The Dutch fashion industry is facing a serious decline in turnover , but this is not caused only by an overall decline in consumer spending. It is also facing very rapid structural changes, especially in the European retail structure. As an economically liberal, open economy, with an accent on flexibility, changes to the industry often happen early in the Netherlands. It is therefore interesting to see how the Dutch Fashion industry and its Association MODINT, are reacting to the double impact of recession and structural changes.
The Dutch market for clothing shrank with 3.7% in value over 2013. Consumer confidence is slowly rising though, and the expectations for 2014 are better. Overall, the turnover in Dutch non food retail shrank at least 3% in the last quarter of 2013 (as compared to the same quarter in 2012). This was an improvement on the turnover development in the third quarter though. Volume decreased almost 3% in the fourth quarter so that prices in the non food retail also decreased slightly. Although for the total non food retail also 2014 is projected to show a better performance that 2013, still a decline of turnover is expected.
The biggest factor impacting on Dutch fashion brands’ markets is the ultra quick rise of the online retail channel. At this moment the share of clothing sold online i10 % and it is set to grow to 30% in 2020, as predicted by ING, the largest Dutch bank. For local fashion brands, this partially means a loss of market as often very big international players such as Zalando and Amazon account for a major part of the increase of the internet sales channel. These grow at the expense of independent multibrand offline retailers, who happen to be Dutch fashion brands’ major clients.
Secondly, in dealing with social compliance and sustainability, the mid segment, mid sized brands are squeezed between large brands and retailers with funds and knowledge and very small operators, who start as a ‘sustainable brand’.
How is the industry association MODINT reacting to these structural changes?
First of all, MODINT has always chosen to help create an optimal climate for entrepreneurship and structural change, rather than pressing for protection. It has invested in convincing the Dutch government that the fashion industry, even though it outsources 99% of the production outside of the Netherlands, is a vibrant part of the ‘Creative Industry’, a vital component of the high cost Dutch economy. Bundling of size vis a vis the government has secured access to (limited) funds for the support of innovation in the fashion industry. MODINT is now focusing on involving its members in R&D projects on sustainability, 3D digital design, new business models and wearable technology. . In practice, MODINT is following a ‘routemap’ model, organizing strategic sessions bringing together fashion brands and designers, academics, suppliers to the industry and potential new entrants to the industry, such as electronics giant Philips electronics.
Secondly, MODINT has worked closely with the Dutch online retail association in developing a country and industry wide action program for online retailing of fashion focusing on practical advice to members on how to best combine the online and offline channels
And thirdly, House of Denim, a unique network of jeans brands, suppliers and professionals runs an ambitious program in support of the sizeable concentration of jeans brands in Amsterdam. It has set up the first dedicated jeans school in the world and is now developing a jeans research program with MODINT. House of Denim is also developing a location with a full fledged laboratory, based on the idea that for the development of world class jeans a place of production and finishing of jeans must be available in Amsterdam. House of Denim is not necessarily investing in bringing the production of jeans back to Amsterdam, but it is driving a renewed and necessary investment in product knowledge.