If Covid plus business rates plus VAT equals death to the independent UK brand, can anything be done to save them?
Last Tuesday marked a tough blow for fashiony types the world over, whose dreams of ever owning the renowned Falconetti dress from The Vampire’s Wife were dashed in a single Instagram post. Just like The Vampire himself, reality bites.
Susie Cave, former model and Founder of the British cult womenswear brand announced in the post that after a decade of dressing the likes of Cate Blanchett, Kate Moss and Kate Middleton (the latter several times, including once for a royal portrait), The Vampire’s Wife would be bolting its doors for good after a three-day “goodbye sale”.
Unfortunately, those with an ear even remotely near the ground know that this is not an isolated incident. Two weeks ago, Roksanda Ilinčič closed her flagship store and sold her eponymous brand Roksanda, a cornerstone of the London Fashion Week lineup, to the emerging brand development platform The Brand Group. This came shortly after filing a notice of intent to appoint administrators.
“I’m upset about Roksanda,” said Mandi Lennard, Brand Strategist and Founder of creative agency, Mandi’s Basement. “She’s consistently innovating and nurturing a discerning art-slant audience … so it’s a big shock, particularly the store, what a loss for Mayfair.”
The defeat goes on. Back in March, UK-born Matches Fashion was unexpectedly shuttered by Mike Ashley’s Frasers Group, summoning administrators from management consultancy Teneo. Frasers acquired the luxury e-tailer in December, just three months prior.
The fact that Matches has been a mainstay of UK luxury fashion since 1987 makes its demise all the more poignant. Industry icons Tom and Ruth Chapman founded Matches as an independent boutique in Wimbledon, southwest London. They introduced global brands such as Bottega Veneta into the UK market and championed emerging British brands, including Chopova Lowena and Wales Bonner, along the way.
Emily Gordon-Smith, Content Director at fashion trend forecasting and analysis platform Stylus, tells TheIndustry.fashion that larger luxury e-tailers struggle when they “over-expand and become faceless, not least in their relationships with the brands themselves, which in the case of Matches as an example had been forged over decades and were built on personal connections.”
A month after it was placed into administration, Frasers Group bought back Matches’ intellectual property from Teneo for an undisclosed sum, but none of the £80 million stock.
The stock, however, is the sticking point if you’re an involved brand. As British brands – both established and emerging – dust themselves off from the post-Matches wreckage, several millions have been left unaccounted for. Burberry is owed more than £500,000, Anya Hindmarch over £200,000 and both Paul Smith and Samantha Cameron’s Cefinn are owed over £100,000. The list goes on.
This bitter pill is made all the less palatable for smaller (and less financially secure) independent brands, who have luxury multi-brand platforms like Matches or Farfetch to thank for their making, and now possibly for their breaking too.
Stefano Martinetto, CEO of Tomorrow, a fashion brand development agency that has cultivated the likes of Charles Jeffrey Loverboy, Martine Rose and A-cold-wall*, said that while Matches et al “have created a problem, it needs to be recognised that many of these designers wouldn’t have had the chance to start without their support.”
“At the beginning, multi-brand platforms needed to grow, and were encouraged to do so by investors regardless of profitability,” he continued. “This means overbuying products from everyone”.
Martinetto adds that if a brand was worth £2 million at that time, it was not out of the ordinary that £1.5 million of that would have come from three multi-brand retailers. “Of course when the money dries up it’s unjust, but they also created a market for independent designers that wasn’t there 10 years ago,” he concluded.
Igor Ivanenko founded the UK-based luxury streetwear label Only The Blind in 2016. This month, the fashion label launched in Harvey Nichols – a goal of the brand’s since its inception eight years ago. However, director Ivanenko said that the journey up until this point has been punctuated by “countless hurdles and roadblocks”, such as “receiving collections five months late from manufacturers and dealing with the knock-on effects of this, where you’re essentially receiving a winter collection in summer.”
“One season, we had a collection’s samples come through completely wrong, and the correct samples were not designs we were happy to release,” he said. “Meaning we had to re-design and re-sample an entire collection over two days during the Christmas period.”
However, as well as the universal uphill water pushing that is synonymous with starting a fashion brand, for British brands there is additional red (white, and blue) tape that makes the playing field decidedly un-level with other brands globally.
Brexit has a lot to answer for in this regard, with the most commonly discussed downfall being the 2021 removal of VAT-free shopping in the UK. “It’s ridiculous to me that anyone can jump on a train to Paris and receive a tax refund for the same items they could get at home,” said Tomorrow’s Martinetto. As Ivanenko points out, Mulberry attributed the closing of its Bond Street store to the end of tax-free shopping.
“Many retailers such as Harrods and Harvey Nichols are part of a campaign to reinstate the VAT RES [Retail Export Scheme] as it’s been a massive blow to any retailer in the UK which had business from tourists,” said Ivanenko, “especially in London, then having a knock-on effect that fewer brands can be taken into these stores as they have smaller budgets for new brands.”
Ivanenko also wants to see a reduction in business rates, which are typically around 50% of the annual rent of a premises, making “stores unviable for a lot of businesses, as well as making offices hugely expensive and increasingly less viable.”
This seems all the more essential as Mads Koch Petersen, COO and co-founder of Danish independent eyewear brand MessyWeekend said a brick-and-mortar presence has been essential for success.
“We sincerely believe that ever since Covid there has been a clear and evident trend of people ‘going back to real life’, which makes physical presence immensely important. For MessyWeekend, physical stores are the cornerstone of our distribution strategy.”
Similarly, Martinetto opines that a pop-up-based business is the best way for independent streetwear brands to start out. “Find a couple of retailers, do some pop-ups, find every possible angle to have a sustainable business.”
For more sartorial designers, Martinetto suggests that they opt for what he calls “the old school model”.
“Designers convince themselves they need big shows, but they can’t spend £200,000-£300,000 on a show,” he said. “Gone are the days when you could put on a show for £40,000.”
He recommends that emerging brands work on custom-made products for customers who “don’t have price sensitivity”. “Customers will judge your ideas and whether you have an outstanding craft,” he said.
“These young designers are super self-reliant,” said Lennard, who worked closely on Central Saint Martins’ BA fashion show last night. “The industry is imploding, [so] they are going to rise underpinned by their fresh innovations and use of repurposing, [meaning that] the customer is well and truly getting a one-off piece of clothing that’s been touched by the hand of the designer and not batch outsourced.”
“Brands must free themselves from what they perceive as obligations from the industry,” Martinetto continued, “such as shows or scaling up too quickly. There are unrealistic expectations that they should be able to do what much larger brands can do.”
Martinetto wants to see “significant grants made to a very small number of winners”, rather than smaller grants to lots of brands.
“Every now and then there is a JW Anderson or a Martine Rose that proves to brands that there is a chance,” he said. “But too many brands have been started in the past 10 years due to low barriers at the entrance of the market. It’s a tough market and brands need to be realistic.”
Ivanenko agrees that grants are essential, and adds that he wants to see “a big push in support of local British brands”. “So many exciting, talented brands have launched over the past [few] years in the UK that are doing amazing things, but they don’t have the support from the industry to be given the exposure they need,” he says.
Ivanenko also wants a simplification of the overly complex, Brexit-induced import and export processes; a strengthening of intellectual property protection; and better networking, education and training programs for emerging brands who “don’t have the finances available to hire the relevant experts for different business roles”.
“By implementing these legislative and industry changes, we can create an environment where independent brands not only survive but thrive,” Ivanenko concluded. “Contributing to a vibrant and diverse fashion landscape, which has always been a large part of the British economy and culture.”
