Transcript of Liz Pape from June 18 | "What's going to happen to sustainable fashion brands?"

I've seen so much conversation happening lately in the slow, ethical fashion space talking about the future of our kind of corner of this industry. And is there a future? Is this what's happening? The truth is, right now, we are all struggling. The economy is tough. The cost of living is so high. When individuals are feeling that pressure and squeeze financially discretionary spending is, of course, going to drop. And those of us who sell things like nice clothes, of course, are going to feel the squeeze of that reduced spending. So yeah, it is tough. A lot of us are barely hanging on right now. 

There was an article in The Cut talking about consumer preferences and whether sustainable fashion is dying or customers are tired of buying sustainable fashion. I don't remember the headline. [The article Liz referenced was published by Business of Fashion on June 11, 2024.] They rattled off a bunch of brands that have closed their doors, and also some that are struggling or pivoting and changing their business models to adapt to kind of how tough it is right now.

Also, I hate how the press only wants to talk about things when they're a problem or when they're ending. I wish that The Cut would have highlighted these brands before they were struggling. That would have been nice. It reminds me of post-COVID when we had to close our factory down. It was the first time that I had ever heard from Vogue. They wanted to write an article about us closing. I said I would really rather they not because they had never been interested in reaching out or writing about us before until there was a sad story to tell. I have my own hangups and baggage about why I feel the press doesn't care about our brand. The New York Times has written a couple of nice things. But anyway, I don't really care about the press, whatever. It's never been a big goal of ours, and I don't think I like "fit" the image. I'm not a model turned designer, and I really don't feel like I fit in that world. That's fine. 

Anyway, there was a really great post today that I saw from Free Label asking the question, "Is slow fashion cannibalizing itself?". Basically, for brands that make ethical, responsible, sustainable goods, one of those tenants typically is longevity, durability, serving multi-purposes in a wardrobe, so you shouldn't need a ton of things if you can buy these things that serve a lot of purpose and will last. And also, a lot of brands like that, like ours, encourage mindful and thoughtful consumption, so you don't need to buy a ton of stuff. And the question there when you're running a business, of course, is how does that mesh? How do you make that work if you are actively trying to help your customers buy less stuff through the thing that you sell? And that has been a question that's been part of our business since 2013. I asked myself and was asked when we decided to continue selling the same styles. After the first or second season when I released garments, I decided I wanted to develop our Signature Collection and keep our most popular styles indefinitely and just focus on those. And that came with, okay, well, how does that work? What will customers buy if they already have these things? How are you going to make money? And my kind of answer to that has been two-fold. 

One, wardrobes are not static. Even if you get to a place where you feel like you have what you need, which is the goal, bodies change, you might move to a new climate, and things do inevitably wear out. So ideally, even if you were able to have a customer with a relatively stable and complete wardrobe, if you've served them well with the thing that you make, hopefully they will come back when they need to. So ideally, they're not buying a new thing every two weeks, but if they do need a new version of this shirt, or they're moving to a new climate, or they need a specific thing, hopefully, we "slash" whatever brand is kind of thinking about this question will have served their needs in the past in a way that makes them want to come back and shop with us again. So yes, products are intended to work for a long time and serve a lot of functions, so you don't need a ton of them, but hopefully, repeat customers will have some reason to come back in the future. 

And then two, the market is big. So yes, the goal is to have our product serve people for a long time, but hopefully, we can continue to meet new people to serve. And that was a lot of the conversation happening in the comments section that I saw today. But that has kind of always been our theoretical answer to the question, "How does your business work?", when your model is slowing down individual consumption. The answer is that, hopefully, we, on an individual level folks, will buy less, but on an audience level, we will continue to grow. The hard thing about that is the way that used to happen, which was organically through social media, and that doesn't really happen anymore. The way that Instagram works has changed so much depends on paid advertising; it is so expensive and doesn't really work. So I think that the answer is to grow our audiences. The how is something that we are constantly working on, but I think that the community is at the core of that. In the beginning, all of our growth just came through word of mouth, and I think that's going to be how it continues to happen.

Moving forward, I don't think there's going to be like a magic bullet; I think that it might come back to more in-person events and networking rather than social media, like word of mouth. But customers, you watching this, you play a huge role in that. That kind of social connection recommendation is so trusted. So yeah, I think if you are into posting your outfits, that's great. That's a wonderful thing to do to tag the brand. Just sharing in real life with friends and family and people that you see in person. If you love something that you're wearing or that you found or you think something might work for someone else. Also, things that help significantly are signing up for our newsletters and opening and clicking the emails. The more clicks they get, the more reliably our software will send those emails to other people. All of that stuff has factors on whether emails get suppressed and not delivered, if folks aren't clicking through, engaging with posts on social media, so liking and commenting. All of that stuff determines if the algorithm is going to show our content to other people. So if you see something from a brand you love and want other people to see it, that engagement makes a huge difference. Sharing stuff to stories, signing up for post notifications, all those kinds of things help. I'm not saying that you have to do this, I'm just saying if you're looking for a way to keep a brand you love going but you don't need to buy something, there are a lot of things you can do. I think that word-of-mouth growth is going to become key for small businesses that want to stick around. Leaving reviews is huge. Photo reviews, people. I mean, think about when you shop, I immediately go to reviews and look for images. Sharing your size and measurements with the photo is like, oh my gosh, it's just so helpful to shoppers, so in turn, it's helpful to brands.

