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On Fashion and the Future of the Creator Economy
A publication of It's A Working Title LLC
This weekly publication focuses on how business and economics trends, technology, and the drive for sustainability impact the global luxury, fashion, and experience economy industries. Prepared by the staff of content strategy agency and think tank It’s a Working Title LLC, each week’s issue provides a summary of recent trends across the globe and a leader that conducts a deeper dive into content strategy.
This week’s contents
Leader: On Fashion and the Future of the Creator Economy
In fashion and luxury, the business of influence is big money, whether you are a major brand or an influencer. The creator economy is, if nothing else, an endless morass of content, spread across platforms, with brands fighting to be innovative and differentiate their point of view to consumers.
The big question remains: How do brands build authentic content across channels, encourage a range of diverse voices, and convert followers into brand evangelists without risking brand dilution or inconsistent messaging?
The answer is: On their own, they don’t. These days, brands need influencers as much as their marketing teams to grow reach, to establish reputation, and to build brand loyalty organically and creatively.
On 16 August, It’s A Working Title co-founder and principal Jessica Quillin presented at a webinar with retail strategy firm PSFK on “The Influencer Marketing Landscape,” as part of a report for which she served as lead researcher.
One main takeaway from the report is that brands benefit most from influencer marketing when they take a targeted approach to working with influencers. This means brands should choose influencers who make sense for their brand or campaign goals, not just people with a high follower count.
What is often missing from many influencer marketing campaigns is a sense of continuity or, frankly, even control of content creation and messaging from a brand perspective. One way to allay the fears of many brand marketers when it comes to using influencers is to integrate influencers and, in turn, the content they create, as one spoke of the brand’s overall content strategy.
Of course, fashion is one of the original homes for the creator economy. According to Vogue Business, influencers are a marketing necessity these days for fashion and luxury brands, with more than half a million influencers in fashion, luxury, and beauty alone. While nearly all major brands use influencers in one way or another, many brands still struggle with finding the right balance between brand-driven and influencer-driven content.
The secret to fashion influencer marketing is, in a nutshell, a solid content strategy. Brands achieve success when they take the leap to integrate influencers into the campaign vision and goal setting processes, then set them loose to create original content as they see fit.
The Cult & Rain creative director, George Yang, believes that the future of fashion is phygital (physical + digital), which he describes as a more environmentally sustainable and the ultimate D2C distribution model. Cult & Rain describes itself as the first luxury web3 fashion house. They are pioneers in marrying physical, luxury goods to digital technologies. For example, early efforts involved connecting luxury shoes (produced in a factory that also produces for more, shall we say, legacy brands owned by LVMH and Kering) to a blockchain via an embedded chip for authentication purposes. More recent offerings involve producing phygital designs as 3D animated NFTs with a physical counterpart. Yang sees these types of pairings are more than just a product innovation, but as a sea change in the industry:
I knew that digital fashion was the future, and I knew that metaverse digital wearables, phygitals, and this completely new transformation into Web3 would become the foundation of how different luxury brands would enter into the next phase.
Moreover, the highly targeted and personalized nature of these products reduces the environmental impacts of production by minimizing excessive production:
So with this model we eliminate the wastage. We go directly to the consumer. This is almost like the ultimate direct-to-consumer model. We allow the consumer to shop on a website or shop in the metaverse.
Beginning 2023, France will require that all clothing sold in the country to identify its climate impact. Though some details remain to be worked out on the labeling requirements, the momentum for climate disclosure requirements is growing in retail fashion with the European Union investigating a bloc-wide standard. Getting these labels right can be difficult on both the standard-setting and technical side. For one, it is not always straightforward to determine the most accurate way to measure climate impact: for example, whether it is more climate impact neutral to create a new cotton T-shirt or recycle an old one comes down to examining the impact of the recycling chemicals. Second, clothing manufacturers often do not know the climate implications of various segments of the supply chains that they leverage to produce and transport inventory. Yet, given the large emissions and climate footprint of the industry, it seems certain these the types of disclosure standards will be much debated over the next few years.
The costs of not getting sustainability right are rising as H&M is sued over “greenwashed” marketing. A class action suit filed against H&M in a New York federal court on July 22 complains that the retailers’ extensive environmental labeling is based on spurious information. H&M has sought to provide extensive disclosures and transparency on its sourcing and production in order to market itself to consumers as being committed to circularity, transparency, and traceability. The complaint alleges that H&M’s efforts were misleading. The difficulties of separating out true efforts at promoting sustainable fashion as opposed to '“greenwashing” are just beginning. Clothing manufacturers across the price and quality spectrum will need to invest in content, inventory, and supply chain systems to get the story of the size of their environmental impact right. This will raise lots of issues in the areas of data quality and the commitment of resources to avoid “greenwashing.”
Business & Economics
Prada is exploring a $1 billion secondary listing on the Milan stock exchange. The brand is working with investment bankers to explore an at least $1 billion listing to add its primary listing on the Hong Kong exchange. Some institutional investors are only able to invest in equities listed on U.S. and European bourses so the secondary listing could potentially expand its investor base. The timing has not been confirmed, but the listing could possibly go ahead early in the next calendar year.
U.S. retail sales in July were up 10.2 percent versus July 2021 with clothing sales showing mixed results. Sales for the initial retail estimates released this week came in at $682.8 billion, which was roughly unchanged from sales values last month. Though this monthly number was lower than the market median expectation of a 0.1 percent increase, it points to the continued resilience of the U.S. consumer amid significant macroeconomic headwinds. The biggest year-over-year gains were recorded at the gas pump (39.9 percent), food services (11.6 percent), building materials (10.1 percent), and food and beverages (8.4 percent). Clothing and accessories sales were down from last month (-0.6 percent), but showed strength from last July (2.3 percent). Putting these numbers in the context of various segments of the retail clothing market, the luxury and premium end of the retail market has been extremely robust as exhibited in the H1 earnings reports and outlooks, though mid-market and box shops have reported concerns for H2 sales. Digital shopping remains popular. Online sales growth remained strong (2.7 percent y/y) as consumers took advantage of online deals, including a strong Amazon Prime Day.
Blockchain use cases continue to rise in the luxury industry. With its ability to securely store data and records using cryptography, the digital ledger technology blockchain has been used by luxury brands as a tool to track the authenticity and provenance of its products from sourcing to manufacture to transport and ultimately to delivery. Given that authenticity is part of what allows Veblen goods, like luxury, to set its price points, blockchain has been used across the luxury spectrum, including some corners that you might not expect such as wine and spirits. Yet, the technology is now being applied to a collection of new use cases in the luxury industry. One new application is the release of NFTs so, for example, in May 2022 Prada released several NFTs on the Ethereum blockchain. Another application involves the increasing acceptance of cryptocurrencies as this publication has documented before in previous issues. Another application is exhibited by Israel-based jewelry house Yvel’s expansion into the launch of a financial product called an Independent Non-Fungible Security (INFS). This is a trading platform that marries blockchain with customizable guarantees in the form of precious stones and rare metals.