Boom or bust: The challenges of launching a fashion label today

A handful of respected and previously successful brands, including Mara Hoffman, Dion Lee, and The Vampire’s Wife, have recently ceased operations. Their struggles underscore the formidable challenges faced by independent fashion designers in today’s market. Competing against well-oiled conglomerates, the market is saturated with brands and products that often mirror what smaller designers offer. Without the backing of larger retailers—many of whom, like Matches and Farfetch, are struggling themselves—the outlook appears bleak, with little chance of respite. The pressing question remains: why would anyone in 2024 want to launch a fashion label given the high risk of failure and myriad challenges?

The lack of support, structure, and high financial barriers are significant obstacles for today’s young designers. Fashion schools often fail to teach the essential business fundamentals required for production, marketing, sales, and growth strategy. No brand aspires to tread water for a decade, yet many never progress beyond the sink-or-swim stage to truly reap rewards.

The fashion industry is fiercely competitive, with a high failure rate for new businesses. Many new labels struggle to gain traction and visibility amidst established brands. Starting a fashion label necessitates substantial upfront investment in design, production, marketing, and distribution. Managing cash flow is challenging, especially when navigating production cycles, inventory management, and fluctuating sales. Additionally, establishing and maintaining a reliable supply chain is complex, involving sourcing materials, managing production timelines, and ensuring quality control. Finding a factory willing to produce small quantities of garments at reasonable prices is akin to finding a needle in a haystack. Marketing is another significant cost. Unless a brand is picked up by a celebrity, building brand awareness and a loyal customer base requires consistent and often costly marketing efforts.

Creative expression

Yet, despite these negatives, launching a fashion label allows designers to bring their unique vision and creativity to life, creating products that reflect their personal style and artistic sensibilities. Fashion thrives on innovation, and young talent is needed to introduce fresh perspectives and trends, potentially influencing the broader market. If the industry were led solely by heritage brands, large groups, and fast-fashion behemoths, there would be little innovation and uniqueness.

Market opportunities

Moreover, there is growing demand for niche fashion markets such as sustainable fashion, plus-size clothing, pre-owned luxury and gender-neutral apparel. Despite the high cost of marketing, the rise of e-commerce and social media has lowered the barrier to entry, enabling new brands to reach global audiences without the need for traditional brick-and-mortar stores.

If successful, a fashion label can be highly profitable, otherwise, giants like LVMH and Kering would not exist, nor would a group like Puig be able to raise billions of euros in new capital. These for-profit companies achieve billion-euro revenues for many of their portfolio brands. The global fashion industry remains a vast market with opportunities for significant financial gains.

Starting a fashion label is a venture that combines artistry with entrepreneurship. However, it is undeniably a journey fraught with challenges, including high failure rates, financial risk, and operational complexities. Aspiring fashion entrepreneurs must weigh these factors carefully, ensuring they have a clear vision, a robust business plan, and the readiness to navigate the dynamic landscape of the fashion industry.