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The fast fashion industry is facing a triple threat from tariffs, the end of the de minimis loophole, and an ongoing shift by consumers to secondhand markets, according to LVK Logistics CEO Maggie Barnett.
In a LinkedIn post, Barnett wrote that “leveraging the de minimis for the 20%–35% cost savings that fast fashion relied on has evaporated, making ultra-cheap, high-volume fashion financially unsustainable.”
The way forward, she argued, is for brands to diversify their supply chain outside China and Vietnam, shift their assortment to more “timeless basics” as opposed to trend-driven “fast elements,” and implement “pre-sale models” that “validate demand before production.”
“The brands that will thrive in this new era will be those rethinking their entire approach to inventory,” she wrote. “When 76% of Americans anticipate making changes to their shopping habits in response to tariffs, the old model of overproduction and discounting is financially unsustainable.”
Barnett elaborated on her thinking in an interview with Retail Brew.
This interview has been lightly edited for length and clarity.
How will the de minimis exemption ending impact fast fashion?
There are going to be a lot of brands that just go out of business, or they’re going to get rolled up into a larger conglomerate, because an assortment of brands that were leveraging the de minimis might not have anything special about them. It’s not like they have a cult following or a community that surrounds them, or an amazing, differentiating product…So if that low price goes away, we think consumers will go more towards long-lasting items that are at the same price.
What are some changes brands can make to adapt?
The first item is being able to build a brand and a community where people really love your product and what your product stands for, because that’s what’s going to keep them around when prices go up.
The second thing for some of these smaller brands—if they have only been direct-to-consumer—is trying to get into a very good retail position. Can you get into a Nordstrom?...Can you enter into some sort of partnership with those retailers to go wholesale in their store?
In your LinkedIn post, you talk about this idea of pulling back on bulk buying and becoming more lean. Can you talk more about that approach?
So this [is] the idea of hybrid fashion. If you can do pre-sale orders, if you can do small batches that you know will sell…you can get smarter about the ordering ahead of time, right?
Then with their tried-and-true items…those are the things that you put on the ocean so you can save some money. You’re not having to air it in…You don’t have to feel rushed about getting them in.