After Brexit, the road ahead looks more difficult for independent luxury brands in the UK. One solution may be for small businesses to make more of local supply chains and market close-to-home authenticity, responding to a change of mood among younger consumers, many of whom are becoming appreciative of brands that chime with their values.
“Being forced to spend time closer to home has caused people to want to support the local labels and designers they feel represent them,” says Katie Baron, director of brand engagement at trends intelligence agency Stylus. “That creates an appreciation of brands — both big and small — that are capable of communicating on a much more micro level.”
The UK’s split from Europe represents a huge challenge for UK-based SMEs. Close to three-quarters of UK fashion and textile exports go to the EU, representing about £9.6 billion worth of trade, according to the UK Fashion and Textile Association. As of 2018, a resounding 99.7 per cent of fashion and textile businesses identified as SMEs, employing less than 250 people, according to the Office for National Statistics. Brexit is compounding the challenges of the ongoing pandemic. Though the trade deal between the UK and the EU may have dealt a softer blow to trade than a so-called hard Brexit, additional red tape is now a fact of life.
Promoting sustainability, close-to-home production
The hope is that the flexibility of smaller businesses can work to small fashion brands’ advantage if they re-adapt fast. Small can still be beautiful, particularly as the consumer mindset changes. Responding to eco-anxiety and more at-home working, consumers may be more inclined to connect with local brands and the authentic narratives of compelling founders, according to McKinsey.
As sustainability becomes more important to consumers, smaller brands are well positioned to highlight on-shore production as an attractive value proposition. “Customers want to know where their clothes have been made, and I have found them interested in behind-the-scenes content,” says Hope Macaulay, founder of her namesake fashion brand based in Northern Ireland. Hope Macaulay manufactures all of its products in Northern Ireland with 15 local seamstresses. “More and more, customers are realising the importance of buying sustainably,” the designer says.
Hope Macaulay manufactures all of its products in Northern Ireland.
© Hope Macaulay
In December, the brand highlighted its local engagement with an Instagram post titled “Meet the Knitters” that received five to six times the usual engagement, says Macaulay. And customers have shown a willingness to wait longer for delivery, she adds.
SMEs also tend to be closer to their customers and are positioned to respond quickly to their needs. “Radical customer centricity” is a key factor for independent luxury brands’ success, says Daniel Langer, CEO of luxury and lifestyle brand strategy firm Équité and professor of luxury strategy at Pepperdine University in California. This includes building loyalty based on values and experience, rather than on promotions. “Customer centricity requires accompanying customers long-term, understanding their needs and providing them with superior experiences,” he says.
“Especially in times of change and uncertainty, consumers look for brands that inspire them,” Langer explains. “The brands that performed best throughout the last months were those that were able to create desire. Importantly, this does not stop at the product level, but requires a focus on creating an experience of extreme value for customers.”
Post-Brexit, consumers are looking to brands that produce locally.
© Arabella London
That focus on the customer is reflected in the approach of London-based brand Boujo Hake, which sells fully sustainable no-waste underwear and luxury basics through its website. The company maintains close connections with its core customer base and even offers personal fittings for local customers. “Being a small business, we’re able to truly engage on a one-to-one level with our customers, which is a privilege and gives us precious insights,” insists co-founder Kathrin Hake.
Clear information is critical. “Customers wanting more transparency is nothing very new,” says Hake. “But we feel there’s now an increased wish to understand what it truly means to produce, from start to finish, and the genuine costs associated with production.”
Empathy with the customer
Close connection with customers will remain a key strategy for successful brands both during the pandemic and in the post-Brexit period, says Dr. Fabio Duma, president of luxury association Orbis Excellentiae and a luxury researcher, consultant and lecturer at the Zurich University of Applied Sciences. “Those brands that have switched focus to support the community, target local customers and empathise with their audience have seen the greatest gains,” he says.
Tove Studio co-founders Camille Perry and Holly Wright.
© Tove Studio
Brand executives agree. “During the pandemic our priority was remaining connected with our community,” says Camille Perry, co-founder of contemporary womenswear brand Tove Studio. During the first lockdown, the brand sought to deprioritise sales and work on helping the community, including holding an archive sale with profits donated to the charity Women’s Aid — an initiative that also generated plenty of positive feedback for the brand.
The lessons for SMEs are all about dexterity and empathy. Independent luxury brands that pivot in response to their customers and adapt rapidly to changing times can look to the future with more confidence. “Our size and dexterity have been a key advantage during the pandemic,” says Perry. “It has allowed us to remain nimble, act organically and be in direct communication with our audience. We are able to become closer to our customer — and to our community.”