So yeah, those are all things I think that are important, but a couple other things that came to mind. I think that at this point in time sustainability and ethics are not enough to sell a product and it shouldn't be. That should just be the way things are done. Things should just be made without exploiting someone's labor or doing something in a like dangerous factory or using chemicals that cause cancer. That should just be a given; the bare minimum. I know it's not but for most of us in this space, we're like, that's not even the world we're living in, but just because we are making things in a way that we feel good about and have integrity in that doesn't mean that's going to be enough for someone to buy what we sell.

So, I think we need to really focus on what differentiates our product from other things in the market, and I know for a lot of us that's getting hard. Our aesthetic used to be pretty fresh and unique when we first started, especially the way that our items were photographed and styled. You can now get similar stuff to what we make from a lot of different places. That's tough, but we do still have some big pillars to our brand that are really at the core of what we do, and those are what we're going to have to rely on. Those problems that we solve, those needs that we meet, that's what makes us worth investing in, not just the fact that we make things in a way that I'm proud of and I believe is ethical. I know everyone has different definitions of ethics. So yeah, I think that really relying on your product and what you offer is going to be key in surviving. 

I also, this is the last thing that I want to talk about, I think that we have to price ourselves fairly, and I don't mean lower, I mean higher. I think that most of us are probably underpricing our products. Traditional retail is a 4x markup. We have never had a 4x markup, and I doubt that many of our peer brands do either. Our margin is like 30 to 40 percent when things go perfectly on a good day. That's like on the spreadsheet when I'm trying to like get the retail price. I add up all the labor, the material, the trim, the packaging, all that stuff, and I'm looking at our margin and I'm trying to see what can I whittle it down to to be like the minimum retail price we could squeak by with. That's a 30 to 40 percent margin, and that never happens. Things never go according to the spreadsheet. There are always issues that come up and added expenses that go in that aren't accounted for, which means our real-life margin is even less than that. And that's just not sustainable for a business. It's just not. That type of margin isn't enough to operate safely, let alone have any hopes of growing our audience, which is what we would need to do if we're not just going to atrophy and die. So I think we have to start pricing fairly. I don't mean a 4x markup, but it has to be enough to cover the actual cost of production and the cost of operating, and the cost of operating has to include sustainable salaries for the people involved.

I think that I constantly am looking at peer brands and I'm wondering like how are they possibly doing that? How are they offering custom sizing or free alterations or free customizations made to order on any one of these SKUs and at that price? I see that happening and I think what I'm realizing is that they're not because a lot of those brands have closed or are having to pivot and change how they're operating. So I think that we are basically competing with ourselves and we're thinking, oh well, if that brand is doing it I have to do it too, or I must be doing something wrong so I can't possibly charge what it looks like I need to charge based on my math because this brand isn't charging that and I need to meet them where they're at because I must be the problem. And I know I think that all the time.

I'm like, "what are we missing?". What big thing am I missing that when I do the math on our pricing, it needs to be X but then I'm seeing other people selling similar things for less and I'm just like, what's going on? And I think that at the end of the day, I can't, we can't, look at it that way. We need to look at the way we're operating and price for that. I know the decisions we've made about how we make our products are decisions that I stand behind and feel good about. I know that what we pay for labor is fair, and what we pay for materials is fair, which means a certain price. And I think we have to start really standing behind that.

I know that a lot of us defend our pricing, and we do that with gusto and pride, but I think we need to stand behind it in terms of increasing our prices if they need to go up. And if people can shop at Anthropologie or Free People or Eileen Fisher and spend $300 on a jumpsuit from those brands that are making things very differently than most of us small brands are, then we can charge that too and feel good about it. I hate that that means our things won't be accessible to everyone, I do, but we can't solve every issue with one dress. And if we're going to make things in a way that has integrity, we have to price with integrity. And I think that within our kind of niche circle, we have to stop lowering the bar by underpricing because then we just kind of push each other down. 

I also think that when you look at our larger like, not that I wouldn't say they're competitors, but brands like Everlane or like Reformation that are in the like kind of quote-unquote like "sustainable fashion space," and their prices are obviously lower in some cases and more competitive, like to customers those feel like comparable, I think. But in reality, like, no we're world apart. We don't have venture capital. And a lot of those brands are producing garments at a loss. They're not making profit on the product. They are losing money because they have this huge influx of investment. And the end goal may either be to sell the business, get acquired because they've created, you know, a threat to a larger brand that they can then sell to to eliminate competition, they might be selling customer data at the end, their plan may be to eventually become profitable at a certain scale. So where they're at now, they're not profitable, but in the future they will be. 

But comparing our very tactical like, "this fabric plus this labor equals this price," comparing that to the pricing of a huge brand like those where they're most likely losing money on every product they sell it's just not, it's not comparable at all. And I think I know I need to kind of eliminate that from my thinking and I think that other small brands should feel the freedom to release themselves from that too. So yeah, I think that pricing things fairly is going to be key for smaller brands not only surviving but thriving moving forward. If we don't set ourselves up for success at the base level and create sustainable systems, that's going to be really tough when we have downturns like we're in now. Then, if my premise is correct that audience growth is key, when the audience grows and more sales come, if things are not priced correctly at the base level, then things are just gonna break as they grow.

So that's where my head is at right now. I love hearing what other people are thinking. I'm glad that this opened up a little bit. It feels really nice to be able to talk about this stuff and to hear other business owners talking about it. It feels way less lonely and I don't love that we're in this position, but it is nice to not feel so alone. So I would love to hear what you all think. Thanks for listening and feel free to share your thoughts.