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If there’s one industry that’s being forced to change rapidly, it’s fashion. Over recent years, shocking statistics and real life fatalities have forced us to come to terms with what is. If we don’t change the fashion industry now, it’ll change us.
Last year Boohoo faced allegations of modern day slavery… in 2021. They were reportedly paying their Leicester factory workers as little as £3.50. Which makes you wonder what else is going on in parts of the world that aren’t ‘westernised’ like the UK?
You may have already heard about the Rana Plaza incident in 2013. A clothing factory in Bangladesh, manufacturing for brands including Primark, collapsed and killed a total of 1,132 people. The building had shown severe warning signs of deterioration but the factory was under pressure to complete orders on time due to the insanely fast-paced nature of fast fashion industry.
That tragic moment made us wake up and evaluate how we can consume fashion in a sustainable and conscious way. And investors are looking for the companies doing so through sustainability, design and technology.
Last year, by August 2021, there had already been over $30 billion invested in fashion and fashion-tech companies. This included the likes of Farfetch who raised $1.15bn to expand their digital e-commerce empire.
Major acquisitions took place too. Klarna bought Hero for approximately $160 million. In a similar deal, Attentive acquired Tone, an AI-enhanced SMS service. Both businesses help keep up with community engagement and build stronger relationships between brands and consumers beyond social media.
In this report, we’ll cover:
- How consumer behaviour has changed
- The startups bringing solutions to the fashion industry
- The impact of digital
How has consumer behaviour changed?
Consumers are shopping differently. 43% of Gen Z actively look for sustainable brands and they’re willing to pay up to $50 more for their products. This is forcing brands to not just shift the way they produce clothing, but how they communicate it.
Gen Z and millennials are also the largest fashion consumer demographic, both experiencing rapid digital development. Whilst brands, especially heritage, are finally adapting to these changes (Céline only just joined social media and e-commerce in 2017), there’s a new challenge now. The social media influencer.
Chiarra Ferragni is an Italian blogger who started the ‘The Blonde Salad’ blog in 2009. It was all a hobby where she’d share fashion, beauty and lifestyle content with whoever would read it. Fast forward to today and she has a loyal Instagram following of 26.2 million followers. In 2013, Ferragni launched her self-titled footwear label. By 2019, they had generated over €30 million in sales. The brand has now expanded to clothing, jewellery and make-up. She’s not the only one. Traditional retailers are not just fighting to be seen, but also fighting to be authentic and trusted like the brands built off of a loyal audience.
However, Outfts spotted an opportunity here. Knowing the level of influence fashion influencers have, they’ve created a platform to benefit all parties. With each affiliate sale, influencers receive a commission and generate income. Users get a personalised service, only offered what their AI-technology believes matches their interest based on the influencers they follow. The 55+ partnered retailers make more sales and are introduced to an expansive (ready-to-spend) audience. A triple threat.
In June 2021, Outfts raised £260,210 on Seedrs, overfunding by 171%. The crowd of 222 investors could see the relevant and forward-thinking platform they’ve built. You can learn more about Outfts here.
The startups making sustainability cool and accessible
More people are shopping online. Naturally, this results in more returns. In fact, 50% of garments returned will not be restocked and instead end up in landfills. Returns demand extra warehouse space and employees to sort them, which is already costing UK retailers £60bn a year.
efitter believes they can help with minimising returns. The Google Chrome extension works by skimming through your email order confirmations and using technology to aggregate your size across different brands. When you launch their chatbot, it will predict your size based on information collected and provide details about the fabric used to make the product you’re browsing. It’s now available to use with H&M, Zara, Mango, ASOS and Uniqlo. Co-founder Judith Omoregie will be speaking at our Fashion & Tech event later on in the month as they prepare for their first funding round. Get updates here.
With sustainability at the forefront of brands, who exactly is their customer? There has been concern that the pricing caters to a narrow demographic. A founder who didn’t want her brand to be limited to who’s got the coins or not is Grace Beverly.
