1) Fashion Nova relies on factories with underpaid workers, the only way it can produce more products faster and outspend competitors on Instagram advertising.

WHAT HAPPENED: The federal Labor Department found that Fashion Nova’s clothing is made in Los Angeles by workers who are paid illegally low wages. The brand uses dozens of factories that owe $3.8 million in back wages to hundreds of workers. Fashion Nova responded to the Labor Department’s allegations saying it is not responsible for how its vendors handle their payrolls.

WHY IT MATTERS

  • Fashion Nova’s rapid success proves that Instagram is the ultimate advertising space to reach GenZ consumers. Starting as a mall store in Los Angeles, Fashion Nova took-off once it directed most of its advertising attention to Instagram. Only after the brand partnered with celebrities and influencers did it grow to become one of the most searched brands on Google in 2018, more so than Gucci. Based on limited options in stores and GenZ’s daily use of Instagram, Fashion Nova’s fast-fashion business model can be seen as a foil to Forever 21’s demise. Proving that the hunger for fast-fashion still exists, but its audience prefers to buy via Instagram instead of the mall.
  • Fashion Nova’s audience is more concerned with novelty and fast shipping than worker’s wages and environmental sustainability. For GenZ consumers who spend much of their time on social media, they are more interested in curated versions of their lives than sustainable and responsible brands, according to teenagers who spoke to The New York Times. This means novelty, price and timing are what contribute to their purchase decisions and factory conditions and worker’s wages are less relevant, which will not help the apparel industry move to a more sustainable model.

2) Cities across the U.S. want dollar stores to sell fresh food in impoverished areas—an opportunity for big-box retailers to refine their fresh-food delivery programs and serve those in need.

WHAT HAPPENED: The Oklahoma City Council is trying to pass legislation requiring new retailers to designate at least 500 square feet of space for fresh food since grocery stores continue to close in impoverished areas of the city. The move is one among many from local governments around the country that are working to force dollar stores to sell fresh fruit, vegetables and meat.

WHY IT MATTERS

  • Dollar stores might be the only retailers still standing in some areas, but they are ill-equipped to solve the shortage of fresh food. Dollar stores have persevered in low-income areas because they are much less expensive to operate than grocery stores. A business model that is centered around getting the cheapest products on and off the shelves will not directly translate to selling fresh food. Walmart owns over 4,700 stores across the U.S. (800 are local market stores) while Dollar General has over 11,000, which is only possible because of the cheaper cost of opening and maintaining the latter. Forcing retailers to carry fresh food is one approach, but it would be better for city legislatures to offer incentives to actual grocery stores or big-box retailers that have built their business on this very model.
  • The lack of operating grocery stores in impoverished areas should prompt big-box retailers to refine their fresh food delivery strategy. While this issue is not unique to impoverished areas—Walmart-owned Jet.com recently stopped its fresh-food delivery service in New York City because of high food costs and a lack of demand—lower-income areas need these services even more. In areas with lower rents and operating costs, retailers such as Walmart could recruit people in these areas as both buyers and employees, two constituencies it needs to make the service viable. Time will tell if the offering can work on a lower cost structure, given the already minimal margins for the grocery industry, but between in-store pickup and delivery there is a business to be built servicing those outside of major cities.

3) As other media companies struggle, Hypebeast reported rapid growth this year—proof that the global streetwear craze shows no signs of slowing.

WHAT HAPPENED: Hypebeast, the sneaker-blog-turned-streetwear-media-and-ecommerce platform, saw a 75% increase in revenue and a 37% increase in profit for the year ending in March 2019. The company attributed its growth to strength in Asia and further revenue diversification.

WHY IT MATTERS

  • While many media companies report losses, Hypebeast’s focus on the intersection of streetwear editorial and commerce continues to drive growth. Startup media companies like Vice, TheSkimm or Buzzfeed attracted large, loyal followings due to their unique, demographic-specific content offering. But Hypebeast’s transition from being sneaker-centric to A to Zstreetwear enabled the brand to evolve as a niche industry transitioned into the mainstream. Venturing into ecommerce through private labels, brand collaborations or selling third-party brands on its platform was a natural choice for both media outlets.
  • Hypebeast’s creative agency enabled the brand to diversify beyond advertising. The 2017 launch of its creative agency Hypemaker allows the media company to set streetwear trends itself by creating limited-edition products and unique multimedia content. In 2018, Hypemaker worked with Nigo, the founder of Japanese label Bape, to create a streetwear line collaborating with fast-food chain KFC. These collaborations both grow Hypebeast’s following and impact the industry as a whole. Hypebeast can also can use its vast knowledge and command of streetwear media to advise streetwear brands and forecast what products and designs will be most important for the industry going forward.

4) Clothing sizes are unreliable in the U.S. and technology companies are trying to fix it, which should benefit both brands and consumers.

WHAT HAPPENED: Given the lack of universal sizing in the apparel industry, technology startups are using body-scanning technology to solve the problem. Similarly, clothing companies are having trouble finding fit models for product design because the size chart measurements are so out of date.

WHY IT MATTERS

  • Poor sizing and fit are major culprits for costly online returns, which is why brands and retailers need to invest in advanced sizing technology. With many brands offering free shipping both ways, returns can take a financial toll—anywhere from single digits to close to 50% of orders are returned depending on the brand—unless the company can solve for the root cause of the problem. German online retailer Zalando reported a third quarter loss because of problems processing returns. Calculating consumer sizes more accurately and ensuring the sizes are reflective of realistic body types would help retailers to improve customer satisfaction, cut back on costs and would ultimately help to lessen its carbon footprint too.
  • Advanced sizing technology is a marketable asset for clothing companies—a response to consumer’s desire for transparency. Overall, clothing companies in the U.S. have directed very little attention to the lack of uniformity around sizing and fit. The founder of the first body-scanner, Alvanon, said that brands use different sizing on purpose, which they think is reflective of their customer demographic. As Americans have grown larger, brands have shifted their metrics to make shoppers feel thinner—with a women’s size 12 in 1958 equivalent to a size 6 today. Brands are not only misleading women but fail to offer the appropriate sizes since 67% of American women wear a size 14 or above, and most clothing brands don’t carry those sizes. While some shoppers might not be pleased to know their actual sizing, once they learn the truth and are able to purchase items from various brands online and offline.