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American Eagle, Abercrombie, Aeropostale, PacSun, and similarly situated brands have suffered in recent years due to the decline of the American mall. Teen-clothing chains have been hit especially hard by the drop in foot traffic, as younger shoppers are looking to the web – as opposed to the mall – for fashion inspiration. And while an improving job market and lower gas prices have helped boost U.S. consumer spending, the results are not being seen by such teen retailers, causing brands like dELiA*s, Wet Seal, Aeropostale, and PacSun to file for Chapter 11 bankruptcy.
As indicated by Bloomberg earlier this year, the challenges for apparel sellers have been building for years. E-commerce sites and fast-fashion retailers, such as H&M, Zara, and Nasty Gal, are luring away customers. Households also are spending less on clothing and we have seen a larger shift in spending toward categories such as consumer electronics and more experiential alternatives.
With this in mind, one of the more troubled companies, PacSun, seems to be breathing new life into its brand, and such changes may just enable it to beat the odds, which firmly situates it in the “Brands That Will Disappear in 2016” camp, at least for now.
REMAKING PACSUN
Pacific Sunwear, the California-based brand that filed for bankruptcy in April, is in the middle of a very timely revamp. After tapping Kendall and Kylie Jenner to front their own PacSun collection beginning in 2013, the retailer, which stocks both in-house lines, as well as third party brands, is looking to lure millennials back by way of a widespread overhaul. Its garments are more trend-based than before; its social media presence more modern – think: lifestyle-inspired photos alongside influencers, such as models, DJs, and “it” bloggers, wearing the brand’s gear. Not to mention its models are far more relevant than ever before. The brand has traded little known commercial models for young style figures Luka Sabbat and Kate Moss mini-me Lottie Moss – both 18 years old – who appear in the brand’s new denim campaign.
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The 36-year old brand is looking to in-the-know youth as evidenced by its most recent campaign – with its influential young stars – and its overhauled offerings, which consist of Yeezy collection knockoffs, vintage-inspired band tees (not terribly unlike the ones buzzy streetwear brand, Fear of God, is currently pedaling, and not far from the Hot Topic model of selling licensed band merch), etc. It quite obviously aims to bring internet cool kids into the fold, by offering the young hypebeasts, Grailed devotees, Jenner wannabes and Yeezy cult followers affordable lookalikes of the latest iteration of the cool youth uniform of the moment.
Speaking to Complex, Greg Crawford, PacSun creative director, said: "I think Luka is obviously the 'It' kid out there for guys who look up for fashion sense. Those are far and few between, so his personal sense of style 100% played into the decision. He's representative of what anyone in our demographic as a guy would look and aspire to look like." He continued on to say: “We paired with Kendall and Kylie at a very young age. We saw their potential and were able to grow with them. And we were looking for the next wave of who the next 'It' kids are and we felt like both Luka and Lottie are going to be the next big thing. We want the coolest of the coolest who can represent PacSun.”
Judging by the “cool teen” reputation of Sabbat and the barrage of Jenners, Hadids, Kanye West, and Justin Beiber – at least some of which are seemingly unrelated to the brand, such as the Kanye West birthday and Father’s Day shout outs – this revamp is at least partially dependent on the banking on the cool factor of the aforementioned celebs, all of whom have massive selling power. This is not a sustainable model, as trends change and putting all of your eggs in a Yeezy basket will prove passé at some point, but it will likely help the retailer get more clicks and more shoppers into its stores.
In addition to catering to the hunger of the youth to be up on the “now,” PacSun is putting the footwork in place. Under the bankruptcy restructuring plan, PacSun will solicit bids to be acquired or will be taken private by San Francisco private equity firm Golden Gate Capital, converting much of its debt into equity. Meanwhile, Wells Fargo has agreed to lend Pacific Sunwear as much as $100 million to use as it restructures. Golden Gate hopes the retailer has put its beach bum past behind it. "PacSun has successfully transitioned beyond its historical base of action sports brands to what we believe is the most relevant and coveted mix of brands celebrating the California lifestyle," Josh Olshansky, managing director at Golden Gate Capital, said in a statement.
Yes, instead of focusing primarily on sports, PacSun appears to be transforming itself to become a Southern California cool-kid destination, pushing its own private-label clothes, such as the denim collection in the Moss/Sabbat campaign, alongside the wares of third party brands, such as adidas, Brandy Melville, Been Trill, New Balance, and Levi’s, as well as traditional surf brands as Billabong, Hurley, and Volcom.
The web is also slated to play a huge role, as well. In 2015, for instance, the retailer began shifting spending from print publications to the digital world, for instance. The campaign starring Moss and Sabbat, paired with first-person point-of-view videos from them, will be dispersed on YouTube, Snapchat and Instagram. And learning from its past mistakes, such as supporting too many underperforming stores and selling too many unfamiliar brands, a reorganized PacSun will also likely continue to slim down its retail fleet to shift more to e-commerce and rebuild around its most successful merchandise.
While PacSun seemingly has downsides in its plan, such as how it will sustain such momentum when the Yeezy-inspired wardrobe is so last season, teens appear to be responding to the new revamp. Now PacSun has to translate Instagram “likes” into foot traffic and e-commerce buys and keep those consumers coming back.
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