Weekend Briefing: Circular fashion faces ongoing logistical challenges

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Weekend Briefing: Circular fashion faces ongoing logistical challenges

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Last week, luxury repair company The Restory abruptly shut down, highlighting the logistical challenges of circular fashion. Elsewhere, Warby Parker posted surging revenue despite its pullback on marketing, while Nike was hit with an accusation of wage theft. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes, and the Glossy Beauty Podcast for interviews from the beauty industry. –Danny Parisi, sr. fashion reporter

On Thursday, London-based luxury repair startup The Restory abruptly shut down after its three co-founders, Vanessa Jacobs, Thaís Cipolletta Ferreira Alves and Emily Rea, released a joint statement saying they would all be resigning.

The company was started in 2015 as a sort of repair marketplace where clients could submit what kind of repair they needed — for example, a new strap for an Hermès bag — and The Restory would connect them with an appropriate artisan or tailor who could do it. In the years that The Restory was around, it attracted attention from bigger fashion companies like Farfetch and Selfridges, which established partnerships with the company. Fellow repair provider The Cobblers took a 50% stake in The Restory last year. The company had also raised more than $4.5 million in funding from investors.

But The Restory struggled to stay afloat, citing high costs and thin margins on its transactions. The company was in a dire financial situation last summer before The Cobblers took a stake in it, but it wasn’t able to turn things around. All of its staff will now be laid off.

The shuttering of the company presents a warning to other circular fashion-based businesses which, despite apparent demand, often struggle with profitability. Facilitating circular fashion, from rental to resale to repair, is often logistically intense. And companies attempting to do so often have thin margins.

Andrew Blackmon, founder of men’s suit rental company Black Tux, said that repairing clothing is among the most expensive and labor intensive things a company can do.

“Selling things is a lot easier than renting them out,” he said. “The logistics of cobblering and tailoring, all these old-world services that we like to provide, are so challenging. We have people return suits who clearly jumped in a swimming pool in them. It’s a lot of work.”

Warby Parker made more money with less marketing last quarter

Warby Parker posted better-than-expected earnings for the fourth quarter on Tuesday. That included a 10% increase in revenue over the third quarter, to $127 million. More notably, it did so while reducing its marketing spend by 41%, citing higher customer acquisition costs as the reason it pulled back on spending.

Dave Gilboa, co-founder and co-CEO of Warby Parker, said on the brand’s earnings call that brick-and-mortar stores, including the 10 stores opened in that quarter to bring the company’s total to 200, helped make up for the decreased ad spend.

He described the relationship between marketing, e-commerce and physical retail as being decided by three factors: “The first is that [e-commerce] is more sensitive to changes in marketing spend, given that our stores enjoy embedded marketing,” Gilboa said. “The second is a broader consumer shift back to shopping in physical stores as we move past the acute periods of the pandemic. The third is the impact of new store openings, especially in new markets, which immediately increases overall sales in that market but creates headwinds for local e-com sales during the store’s first year of operations, after which this effect abates.”

Nike accused of wage theft by 20 South Asian garment workers’ unions

On Wednesday, Nike was hit by a complaint from a group of 20 labor unions across South Asia where Nike does much of its manufacturing. The complaint was submitted to the Organisation for Economic Co-operation and Development (OECD), an international organization with 38 member countries dedicated to stimulating world trade. The complaint accuses of Nike of various violations of the OECD guidelines, including mass wage theft and refusing to negotiate with the trade unions that represent many of its garment workers.

Nike has not yet publicly responded to the complaint. The OECD rules aren’t legally binding, but if the organization approves the complaint, it will invite Nike to a mediated discussion with the unions.

The complaint calls to mind a similar activist action made against Adidas in January, although the methods were very different. In January, a group called The Yes Men published a fake press release ostensibly from Adidas. It named Vay Ya Nak Phoan, a Cambodian garment worker and union leader, as co-CEO of the company and announcing that Adidas had signed the Pay Your Workers agreement, a pledge against wage theft. The hoax was meant to call attention to similar concerns that the new complaint against Nike raises: large multinational corporations, especially those based in the U.S. and Europe, rely on the labor of workers in countries like Sri Lanka, Vietnam and Cambodia, yet rarely negotiate with garment worker unions or address unsatisfactory working conditions.

It’s not clear that the OECD complaint will lead to results, however. According to Business of Fashion, there have been 35 complaints lodged to the OECD since 2001, and the vast majority have gone unresolved.

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