How Small Fashion Businesses Can Help Themselves Through Economic Hardships
With layoffs, rising grocery prices, and economic downturns, the fears of an upcoming recession continue to be top of mind for many. Where and how you choose to spend your money during this time is important. This is especially important for small business owners as they may face additional challenges navigating expenses and profit.
A recent survey conducted by Nationwide Insurance shows data on small businesses impacted by previous economic crises, like a recession:
6 in 10 small business owners said inflation and rising costs have negatively impacted them.
35% said they have been negatively impacted by interest rate hikes.
Almost 4 in 10 (39%) said their business revenue has decreased over the past six months, with most declines being as high as 30%.
While there is a worry, there are a few things small fashion businesses can do to help ease the struggle.
Focus on Cost management & Cash Flow
This may involve cutting the cost of products and supplies, and making a deal with manufacturers. It would be best to cut the production in half for brands that handle all these things independently. So, instead of getting an entire supply batch, a brand can focus on products and supplies with higher sales performance.
Focus on Building & Maintaining Relationships with Customers
Luxury brands tend to focus more on customer relations and build on VIP clientele books and often times, VIP clients continue shopping with a brand despite economic uncertainty. For example, during the 1982 recession, journalist John Duka wrote an article about the habits of spending in fashion during the rescission.
Duka said, “customers who can afford such expensive merchandise, although they too have become more selective, are still little affected by the vicissitudes of the economy,” Duka also provided insight from Calvin Klein and Perry Ellis, explaining that due to their devoted fan base, they continued producing the best products despite the recession. By providing excellent customer service and building a loyal customer base, customers can look to spend money with small fashion brands to show support, as this is what luxury brands follow.
Offering Discounts
Small fashion companies may also consider offering promotions or discounts to attract new customers and retain existing ones during a recession. Research shows a study from RetailMeNot found that “80% of shoppers said they feel encouraged to make a first-time purchase with a new brand if they found an offer or discount. In the absence of a special deal, customers would otherwise abandon their carts.”
Some shoppers feel a first-time buyer discount is a prerequisite for brands looking to acquire new customers. That’s because 62% of consumers invest two or more hours each week scouring the web for promotions. Fortunately, retailers can rest assured that any coupons issued may still attract loyal, lifelong customers. In fact, 91% of buyers who redeem coupons say they’d visit the same retailers again.”
One considerable risk small fashion brands can make is taking out a loan. A loan can help keep a brand afloat in tough times; recessions are deemed only to last a couple of months, the longest being 16 months. So, it would be best to focus on the market and consider how much small fashion brands can afford and for how long.
In summary, small fashion companies can increase their chances of survival during a recession by focusing on cost management and cash flow, expanding customer relationships, and seeking additional resources. While navigating a recession can be difficult, with careful planning and a focus on long-term sustainability, small fashion companies can weather the storm.