The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — In December 2014, after over a decade in business, the German trade show Bread & Butter filed for bankruptcy. The company had just cancelled its January 2015 event amid rumours of financial difficulties and was unable to reimburse brands that had already paid to exhibit at the show, which takes place twice a year at Berlin's Tempelhof Airport.
Even if it wasn’t financially sound, Bread & Butter still drew crowds. But while brands used Bread & Butter as a marketing tool to garner exposure and meet international distributors, fewer were expecting buyers to be writing actual orders on the exhibition floor.
In the past, Karl-Heinz Müller, the show's founder, expressed his desire to open the event to the public on the weekends. Now, this idea is coming to fruition. Earlier this month, German fashion e-commerce company Zalando acquired the troubled Bread & Butter trade show for an undisclosed sum and plans to launch a consumer-facing event.
The deal is thought to be a boon to both sides. Bread & Butter will get the financial support it needs, while Zalando, which has struggled with its image, will be able to tap the trade show’s slick marketers. Bread & Butter is also attractive because of its contract with the Tempelhof Airport: through 2019, it occupies Berlin’s prime exhibition venue for an affordable price, much to the chagrin of its competitors.
While Bread & Butter is reinventing itself in the face of financial challenges, Pitti Uomo — Florence, Italy's biannual menswear show, which begins its summer session on June 16 — is going from strength to strength. In January 2015, Pitti reported record attendance, attracting 24,000 buyers, up 15 percent from the previous year, and nearly 1,200 exhibitors, including Brunello Cucinelli, Gant and Levi's Made & Crafted. While the majority of buyers still hail from Italy, foreign attendees make up more than 40 percent of the crowd and include buyers from Japan, the US, South Korea and other markets. Pitti has also become a men's street style epicentre, providing a platform for menswear editors and bloggers akin to what 'fashion month' has done for their female counterparts.
Pitti is partially funded by the Italian government and is integral to the economy of the city of Florence, which comes alive during the biannual four-day event. "It only took 25 years!" says Raffaello Napoleone, chief executive of Pitti Immagine, the group that runs the event, as well as Pitti Bimbo, Pitti Taste and Pitti Fragranze, among others. He joined the company as CEO in 1989 and has spent the past two decades transforming Pitti from a local attraction into an international event. This session, Pitti will include a "Made in the U.S.A." section, as well as a "No Sex" section, which will highlight the demand for unisex fashion.
If Pitti’s current success exists in stark contrast to Bread & Butter’s struggles, it also says a lot about the current state of the trade show industry at large. Buyers need more product than ever — but they also have access to more information than ever. A trek to a trade show is often far less appealing than a scan of new brands on Instagram.
“In 2007 and earlier, trade shows were basically physical B2B events. Today, they have to be much more than that,” says Tom Nastos, chief executive of ENK International, which produces fashion trade shows including Coterie in New York. In 2012, Advanstar Global — home of WWDMAGIC, the largest US apparel show — bought ENK for $155 million. In 2014, the group merged with events and marketing company UBM to form UBM Advanstar.
Traditionally, trade shows allowed buyers to complete the season’s buy in one place, within a couple of days. The revenue model is fairly straightforward. The shows charge exhibitors for space: prices range from $1,200 at a small, local show to nearly $30,000 for a spot at an upscale, high-profile event. They also court sponsors with the promise of a captive, like-minded audience. What they typically don’t do is take a commission on sales, although it’s not unheard of at smaller, niche shows. Unless it’s a consumer-facing show, trade shows charge either no fee or a nominal fee to ‘walk the floor’. Sometimes, show organisers will secure the attendance of VIP buyers by offering to pay for their flight and accommodation. Marquee brands are often offered deals on exhibition spaces.
Overall, the trade show business is growing. In the US, trade show revenues grew by 7 percent to reach $3.7 billion in the first quarter of 2015, up from $3.46 billion in the first quarter of 2014, according to industry trade group Center for Exhibition Industry Research. And as the number of fashion labels has increased, so has the number of shows. Capsule, which was launched in 2007 by fashion PR and strategy firm BPMW, was originally a reaction to the uncool vibe of more traditional shows. “Our brands were sitting next to Ed Hardy and girls in bikinis,” says co-founder Edina Sultanik. Capsule now works with over 1,500 brands — including indie favourites like Won Hundred and Chiyome — from 25 different countries each season. The numbers of buyers attending is up by 25 percent in 2015.
In 2003, Anita Tillman, the German fashion industry insider behind Mercedes-Benz Fashion Week Berlin, launched Premium in Berlin with similar intentions. “At the time, the portfolios in the multibrand stores were all the same,” says Tillman. She launched with 70 brands, including Acne and Filippa K. Today, Premium is a 20-million-euro business, including its menswear-focused SEEK show and #FASHIONTECH conference series. “The concept still really works,” adds Tillman.
