Has the post-fast fashion era already begun? Five models that are redefining textile profitability

The wave of bankruptcies in the French textile retail sector spells the end of a business model. This development is characterized by massive store closures; in the mid-price segment there were almost 3,000 in five years. In addition, there is a cumulative increase in raw material costs of an estimated 70 percent. The previous model was based primarily on volume, customer activation through high and constantly increasing discounts and a large physical presence. This model has led to excess inventory, which continues to weigh on the industry’s profitability.

But this crisis is not a dead end. Rather, it acts like a catalyst. Behind the collapse of the fast fashion paradigm, new models of value creation are emerging. These are more capital-friendly, more precise in their offerings and better tailored to today’s consumer habits. This is the assessment made by the consulting firm Eight Advisory. It identifies five growth levers that can simultaneously restore financial viability and brand desirability.

To decipher the implications, Luc de Saint Sauveur, partner at Eight Advisory, and Élise Rohart, head of the strategy team, provide a strategic and operational assessment. They analyze successful paths forward for an industry at a crossroads.

Overstock: structural pathology of the fast fashion model

While public debates focus on inflation or dwindling purchasing power, the cause of the weakening of the fast fashion model lies elsewhere, namely in a key operational metric: inventory.

“What we are specifically observing is that overstocking has become a chronic disease of retail and fast fashion,” explains de Saint Sauveur, a business restructuring specialist. “It triggers a vicious circle that affects the entire value chain.”

This cycle is well known: producing too much and too early leads to a structural dependence on discount campaigns. Sales become a “drug”: they are necessary to sell volume, but destroy the margin and the reference price. In the end, brands even sell too much and thus damage their own desirability.

However, the challenge is not to give up affordable fashion. “A value-based strategy is not incompatible with novelty,” emphasizes de Saint Sauveur. “You can offer quick renewal without running into overstock.” Players like Zara have shown that a very short time-to-market combined with strict volume discipline can combine speed and control.

Contrary to popular belief, the industry’s crisis is not primarily a liquidity crisis. “For many established brands, it is not initially a problem of liquidity management,” explains de Saint Sauveur. “It will be fatal to miss one or two seasons. The saved inventory is tied up capital and sooner or later that will take its revenge. In addition, there are new, more agile competitors who are redefining the rules of the game. They take the established stationary retailers by surprise in their day-to-day business.”

Five levers to restore margins: The return of vertical integration

The realignment of the industry requires more integrated models. These must be able to simultaneously manage rapid product range renewal, a controlled gross margin, operational risk and customer relationships.

DNVB: Reclaiming the gross margin

Digital Native Vertical Brands (DNVB) achieve gross margins of up to 70 percent or more. This achievement is based on two factors: eliminating middlemen and introducing direct-to-consumer models. Wholesale traditionally takes 30 to 50 percent of the final price and pre-ordering is the most developed form of the direct-to-consumer model.

Although these brands internalize significant costs — customer acquisition and logistics costs account for 15 to 25 percent of sales — the margin gained through disintermediation far offsets these expenses. In contrast, established actors are disadvantaged by “legacies such as outdated information systems, real estate and a certain organizational inertia”.

Time-to-market: crucial lever for established players

For the traditional mass market, the transformation does not mean a radical break, but rather a gradual adjustment. “The absolute priority is time-to-market,” explains de Saint Sauveur. “The time between product design and delivery to the store needs to be shortened.”

This agility makes it possible to limit seasonality risk. In addition, volumes can be adjusted quickly and capital can be reallocated into successful products.

Drop model and co-creation: Restoring desirability

While operational discipline protects margins, growth is achieved through desirability. The drop model and collaborative co-creation meet this requirement.

“Consumers today expect a story, an event, an experience,” observes Rohart. “They want to feel unique and have access to something limited and ephemeral.”

Co-creation goes beyond pure marketing engagement. She involves customers in the design processes and even in the introduction of collections. This is how brands approach a joint design of the lifestyle. This reduces commercial uncertainty and at the same time strengthens customer loyalty.

Branch network: from cost factor to asset

For established brands, the branch network is not doomed, it needs to be realigned. The point of sale becomes a marketing investment and an omnichannel hub rather than just a profit center.

The first decision is often painful: close more, but better. “Closing also means gaining the means to open in the right place,” reminds de Saint Sauveur. That means smaller spaces, more visible locations and a business model that focuses on actual traffic.

In this logic, the store functions as a medium. Pop-up stores, which are temporary but highly visible, illustrate this shift. “They generate a lot of traffic, a lot of attention and strengthen the experience dimension,” notes Rohart. The central challenge remains investing in a seamless customer journey without breaks between website, app and store.

Can pre-ordering be industrialized?

Pre-ordering directly impacts net profitability. It eliminates the risk of slow sales and automatically reduces the need for price discounts. It also optimizes logistics: “We have observed return rates halved for pre-order models. They can be eight percent, compared to a market standard of up to 30 percent for online sales from stationary retailers,” emphasizes Rohart.

A key question remains unanswered for the future of the industry, which has to do with the industrializability of this new paradigm. Can pre-ordering, which is effective when volumes are limited, be expanded to the mass market?

For de Saint Sauveur, the potential is real: “Very significant volumes can be achieved for essential products, high-quality basics and recurring items.” In an environment with limited purchasing power, industrialized pre-ordering could even compete with some secondhand platforms. “In the long term, it could become a credible alternative to Vinted.”

The end of a model, not that of affordable fashion

The current crisis is not about affordable fashion, but about a business model based on the illusion of infinite volumes. Overstocking, shrinking margins and the trivialization of supply have shown its limits.

Tomorrow’s winners will be neither the fastest nor the cheapest. It will be those who know how to orchestrate scarcity and exclusivity, precisely control their flow of goods and use digitalization and the community as a lever for value creation. In this post-fast fashion era, profitability is no longer determined by volume size, but by strategic precision.