Grace is the founder of TALA, a women’s activewear brand. The brand prides itself on sustainability merged with accessibility, with prices ranging from £32 to £129. They are also very transparent about their materials used and where they produce their clothing.
Grace has commonly spoken about the cost issue with creating sustainable clothing. Special materials and longer manufacturing processes means sustainable brands are paying more per unit. Therefore, brands need more funding to provide accessible solutions in this space.
In February 2022, TALA announced that they had raised £4.2 million in seed funding. The round was led by private equity firm Active Partners and VC firm Venrex. The activewear brand plans on using the funding to widen their market and provide even more accessible options.
Lastly, there’s the rental and pre-loved market. The fashion rental market is valued to reach $2.3 billion by 2028 and has been wildly spearheaded by founding companies such as Rent the Runway. The designer rental platform was created to provide the everyday woman with designer clothing for special occasions, at a fraction of the price.
Their business model then took a subscription approach. From $69 a month, you can rent up to a certain number of looks from a range of over 750 luxury designers. According to their site, the average shopper rents $37,000 worth of clothing each year. In October, they started trading on Nasdaq under RENT and have a $1.7 billion valuation.
Over on this side of the pond, we’ve seen Hurr lead the fashion rental space. In 2021, the company raised $5.4 million led by Octopus Ventures. They also have an Instagrammable permanent pop-up in Selfridges where designer-lovers can try on the clothes before they rent.
On a larger scale, the pre-owned market is projected to reach $84 billion by 2030. Double the predictions for fast fashion. A fan favourite, Vestiaire Collective raised a grand $216 million in 2021, taking the French company to unicorn status.
We recently saw Open for Vintage raise on Seedrs. Open for Vintage stock some of the rarest designer finds in the world. Think anything from Hermés to Chanel and Fendi. Marie Claire approved, the company is quickly becoming the go-to place, bragged about by many influencers. They had a record single order value of £24,000 (a Birkin?) and the average order value is £670.
In September 2021, they set out to raise £400,000. With a strong reputation and mark in the industry, they exceeded their goal and raised £596,402 from 183 investors. The funds will be used to fuel UK and US growth as well as growing their team. Luxury resale platform Hewi is coming soon to Seedrs – sign up for priority access.
The impact of digital
At its peak, fashion weeks were attended by hundreds of thousands of people. The New York City Economic Development Corporation reported that NYFW contributed $850 million a year to the local economy. That was twice the impact of the 2014 Super Bowl.
Pre-pandemic, footfall was beginning to decline. People didn’t feel the need to travel across the world to watch a fashion show when they could watch it online. This year, fashion week has gone digital. Independent brands are also taking matters into their own hands – hosting off-season shows and bringing their creative flare.
The software used was CLO3D, a world leader in 3D garment simulation technology. Their software reduces the lead time of samples being created from 37 days to as little as 27 hours. Designers can see their samples in real time and showcase their creativity.
Most recently, they acquired PixelPool in what they call a ‘strategic investment’. PixelPool provides 3D fashion experiences such as virtual showrooms. With this acquisition, they’ll be merging their clients together and providing an all round 3D experience. Many designers will be turning here to create show-stopping designs, catwalks and showrooms.
Close to home, the British Fashion Council has joined forces with VC firm Venrex to launch Venrex BFC Fashion I. The investment fund will be used to support small businesses in the fashion industry. One of their first investments included Digital Village, an ecosystem designed to help people integrate their digital assets and lifestyles into the Metaverse.
DV saw their Marketplace grow by 900% in December 2021 alone. This success is followed by their 3D virtual fashion week hosted in 2020, which saw 700,000 global participants. Fusing their model with blockchain technology such as Ethereum, DV is a force to be reckoned with.
It’s an exciting time to be a player in the revolution of the fashion industry. To keep up to date with new investing opportunities, sign up to Seedrs here.