Using Fashion Industry Market Research For Business Development

Research is key to making any business successful and even more relevant to the fashion industry as the variety of products and diversity of your potential customer is vast. The information you gather from your market research will feed in to your business plan and help you identify where your products/idea will fit within the context of the following questions:-

1. What is the size of the segment of the market you want to operate in and how is it performing?
2. Who is your target customer?
3. Where and how do they shop?
4. What are the price points your target customer are willing to pay?
5. Who are your competitors?

Knowing the answers will help shape your product development and overall business direction.

Your research will encompass a variety of sources including national press, blogs,  market databases, trade magazines,  exhibitions, e-commerce platforms, and the high street.

In this post I'm focusing on the first question raised, as your starting point is to find out the size of the market, predict whether it’s an expanding or shrinking segment, and what the impact of the national and international economic climate is likely to be.

To find this out  there are on-line market prediction reports which give you information, statistics, insight, and analysis for every type of fashion and accessory product category. Large brands, marketing and advertising agencies all pay subscriptions to have this information, but the Business Library’s Business and IP Centre gives you free access to most of the main electronic research databases, and is a brilliant resource.

Below are examples of what looking at recent market reports* can tell you:-

• According to the DCMS, the current value of the clothing and footwear market in the UK is estimated at £44.8 million. This is predicted to grow between now and 2017 to £53.1 million. The following shows the levels of expenditure in the UK in 2012 for different apparel categories:
• Womenswear expenditure was £21 million, a growth rate of 13% since 2007. It is predicted to grow a further 21% from now until 2017, to reach an expenditure of £26 million.
• Menswear expenditure was £10 million, a growth rate of 10.% since 2007. It is predicted to grow a further 19% from now until 2017, to reach an expenditure of £11 million.
• Childrenswear expenditure was £5 million, a growth rate of 7% since 2007. It is predicted to grow a further 14% from now until 2017, to reach an expenditure of £6 million.
• Footwear expenditure was £5 million, a growth rate of 6% since 2007. It is predicted to grow a further 12% from now until 2017, to reach an expenditure of £6 million.
• Accessories expenditure was £2 million, a growth rate of 17% since 2007. It is predicted to grow a further 18% from now until 2017, to reach an expenditure of £3 million.

It has been forecasted that volume growth in the fashion industry will not regain pre-recession levels until after 2017 but as you can see, there are areas that are  growing. Despite the recession, luxury brands continue to increase sales and profits, particularly the brands that export to South East Asia and the BRIC markets.

I'll be covering this area in more depth at our forthcoming workshop -
Fashion Business Planning for Success on 12th June.

Let me know what  interesting industry statistics you've discovered?

By Alison Lewy
Founder of Fashion Angel and author of Design Create Sell - a guide to starting and running a successful fashion business.

*Courtesy of the British Library Business and IP Centre

Finance for Fashion Start Ups

At our recent  packed Finance for Fashion Start Ups networking talk, the topic was alternative sources of funding including crowdfunding and Start Up Loans. As we all know, the traditional lenders are not supportive of SMEs, and fashion related ventures are considered high risk, so it’s even tougher for this sector. The good news is that there are now some credible alternatives.

The evening featured presentations from Muriel Dupas, founder of new fashion crowdfunding platform Audacity of Fashion and Fashion Angel’s Alison Lewy, followed by a panel discussion.

Muriel Dupas from Audacity of Fashion

The event was sold out, and attracted a long waiting list, so as requested we are posting a longer blog than usual to capture the key points discussed at the event for those that missed it.

The first presentation was from Muriel, whose background in finance and experience with business angel networks, led her to notice that investors are generally only interested in fashion tech businesses as they don’t understand the fashion industry and are wary of investing. Also the nature of the fashion buying cycle means designers often have to fund several collections and have the finance to support the necessary marketing and PR before they start to generate sales, thus leaving a big funding gap.

Some interesting crowdfunding facts:-
• Rewards based crowdfunding as a route to raising finance is growing rapidly, with the biggest US platform Kickstarter hosting over 4,000 projects and raising in total 400 million since it launched in 2008.
• The platform has hosted 700 fashion specific campaigns and raised around $8million with the average campaign raising between $1- 10K.
• In the UK, NESTA reports that in 2011 £100 million was raised through crowdfunding, which is expected to have doubled in 2012, and in  5 years reach £1.5 billion

One of the most recent successful campaigns on Kickstarter was run by US premium casualwear brand Flint and Tinder. They called for online backers to fund the production of the company’s “10-Year Hoodie” and through pledges and pre-orders, attracted over 6,000 participants and raised almost $700,000 – astonishing considering they were only seeking $50,000!

However, although there are successful fashion projects as this clearly demonstrates  there success rate for fashion campaigns is only around 27%, which is the lowest of the categories hosted.

Muriel came to the conclusion that a different crowdfunding model was needed that built a community of fans specifically interested in fashion and emerging design talent, and that it should  have added value and be more than a platform for raising funds.

Integral to the Audacity of Fashion platform will be the facility for its community to collaborate and connect with each other, allowing users to recommend and find support from photographers, stylists, graphic designers etc.

Designers will also be able to use it to get feedback on their designs and market test new product ideas before going in to production.

Like all such platforms, the basic principle is using the power of followers to finance a specific project by obtaining small contributions from a large groups of fans in return for a ‘reward ‘. This might be a thank you, original sketch, ticket for show or product voucher, depending on the amount of money pledged. It could even be to spend time with you in your studio – the aim is to get your followers to be active and develop an emotional connection with your brand – they are then likely to become loyal customers in the future.

