Fashion forward
By CA magazine
26 May 2021
The fashion industry is back with a bang – but can it return from the pandemic both profitably and sustainably? From high street to catwalk, Cherry Casey talks to three CAs pushing the sector onwards.
Prior to the Covid-19 pandemic, the UK fashion sector was the jewel in the creative-industry crown. Estimates suggest it brought £35bn to the economy, as well as 890,000 jobs. But when successive lockdowns forced stores to close their doors, as well as wreaking havoc on all aspects of the supply chain, the industry was hit hard. Europe alone saw a 43.5% drop in clothing sales between April and June 2020.
Key to survival was the ability to adapt, both to the restrictions imposed on working models, and to the ways consumers had to shop. Unsurprisingly, ecommerce had never been more important. But while lockdown has (we hope) ended for good, the fashion industry cannot return to its old ways as consumer needs have changed, perhaps irrevocably.
We speak to three CAs working across fashion to find out how they have responded to the pandemic, where they see the future of high street retailers and whether the industry can ever become truly sustainable.
Kenny Baillie CA, CEO, Atterley
‘Our boutiques were able to adapt and pivot in a way larger retailers were not’
After an early career in property and financial services, Kenny Baillie CA became Head of Finance at online tyre retailer, blackcircles.com, founded by Mike Welch. After five years, he moved into the fashion industry, before rejoining Welch on his latest venture, Atterley, an online marketplace selling clothing from independent boutiques across the globe. Today, the firm sells garments from 250 boutiques in 100 countries. And it was this international aspect that put it ahead of the curve when it came to planning for the pandemic.
“We have a number of boutiques in Italy so we knew what was happening, and started to prepare pretty early on,” says Baillie. “We tested working from home way before it was required, and then waited to see if Covid-19 was going to come to the UK. And it did.”
After a great opening to 2020, March saw disappointing sales. “Panic took over on the consumer side,” says Baillie. “Everyone was fighting over toilet roll and chopped tomatoes. Fashion was secondary.”
Several staff were furloughed for a month, before consumer confidence began to return in April and clothing became a viable purchase for many once more. This is where Atterley’s business model was perfectly timed. “Boutiques were able to pivot and adapt,” says Baillie. Whereas retailers that rely on warehouse operations had to close for a period, Atterley effectively had 250 individual warehouses, with just one person needing to work in each. And with online sales being the only option available, these were pushed more aggressively, leading to higher conversion rates for Atterley. April 2020 saw 200% year-on-year growth, its strongest period to date.
This success led to a crowdfunding of £500,000: enough to see the firm grow through 2020. “One of our main driving factors was to allow our boutiques to become partners and share our success early. Crowdcube is very good at allowing you to do that,” says Baillie.
One by-product of the pandemic was the push to “shop local” and save small businesses. This helped Atterley’s boutiques – even if many sales were far from local – and Baillie is optimistic the sentiment will be more than just a passing fad. “I think it’s here to stay, certainly in the near future,” he says. “Over the next few years, those local businesses who can marry post-pandemic adoption of in-store purchasing, while keeping their online sales going, will see success.”
Sustainability is a key part of Atterley’s offering. “The biggest thing for us is to offer quality over quantity,” he says. “Our average transaction value is relatively high, compared with the high street. We want people to buy something, keep it, cherish it, love it.”
But sustainable fashion is just $6.35bn of a $1.5trn market. So how likely is it to surge in the post-pandemic years? “With so many people on furlough, budgets will be squeezed,” he says. “How much will people pay for something to be sustainable? If comparable products and price points are there, it’s got a greater chance of taking market share, but if it’s at a premium, it will be more difficult.”
Laura Strain CA, CFO and COO, British Fashion Council
‘Businesses want to change, they just need the tools and knowledge to do so’
In the early 2000s, Laura Strain was a newly qualified CA who wanted to see the world. She joined EMI Music – a role that would enable her to travel – and stayed with the company for 10 years, before moving to the British Fashion Council (BFC). “I’ve had a really fortunate career, working for two iconic British institutions, both over a period of lots of change,” she says.
Change is certainly what the pandemic brought to the fashion industry. Strain explains that while they had no idea of the extent of the impact, they knew it was crucial to swing into action pretty quickly, having witnessed many of the designers they worked with having supply chain or stocking issues when many Chinese cities went into lockdown.