But as competition heats up, the business of trade shows is evolving.
While upstart shows offer a 'cool factor' that mass operations desire, they often lack the financial backing to secure the best venues or the staff support to bring in more sponsorships. The crowded marketplace can also be confusing for buyers, who aren't sure where to start. "There are so many trade shows right now that it's difficult for a buyer not to get overwhelmed," says Tom Florio, former CEO of the Advanstar Fashion Group. Instead of vying for the attention of prime buyers each season, many of the larger trade show groups have acquired smaller, more nuanced players.
In the US, UBM Advanstar owns at least 17 shows in the apparel space, while Reed Exhibitions snapped up both Agenda and Capsule in recent years. “What appealed to us about Reed was their infrastructure,” says Sultanik of Capsule. “Now, we have more resources. For instance, Reed has great leverage with venues in good locations, which are notoriously difficult to secure. They’re able to negotiate on our behalf.”
Key players are also transforming the trade show experience using digital media. “A lot of trade shows are built on archaic technological foundations,” says Macala Wright, a marketing strategist at Emerald Expositions, which runs the Couture jewellery show in Las Vegas. “We’re in the process of assessing everything from our content management system to our marketing software.”
Trade show organisers are also trying to make it easier for buyers to place orders while visiting exhibitors. UBM Advanstar uses Shop the Floor, a platform that allows buyers to place orders digitally and across different shows. Digital ordering platform Joor now works with more than 1,000 brands, from Michael Kors to The Row. "We've developed software that complements the offline experience," says Joor founder Mona Bijoor. "When a trade show does it, it's confined to the brands that are exhibiting there."
Other shows, such as Capsule, are taking a ‘wait and see’ approach. “There are a bunch of different digital trade show platforms out there, and we don’t use any of them for various reasons,” Sultanik says. “But a big one is that fashion is only finally catching up with the tech world — you still get a lot of faxed orders. Everyone has to agree on one platform.”
Technology is being used to enhance attendees’ experience in other ways. “One of the biggest opportunities lies in making trade shows easier to navigate,” Florio says. At Premium, Tillman has installed iBeacons to gather more data on buyer behaviour. She has also developed an app that serves as what trade show execs call a virtual “matchmaker.” A buyer can express interest in specific brands and the Premium app offers directions on how to find that exhibitor and suggests similar brands. According to Tillman, buyers that use Premium’s app can visit 40 percent more vendors in one day. “It’s a more efficient way of organising their time,” she says.
Many trade shows are also ramping up their marketing efforts to target not only buyers, but also what Wright calls “prosumers,” or top customers who are hungry to learn about new brands and products. “Buy and selling isn’t just between the brands and retailers anymore,” says Tommy Fazio, president of Men’s for UBM Advanstar. Both Project and Magic have hired bloggers — along with bold-faced names like fashion editor and writer Hal Rubenstein, who has served as guest fashion director for WWDMAGIC — to introduce the event to an audience of savvy non-professionals. “They’re writing trend reports, bringing in creative directors,” Florio says.
Camille Candella, vice president of marketing at Emerald Expositions, says that trade shows must respond to consumers’ increased knowledge of product, even if they can’t actually place at order at the event. “Consumers are more interested today in where their goods come from,” she says. “And we need to leverage that.”
But don’t expect the majority of these trade shows to go the consumer-facing route any time soon. Many are channelling their energies into international expansion. Not only are retailers across the globe more clued into the different brands and trade shows that take place, but the pending implementation of the Trans-Pacific Partnership will make an even more compelling case for taking trade shows abroad. The trade agreement will reduce tariffs associated with importing and exporting goods between the 12 participating countries, including the US, South Korea, Vietnam, and Japan. Capsule, for instance, now exhibits in Paris and Berlin in addition to New York and Las Vegas. Italian textile show Milano Unica started showing in Shanghai last year and will debut in New York this July. And while she is currently focused on Berlin, Tillman is open to expanding Premium to other markets. “I believe that there will be more local shows in the future,” she says. “The rules are changing.”
The most successful trade shows share a few things in common: a great location, a unique and compelling lineup of brands, a focus on creating an enjoyable, effortless experience for attendees and the ambition to expand into new markets. But at the end of the day, the core concept still works. “It’s the most efficient way to do business,” Florio says. “The primary reason trade shows are successful is that people still go to them to buy and sell.”
Editor’s Note: This article was revised on 16 June, 2015. An earlier version of this article misstated that trade shows only charge attendees if they are consumer-facing events. This is not always the case. Some B2B trade shows charge attendees a nominal fee.