Online competition is growing Fashion retail in upheaval

Status: 16.06.2021 7:16 p.m.

The sale of fashion on the Internet is booming: The Otto subsidiary About You, which launched successfully on the stock exchange today, is growing rapidly. Stationary fashion retailers, on the other hand, are increasingly disappearing. Do you still have a future? The former glamor of the fashion industry has long since vanished in German city centers. There is bare existential fear. Many fashion retailers feel they have been stripped down to the last shirt. In the corona pandemic, textile retailers and manufacturers had to give up in a row. Well-known names such as Escada, Hallhuber, Bonita, Appelrath Cüpper and Adler-Modemärkte filed for bankruptcy. More fashion retailers will soon follow, predict the credit insurer Euler Hermes and the textile trade association (BTE). Euler Hermes does not expect a return to pre-crisis levels until 2023.

“Home office and suit don’t go together”

During the lockdown, new clothes were hardly in demand. Who needs an expensive new outfit for work at home? “Home office and suit don’t go together,” says Gerd Oliver Seidensticker, President of German Fashion.

The turnover in the fashion industry shrank in the Corona year by more than 20 percent to around twelve billion euros. “The pandemic has plunged the fashion industry into a deep crisis,” complains German fashion boss Seidensticker. “Many of our companies are dependent on help from the state.”

Structural crisis even before Corona

But even before the pandemic, the stationary fashion houses were under pressure. Corona has accelerated the structural crisis in the industry. Sales in stationary retail have been declining for years. The death of fashion retailers began a long time ago. Between 2010 and 2019, the number of companies in the clothing industry fell by 31 percent, according to a study by the management consultancy PwC. Retail expert Gerrit Heinemann, retail expert at the Niederrhein University of Applied Sciences, speaks up tagesschau.de of a “collective restructuring case”.

The increasing low-cost competition from textile discounters such as Primark and the triumphant advance of online retail have long been troubling the classic fashion industry. Online retailers such as Zalando and About You are flourishing. Only H&M and Zara have successfully resisted the online competition and also held their own in the Corona crisis.

More and more mono labels

There is also a trend towards mono labels. More and more fashion manufacturers such as Hugo Boss or the sporting goods supplier Adidas are setting up their own flagship stores and selling their products there – to the chagrin of classic fashion retailers who traditionally follow the multi-label approach.

The end of the multi-month lockdown and the return of walk-in customers in the cities should give the stationary fashion retail some breathing space again in the short term. In the long run, however, the industry has to reinvent itself, demand experts. Only those who meet the needs of customers with innovative concepts will survive, says PwC retail expert Stefan Schwertel.

Regional or sustainable concepts as a way out?

Heinemann sees the Mannheim fashion retailer Engelhorn as a positive example. The company has focused on a regional market and now sells a good half of its clothing over the Internet.

Other fashion retailers focus on niches such as sustainability. Some also flee into the arms of their biggest competitor, Zalando. A good 2,400 stationary fashion retailers now also sell their clothing via the Zalando “Connected Retail” platform.

Model H&M and Zara

Above all, however, Zalando is using that and is not enough to save the stationary business permanently, complain experts like Gerrit Heinemann from the Niederrhein University of Applied Sciences. “This is a one-way street.” In his opinion, stationary fashion retailers should primarily operate on demand in the future – following the example of H&M and Zara. In fact, C&A is currently starting to produce jeans “on demand” at the Mönchengladbach location in Germany.

The traditional fashion house Köhler from Hessen is breaking new ground. It offers fashion advice and sales via video. The customer fills out a questionnaire on the Internet before receiving a video consultation. During the video call, the customer then decides what he wants to have delivered to his home. The concept is particularly worthwhile with regular customers, says Paula Vordemfelde, managing director of Köhler. Her motto: “We have to be creative and be able to react quickly.”

This hacker organization has received ransom from many victims. This shows that data ransom attacks have become a lucrative business for cybercriminals. Bitcoin is increasingly preferred by criminal organizations Earlier this month, Colonial Pipeline suffered a severe attack that forced the company to shut down nearly all of its fuel system supplying the southeastern states of the United States. The FBI confirmed the crime was DarkSide, a cybercrime organization believed to be located in Eastern Europe. Last week, it was reported that Colonial had agreed to pay $ 5 million to DarkSide (in bitcoin) for the data recovery password. Recently, the CEO of the company confirmed this information. DarkSide operates like a business. This group develops malicious code to crack and steal the target’s data, then trains partners, the partners continue to train the hackers. When hackers use this malicious code to carry out successful missions, DarkSide will receive a percentage of those successful attacks. In March 2021, when it announced a new software that can crack data faster than before, DarkSide even released a press release and invited reporters to interview. Hackers often demand ransom in virtual currency. London-based blockchain analytics firm Elliptic has identified a bitcoin wallet that DarkSide uses to receive ransoms from victims. On May 14, London-based blockchain analytics firm Elliptic said it had identified a bitcoin wallet used by DarkSide to collect ransoms from victims. That same day, Intel 471 security researchers said DarkSide closed after losing access to its servers and when the organization’s virtual currency wallets were empty. According to Elliptic, DarkSide and other affiliates of this organization have collected at least $90 million in bitcoin ransoms, and they receive funds through 47 different digital wallets. “To our knowledge, this analysis includes all payments to DarkSide,” said Tom Robinson, Elliptic co-founder and chief scientist. However, there may be other undetected transactions, so this $90 million figure should be considered the lowest limit.” Also according to Elliptic’s research, DarkSide’s bitcoin wallet was holding $5.3 million in cryptocurrency before it was all withdrawn last week. There are some rumors that these bitcoins have been seized by the US government. Of the $90 million ransom, $15.5 million went to the developers of DarkSide and $74.7 million to affiliates. Much of that is being sent to cryptocurrency exchanges and thereby converted into fiat. Bitcoin is increasingly preferred by criminal organizations as crypto traders do not reveal their identities. However, because the digital ledger that underpins bitcoin is public, researchers can keep track of where these funds are going.

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