sephora, Amazon and SHEIN are successful “everything stores”.
Mono-brands like GAP fumble when they try to become “the clothing store for everyone”, but retain guardrails around styling, fit and pricing. A brand-agnostic clothing buyer is going to shop at WalMart.
Contrast this approach with Abercrombie & Fitch, a brand that picked a tighter positioning statement. A&F is a brand for millennials who are upwardly mobile but not wealthy, and who care about fit and quality but can’t/won’t pay designer prices.
This customer needs someone to provide an aesthetic filter: what is cute and current, but appropriate? A&F fills this role.