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Op-Ed | Why Nascent Luxury Brands Need Middlemen

While it’s fashionable for start-up labels to bypass retailers and go direct-to-consumer, for nascent luxury brands, middlemen still play a critical role, argues Edwin Jiang.
The Kiko Kostadinov space at Dover Street Market in London | Source: Dover Street Market
By
  • Edwin Jiang

LONDON, United Kingdom — Direct-to-consumer e-commerce pioneers like Warby Parker and Everlane pride themselves on bypassing the middlemen who operate third-party retail distributors. In the telling of their success stories, these middlemen are often painted as meddling intermediaries, taking an unreasonably high margin that serves neither brand nor consumer. But despite the undeniable achievements of companies like Warby Parker and Everlane, there is definite value in the presence of middlemen.

As argued recently by Richie Siegel, third-party retail distributors can offer clear business benefits by taking on the task of merchandising and selling product, enabling brands to focus on design. But when it comes to the luxury fashion market, middlemen also play a more fundamental role that is essential to the earliest stages of luxury brand building.

The value of fashion is about much more than pure functionality. As some scholars argue, the birth of modern fashion began with the rise of Parisian grand couture in the 1850s and 1860s. It is precisely during this time that the role of the “tastemaker” first became solidified in the fashion system. Drawing clients from around Europe, the various ateliers in and around rue Saint-Honoré sought to ground the value of their garments in geography, marketing their products in what fashion historian Christopher Breward calls “a blind belief in the global supremacy of Parisian fashion.”

A century and a half later, Paris remains the world’s most important fashion capital. But geography alone no longer possesses as much power to confer value on fashion products. Even in 2016, tastemaking is still at the centre of the fashion system. Unfortunately for the direct-to-consumer retail model, much of this power is now consolidated in the hands of influential third-party retailers. Indeed, these 'meddling middleman' are critical to the process of luxury brand building and young brands that rely exclusively on direct-to-consumer distribution can face terrific challenges in imbuing their products with brand value.

Building a powerful brand identity in the luxury market relies principally on a capacity to produce a desire for the product in contemporary consumer culture.

Sure, there are alternatives. A common solution involves enlisting so-called 'influencers' to push products online. This strategy can be useful in generating publicity, but is only the first step in luxury brand building and it's unclear whether influencers can confer genuine brand value in the way a major retailer like Barneys or Dover Street Market does.

Examples from the last 12 months alone demonstrate the old system is alive and working. New talents today are still being introduced to the consumer public through influential buyers and stockists. Despite showing at LCM immediately after graduation, CSM graduate Kiko Kostadinov first garnered traction through his Stüssy collaborations, which were sold at the SHOWStudio online store and later in-person at Dover Street Market. Likewise, even before his LMVH Special Prize, Vejas Kruszewski found a dedicated fan base that shopped his collection at Opening Ceremony. The importance of the talent, hard work and dedication of these designers should not be overlooked. But to ignore the role of third-party middlemen is to misunderstand the realities of how the fashion system works.

Selling luxury goods is not the same as selling affordable basics or eyeglasses — products whose value is more functional. Indeed, building a powerful brand identity in the luxury market relies principally on a capacity to produce a desire for the product in contemporary consumer culture. This is specifically where the middlemen of the fashion system excel. From niche boutiques to the biggest department stores, these institutions already possesses a core customer base that sees some type of intrinsic value in the retailer — whether it is a sense of prestige, a tribal sense of belonging or an artistic cognisance of something innovative or avant-garde. Through being stocked at a particular retailer, the perceptible values of said retailer, in turn, become available to newly established labels, a brand-building phenomenon impossible to replicate with the direct-to-consumer model. After all, who can deny the fact that consumer perception of a brand is shaped by where the customer buys the product?

Edwin Jiang is a London-based writer and student of fashion theory.

The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.

Related Articles:

Direct-to-Consumer Labels Sharpen Their Brands
Can Young Luxury Brands Bypass Wholesale?
Ex-Vogue Editors Launch Direct-to-Consumer Brand La Ligne

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