In addition if you build a big following of active fans it can be a powerful tool to use as proof of concept to show potential investors if you want to attract external investment in the future. Muriel sees the non-financial benefits of the platform as important as the funding side.

Key aspects of the AoF platform:- 

• To maintain a high quality of campaigns the platform will be curated and selected by the selection panel of fashion industry experts. The panel will be looking for designers with credible businesses that have passion and drive to drive the campaigns forward.
• Pledges will typically start low at £5 - £10.00 and go up to £1000.
• Each campaign will run for a month however if it doesn’t reach the target then you don’t get any of the money and the participants get their money back.
• The cycle will be around 10 weeks from campaign launch to receiving funds
• Application is free with a 5% charge levied only on successful campaigns, plus any transaction fees.
• Audacity of Fashion will be engaging  a cohort of high profile industry ambassadors to champion the platform to the fashion community

Muriel’s tips for a successful campaign:-

• Your campaign needs to be specific -  be clear what the funding is for. 
• Produce an engaging video that tells your story – this is your main sales tool
• You’ll need good images 
• Your campaign needs to be part of an overall communications/marketing plan - if you generate positive PR around your campaign you’re more likely to reach your goals
• Be creative with your rewards - try and monitise what you’ve already got to offer 
• Your existing family, friends & followers are likely to be the first to support you so actively build your community in advance
• Important to set a realistic target  - if you don’t reach your target you don’t get anything at all and those that have pledged will get a refund.

The platform is due to launch in Spring 2013 www.Audacityoffashion.com

Next Alison gave a short presentation regarding the Start Up Loan (SUL) scheme, a government backed initiative to support young entrepreneurs aged 18-30 with an easy to access loan and business mentoring. So far over 2700 businesses have been helped with an average loan size of £3500-£6000 although it is possible to borrow up to 10K. Larger loans are available but need approval from Start Up Loan Company.

Key Benefits of a Start Up Loan:-
• Gives start ups easy access to finance
• It’s a quick process – decisions can be made within 48 hours
• You don’t give away equity in your business
• Unsecured loan with a low interest rate of 6%
• Flexible payments terms
• Added bonus of Free mentoring
• Global Partner offers including Paypal, Ebay & Intuit
• It’s the best deal on the market

Fashion Angel is the only delivery partner to focus on supporting fashion industry entrepreneurs and so far has approved loans to a wide cross section of fashion related businesses including womenswear, menswear, plus size, swimwear, online marketplaces, jewellery, footwear  and millinery. More information is on our Fashion Angel Start Up Loan page.

The  panel discussion that followed included input from two successful SUL applicants, Remy Ray who is setting up a plus size label, and Joel Adebayo from online platform Utter Couture, who both shared their experiences with the audience. Both confirmed how the SUL loan has allowed them to put their business idea in to reality and how easy they found the application process with the support of the pre-loan mentoring which helped them understand how to generate the  financial forecasts required. They both have also taken up one of the partner offers from Regis and now have a FREE virtual office for six months.

Muriel Dupas and AlisonLewy

The talk was sold out quickly but if you want to find out more about the Start Up Loans, or see if it's right for you, we’re hosting a FREE Finance for Fashion workshop on 30th April at 10.00am.

Spaces are limited and likely to sell out quickly again. For more information go to our Fashion Angel Events page, or click here to book a place.

By Alison Lewy

Samantha McEwan from Isolated Heroes announced as winner of business mentoring competition, sponsored by ASOS Marketplace

Isolated Heroes

We are delighted to announce that the winner of our second business mentoring competition, sponsored by ASOS Marketplace, is women’s wear brand ISOLATED HEROES founded by designer Samantha McEwan.

Samantha has won a place on the Fashion Angel business start up mentoring programme. During the six months programme the Fashion Angel team will work with her to develop the strategic and operational direction of the business to secure its growth and sustainability.

The competition was open to ASOS Marketplace sellers and continues our  commitment to nurturing and developing young creative talent to turn them into successful businesses.

The entries were judged by Fashion Angel Director, Alison Lewy and Rachel Humphreys, ASOS’s Senior Marketplace Manager.

Isolated Heroes

Alison Lewy, Fashion Angel’s Director welcomes this opportunity to support an aspiring design business in this way: “We were overwhelmed with applications which show the high demand for industry led mentoring support to assist fashion enterprises. It was a difficult task to choose a winner with so many strong entries. We selected Samantha as we loved the brand aesthetic and felt with the right support the business had potential for growth. Samantha will now have the opportunity to work with a team of high-level, industry professionals from Fashion Angel to ensure the on-going development and success of her business, as well as exposure for the Isolated Heroes brand.”

James Hart, E Commerce Director of ASOS, said: “We are excited to announce Isolated Heroes as the winning recipient of the mentoring programme with Fashion Angel.  Their entry stood out because of both their eagerness to learn, but also their clear ideas as to the way they wanted to develop their business and expand their label.  Samantha’s commitment to her collection on ASOS Marketplace has given her  the strong foundations on which the Fashion Angel mentoring program can build. We can’t wait to see her business grow.”

Isolated Heroes 

Samantha McEwan, Isolated Heroes Founder and Creative Director, said: “I am so excited to have won this competition and grateful to ASOS Marketplace for giving me the opportunity to be mentored by the Fashion Angel team and benefit from their industry expertise. I am looking forward to developing my business strategy and with their assistance, taking my business to the next level”

We can't wait to chart Samantha's progress over the coming months. For more information about our mentoring programme and how we can help your fashion business thrive go to the Fashion Angel Mentoring page.