“We looked very closely at costs in general and had to do an emergency budget and put in cashflow planning,” she says. “We also had major events like London Fashion Week that we knew wouldn’t be happening, so there were certain team members for whom furlough was an obvious route, although it wasn’t a big proportion.”
Ultimately, worst-case-scenario measures did not need to be implemented. “We had an okay year, we survived it,” says Strain. “A lot of our partners and patrons have been very loyal and continued to support us through the year, so it didn’t get anywhere near to crisis point.”
Key to BFC’s work is supporting the growth of the fashion industry; so, in March 2020, its Foundation Fashion Fund for the Covid Crisis was set up. From a £1m emergency fund it was able to support 37 British designers by May 2020. By July, the fund had raised an additional £500,000, giving financial support to dozens more.
Off the back of this success, the BFC took the opportunity to appoint two new co-chairs to lead an international advisory committee, with the aim of raising £2m this year and every year after. “We have 31 founder patrons already, and there are some great names in there,” says Strain, naming Daphne Guinness and Cara Delevingne among them. “These are industry powerhouses and recognised names putting support behind the charity and encouraging others to donate.”
The BFC has a long-held commitment to sustainability, pioneering initiatives such as the Switch to Green campaign with Vivienne Westwood in 2017. But after lockdown gave everyone a moment to pause and reflect, says Strain, the BFC has decided to move on from “having an interest and participation in the sustainability agenda to really driving it”.
Part of this agenda is hosting the inaugural Positive Fashion Forum, to be held this month, bringing together leading industry figures to debate emerging themes ahead of the UN Climate Change Conference of the Parties (COP26) in November. Strain says the reaction is itself cause for optimism: “Everybody wants to be part of it. The government is very supportive and wants to attend, and businesses want to change – they just need the tools and knowledge to do so.”
Nonetheless, acknowledges Strain, creating a sustainable fashion industry will be a “massive, massive task” and “things are not going to change overnight”. But the appetite and momentum for change are certainly there.
Peter Wood CA, CEO, AllSaints
‘Suppliers took the pressure off the business, so we could focus on surviving’
March 2020 began well for Peter Wood CA. He had just finished his first full year as AllSaints CEO, recording the company’s best financial performance in its 25-year history, making £361.4m to the year ending February 2020. Three weeks later, Covid-19 hit. AllSaints closed its US and UK stores – the immediate strategy was to focus on its team.
“I was very clear that the same team and values that delivered the best-ever financial performance would also make sure we came through this,” says Wood. Communication was key, with daily leadership Zoom calls initiated from day one and continuing almost non-stop for a year.
With no war chest to fall back on (pre-pandemic profit was reinvested into the business) the firm had to furlough as many staff as possible. Again, he had to convey the right messages: it was not a reflection of personal performance, but a means to safeguard everyone’s job. It paid off. “I had support from my team – and that trust was energising for me,” says Wood.
Wood joined AllSaints as CFO around the same time as the financial crash, so had experience of navigating turbulence. “I had a call with our global suppliers on the first day of lockdown,” he says. “They agreed to stop producing for us and gave us longer to pay, which played a huge part in taking pressure off the business, so we could focus on surviving.”
This strategy, combined with rent reductions in UK and US sites, enabled AllSaints to survive. While 2020 was a challenging year, at the time of speaking, the firm has enjoyed better sales figures than for the same period in 2019. “A very good sign that we’re on the way up,” says Wood.
Wood believes there will continue to be a strong digital customer base. In 2019, 21% of sales were online, last year that number rose to 60%. Shortly after lockdown easing, it’s hovering somewhere in between. But we shouldn’t underestimate the social significance of real-life shopping, he says, citing the example of a father and son in a London branch kitting the boy out for his birthday party: “That can’t be recreated online.”
Sustainable fashion is also something consumers want more of, says Wood: a demand that “we dismiss at our peril”. This has been a core part of AllSaints’ strategy since 2018, with the young employees (average age: 25) being key arbiters of the firm’s agenda. “Customers want to know materials are traceable, the processes used are not destroying the planet, no nasty chemicals are being pumped into rivers and workers are being looked after responsibly,” says Wood. To this end, using “real language” rather than sustainability jargon is important, and the company’s “Conscious Commitment” declaration lists specific measures it has taken, while individual products detail their sustainability credentials.
“We don’t want just a sustainable ‘segment’,” says Wood. “It has to be embedded in our core – if the mindset is there, it can be done.”