2. Remote Industry Environment
1) Threats
Fashion industry is facing numerous business risks. The challenges it is facing include ever-changing business climate, shifting demographics, rising cost of key resources, and tougher standards.
I) Ever-changing business climate
Apparel retail or clothing sales is subject to seasonal variations and worldwide economic fluctuations. The protracted global financial crisis since 2009 seriously affected the fashion industry and the consumer spending may remain depressed for the foreseeable. In the fashion industry, it is hard to predict the future trends. Its inability to forecast and capitalize on new trends is a major challenge for apparel retailers, because losing out a single fashion trend can be deadly.
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Wet Seal grew from a bathing-suit company to a smash hit among teenagers in 1980s and 1990s with its bohemian tops and hip jeans. But the mall-based retailer joined Deb Shops and Delia’s which both filed for bankruptcy last year. It was the latest victim of changing teenage taste and lifestyles. (Tabuchi, 2015) Teenagers spend more on technology than fashion. They spend less time at malls and more time online. A lot of dollars they spend on clothing is going into technology, electronics, games and apps. They don’t go to the malls, but to coffee shops. Another failure factor is the shrinking pie in teenage clothing retailer market. As teenagers are abandoning traditional mall shopping, the specialty retail fashion industry has to suffer from increased competition and a difficult operating environment. Due to the continuing shift in consumer behavior away from traditional mall shopping toward online stores, mall-based stores are also losing business to big-box chains and online merchants. Teen shoppers turn to fast fashion giants like H&M and Forever 21, which better match current trends and designs. (Kell,