Tragic reason Aussie fashion labels are collapsing

The CEO of a popular luxury brand rental business has revealed why so many designer clothing brands are collapsing in Australia. 

Fashion enthusiasts were left shocked when the Australian franchise of renowned fashion label Dion Lee entered administration this week. 

It’s understood the much-loved brand, worn by mega-stars like Taylor Swift and Dua Lipa, collapsed after a partnership deal with Cue Clothing Co fell through. 

It follows the collapse of other fashion giants J. Crew, Neiman Marcus and Brooks Brothers with Farfetch and Net-a-Porter also facing financial strife. 

Bernadette Olivier, CEO and co-founder of The Volte – a designer fashion rental marketplace – told Daily Mail Australia the industry was ‘teetering on the edge of collapse’.

Ms Olivier said the emergence of Chinese fast fashion powerhouses like Shein and Temu were only adding to the mounting pressure on designer labels. 

‘These new players, with criminally low prices and massive advertising budgets, have left an already fragile industry on the edge of collapse,’ she said. 

The CEO said a new trend of ‘online trying’ – where influencers share their hauls with their followers to decide which items to keep – was creating waste. 

‘The rise of TikTok and the increased popularity of Instagram stories and reels has revealed new consumer habits,’ she explained. 

Click here to resize this module

‘Consumers are turning online shopping into “online trying”, often posting their “hauls” to followers to decide which garments to keep while returning the majority.

‘Retailers have been slow to identify this trend, and report as much as 50 per cent of inventory sold online is returned, with a significant portion ending up in landfill or incinerated due to cost-effectiveness.’

In the United States, the mismatch in supply and demand has resulted in up to 30 per cent of inventory produced never being sold. 

The growing trend is costing the fashion industry up to $US210billion ($AUD318billion), according to the Boston Consulting Group.

‘This overproduction not only poses a financial threat but also a rapidly increasing environmental threat globally,’ Ms Olivier said. 

The CEO said changing customer sentiments, rapid decreases in brand loyalty and increased regulatory costs were also adding to retailer’s challengers. 

She encouraged brands to use data analytics and AI to forecast their customer’s demands which could then be better aligned with production. 

Click here to resize this module

‘Enhanced development of virtual try-ons, accurate sizing, descriptions, and imagery, and using AI to offer personalised recommendations based on previous purchases can reduce returns,’ she said. 

Ms Olivier said it was important for brands to embrace the circular economy – with the resale economy growing 10 times faster than the traditional apparel industry.  

‘Part of the integration must allow brands to earn from these new business models, enabling retailers to generate revenue aside from producing and selling more garments,’ she said. 

Antony Resnick, a liquidator from insolvency firm dVT Group, was appointed as the administrator for the Australian arm of Dion Lee. 

Major clothing label Cue Clothing Co reportedly ended its partnership agreement with Dion Lee and also cancelled its investment in the business. 

Cue Clothing Co first became a partner with Dion Lee more than a decade ago and the company was a shareholder in the business, The Australian reports. 

Only the operations of the Australian stores are understood to have been affected and customers are still able to access the website of the company. 

The company, founded in 2009, has six stores in Australia and 160 outlets worldwide, including a store in the US which opened in December last year.