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How Do Brands Best Preserve Capital?

April 26, 2022
Author: Jasmine Waters

It’s rare businesspeople are ever unanimous, but the fashion industry is in agreement that the market has quickly become extremely volatile. Prices are increasing on a daily basis, with the global impact of war in Ukraine, China’s lockdowns and record-high energy prices contributing to fashion business bordering on untenable. As financial planning becomes more difficult, what can brands do to preserve their capital?

What is happening in the market?

Cutting corners is never the answer—but being more efficient is. Small measures should be regarded as important as bigger solutions, stemming from a strategic alteration of ways. Quality cannot be compromised, although high oil prices mean fabric is a extortionate expense. Instead of changing the fundamental aspects that could dangerously impact a brand’s functioning, alternatives must be looked to. Offering minimal packaging as a default could be one way to do this, with brands seeing a 70% adoption of less waste when immediately offered it. Buying second hand in-house should also not be discounted, with industry equipment not needing to be bought brand new. 

Does cutting costs work?

While not every brand can afford clean-energy sourcing, exploring new partnerships could help to counter costs. However, there is likely to be a quality risk that requires additional deposits upfront. With the right match, change will be bountiful. For those not willing to run the risk, buying in bulk could provide a solution. When suppliers’ prices are changing on a daily basis, buying bigger quantities may help to mitigate fluctuation. That being said, there’s no guarantee the consumer demand will be there — as inventory count will need to be as low as possible.

Cutting costs outright won’t be enough to preserve capital. Every action has a response, and the industry is currently experiencing a volatile reaction to price increases. Customers could be scared away in the crossfire, alongside a waning in overall consumer demand. Loyalty programmes and in-store encouragement will need to be kept afloat in order for brands to hedge all bets.

Photo credit: https://www.pexels.com/photo/photo-of-person-holding-smartphone-6802042/

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