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The wholesale model — in which department and specialty stores buy product from fashion brands at a wholesale price and then mark it up and sell it at retail price to the end consumer — was already broken, and now may disappear altogether. It’s challenging for both sides to make money this way because of over-distribution, markdowns, and returns. Some bigger luxury companies have taken back control of their brands by instead leasing space within the department stores and staffing their own “shop in shops” as they would their own stand-alone retail stores. Louis Vuitton, Dior, Prada and others have been doing this for many years. In this scenario, the companies own their product, employees, visuals, and they also capture the loyal department store customer — be it Saks, Bloomingdale’s, or Neiman Marcus. I see this trend continuing as Nordstrom’s new NYC store opened with numerous brand partnerships or “pop ups” including Christian Louboutin, Burberry, and Everlane. Fashion companies will continue to build relationships with other brands, stores, and partners. We see designers collaborating with (sometimes) the most unlikely of brands (like Dries Van Noten x Christian Lacroix, Fila x Chupa Chups, Museum of Ice Cream x Sephora, Ikea x Off White) and I don’t see this trend disappearing. However, more of them will do it online, and many of the players will not survive this.
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