London Fashion Week stands to be a diminished affair this season. Just as in New York, Milan and Paris, digital events are replacing the usual whirl of grand catwalk shows and in-person soirées. Though familiar names like Simone Rocha, Victoria Beckham and Molly Goddard pepper the schedule, Burberry, the city’s biggest-name draw, has yet to announce any plans for a womenswear show. Instead, the brand will present a menswear collection as part of a slate of co-ed digital-only showcases.
Behind the scenes, the mood in the industry is anxious. While the pandemic has hit fashion globally, in London the challenges have been amplified by a particularly virulent strain of the virus that has kept the city on lockdown since before Christmas. Worse still, the sector is grappling with mounting external pressures created by the UK’s complicated, drawn-out exit from the European Union.
“The pandemic on top of Brexit is a decimation issue,” said Tamara Cincik, founder of industry think-tank Fashion Roundtable. “We could be looking at a decision or a series of consequences that literally destroys UK fashion … We’ve got a series of perfect storms.”
The pandemic on top of Brexit is a decimation issue...We’ve got a series of perfect storms.
To be sure, the industry has already proved more resilient than many expected. At the start of the pandemic, a survey by the British Fashion Council (BFC) found 35 percent of designers believed they could go out of business within three months if they didn’t receive any external support, while 50 percent didn’t see their business surviving past the end of the year.
These predictions didn’t come to pass: the government was fast to provide support schemes, while industry players, from the BFC to retailers like Matchesfashion, offered cash grants and mentorship. Brands were also quick to adapt, pivoting to digital-first business models and negotiating more flexible terms with landlords and suppliers.
Some brands have even flourished. At Charlotte Knowles, a womenswear brand beloved by the likes of Kaia Gerber and Kylie Jenner, the collections are growing in size, thanks to strong demand from digital retail partners like Ssense and social media buzz. At Bethany Williams, which uses fashion to spearhead positive social and environmental change, sales over the last year grew, in part, Williams said, because the pandemic has caused some shoppers to seek out fashion that is more socially responsible.
But a year into the pandemic, brands are facing new pressures and a less supportive government. A decision to abolish VAT-free shopping for international visitors at the start of the year is seen by many as a new and long-term challenge for the industry. The move is estimated to cost British retailers billions in lost sales each year and diminishes incentives for tourists, a key driver of luxury sales in the UK, to come to Britain to shop once the pandemic has passed.
Meanwhile, the 11th-hour trade agreement reached between the UK and EU on Christmas Eve is proving complicated — and expensive — to navigate. Though it promised free trade with the European bloc, in practice it has led to costly and confusing bureaucratic impediments for smaller brands. There are longer-term concerns too, such as new challenges accessing international talent when travel is allowed once more, and new complexities securing IP protection in Europe.
“The deal was done so late. So in terms of preparing for the 1st of January when [Brexit] came into effect, it left very little time,” said BFC chief executive Caroline Rush. “Most brands had planned by that point for a no-deal Brexit, which meant that, of course, everybody was scrambling.”
So far, the government has provided little signal it intends to offer more support, despite lobbying by trade groups like Fashion Roundtable and the BFC.
Adapting for Uncertainty
Usually designers would spend January putting the finishing touches to new season collections in preparation for February fashion week. This season, the ritual has been complicated by Covid-19 restrictions and Brexit-related issues.
Last year, British menswear brand Jordanluca launched e-commerce for the first time. It wasn’t something co-founders Jordan Bowen and Luca Marchetto had planned, since the brand was already growing successfully through wholesale partnerships and running its own digital shop was an added logistical headache. But the move became essential when the pandemic hit.
Before long, Jordanluca was shipping its products around the world, with lots of demand in the US, but also closer to home in Italy and France. Just as the new business was gaining steam, the UK-EU Brexit free-trade deal came into force, bringing with it a mix of shipping delays, unexpected tariffs and hidden costs — undermining the benefit of larger internal margins when shipping to the EU.
“As much warning as there was, nothing is really like the reality,” said Jordan Bowen, co-founder of Jordanluca. “It’s a bit of a bureaucratic nightmare.”
As much warning as there was, nothing is really like the reality. It’s a bit of a bureaucratic nightmare.
Part of the immediate problem is that the new rules and regulations aren’t all that clear. Designers say lack of transparency and clear guidance from the government has made it hard to understand what processes need to be followed by the fashion industry. The time required to decode what the new rules mean in practice, and how they apply to different fashion imports and exports, can be a significant investment for a small business with limited resources.
Large brands with plenty of resources at their disposal have found the challenges more manageable. A Burberry spokesperson said the company was “dealing with short-term operational issues,” including delays and transaction costs, but that it is coping with disruptions. Smaller brands tend to be having a harder time.
Alexandre Arsenault and Charlotte Knowles, who co-founded their London-based label Charlotte Knowles in 2017, manufacture a lot of pieces in Italy. The duo found that some of their European suppliers were equally unclear about the new rules, leading to confusion, unexpected charges, and more paperwork.
“Any miscommunication or any mistake on the paperwork can just cost so much money,” said Knowles. “For a small brand it’s really terrifying.”
I don’t think it’s an overstatement to say this is definitely the most challenging time most businesses will ever go through.
Brands that produce collections in the UK aren’t having an easier time. While Williams uses local manufacturers, she sources fabrics from a social manufacturing project in Italy. With Brexit-related charges, fabrics can turn out to be about 20 percent more expensive.
Navigating retail is also tough for the designer. The brand is due to launch its direct-to-consumer e-commerce site next month, so Williams and her team are currently working out how to charge shoppers the correct VAT charges for each EU country. On the flip side, she’s worried her European stockists won’t want to pay the additional costs and charges associated with British brands. As a result, she’s diversified her business by taking on more special projects, collaborations and consulting work.
“We’re trying to divide our income...just not to be too heavily reliant on wholesale,” she said.
Natasha Zinko, whose nakesake brand turns 10 this year, said it’s too early to tell the financial impact the Brexit-related changes are having on her business. So far, unexpected taxes and increased paperwork haven’t been a huge challenge, although this could change when she starts manufacturing the new season collection and delivering it to stores, she said.
Over the coming months, all brands are hopeful the UK’s ongoing vaccination drive and more clarity over policy will restore some stability. But it will be a long six months until September.
“I don’t think it’s an overstatement to say this is definitely the most challenging time most businesses will ever go through,” said the BFC’s Rush.