Why do fashion brands fail – 7 reasons

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Why brands fail - 7 reasons

For every successful fashion brand, there are 100’s if not 1000’s dead. The failure rate of early-stage clothing brand is alarmingly at more than 80%

So why do fashion brands fail, particularly the clothing startups that just started. I have complied a list of 7 reasons why do fashion brands fail based on our experience of working as a clothing supplier for large number of brands in last 10 years below.

#1. Inability to find the product-market fit

You were trying to sell something nobody wanted. This is a direct result of poor product research. You will learn more about how to eliminate bias during your product research in the chapter – Product Research in the bookHow to Start a clothing brand

Remember to download our product research checklist to be double sure of you are covering all the aspects.

#2. Inability to find founder-market fit

 Sometimes, the founder’s skills don’t match with what is required, and the founder fails to upskill or delegate well in time before they run out of funds or time or both. During the early stages of your brand, you should be able to rationalize your skills under one of the buckets – “make-stuff” or “sell-stuff” : if you are not able confidently put your skills in one of these two categories, may be it is a good idea to wait and learn one of the skills and gain some experience before starting your clothing line.

You can download the founder evaluation checklist from our resources page.

#3. Poor Financial Planning

This is the most common reason across many brands that shut shop. Most fashion founders put their life savings into the launch of the first collection expecting, but this success on the first launch rarely happens. You should have a clear runway of 24 months before you decide to start. Download our merchandising planning template.

#4. Fad vs. genuine demand — failing to understand the difference

You can make quick bucks going after a fad if you are early in the market, but if you enter late and the fad runs out of steam, you lose all your investment and end up sitting on a huge pile of unsold inventory.

#5. Going after a trend that you are late to market

Do you remember the TikTok leggings? What started as a fad grew bigger. So when the fad goes mainstream, bigger players enter the market, and what ends up happening is several players (including the big ones) get in, and the prices crash to the point where it is not sustainable. We had two small start-up brands who ordered these TikTok leggings from us in the middle of hype, and they were sitting on a pile of inventory even after six months because the CAC (Cost of Acquiring a Customer) became prohibitively expensive because everyone was going after the same customer demographics.

#6. Poor delegation

Several founders don’t know the art of delegation. They confuse delegation with NOT knowing. If you don’t know something, just delegate is their playbook. But it should be the opposite.

If you delegate something, you need to have a thorough understanding of what you are delegating so that you can have a clear oversight.

#7. High expectations of brand value

 This results in very high prices and, consequently, poor sales. If your competitor is selling a midi-skirt for $100 a unit, you cannot sell the same product at the same price no matter how closely or better your branding, etc. Your competitor can command a higher price because they are already in the market. They have consumers who have tried their product and believe in their brand promise. They have created a BRAND EQUITY. You Don’t, at least not in the beginning.

You can learn how to create brand equity, and we have highlighted some of the best practices in this book, but the bottom line is that you cannot charge a premium from day one because your brand and your products are not tested (yet)

I hope these reasons are a good starting point for someone to look for, when starting a clothing brand. If you are intellectually aware of these reasons of why did other clothing brands failed in the past, you are already better off from many others who are starting a fashion brand blindly.

If you are looking for a supplier, do remember to connect with us at Hula Global.

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