How to scale your modest fashion brand seamlessly into new markets

Many budding modest fashion labels start out as home-based enterprises but in order to achieve economies of scale and to survive competition in their home markets, it often becomes necessary for them to expand overseas.

Although the core market potential universe of global Muslim spend on clothing was estimated at $230 billion in 2014, this is also a scattered market stretching across five continents.

KEY CONSIDERATIONS

E-commerce reduces expansion risk.

Leading e-commerce players are now the ideal partners for expansion and to help reduce risk.

Traditionally, fashion labels enter new markets by working with local distributors and retailers, an approach usually requiring considerable capital investment and commitment from both sides of the table.

More recently, however, several modest fashion labels have had a smooth entrance into new geographic markets by forging partnerships with the dominant e-commerce players in the target areas.

· US-based East Essence partnered with Snapdeal by opening a store at its marketplace to tap into the Indian Muslim market.
·  Emirati designer Rabia Z launched a special hijab collection for Turkish women in collaboration with e-commerce site Modanisa.

This type of partnership is a win-win solution for both parties; the designer or label need not worry about the logistics or complications in the new country, while the e-commerce site gets more visitors and revenue from the label’s existing customer base. This opportunity also allows both sides to leverage on each party’s promotional channels and collaborate on joint promotion initiatives.

MARKET PRIORITIZATION

Understanding the most relevant and attractive markets is a key step when considering market expansion. Turkey, UAE and Indonesia are top Muslim clothing consumption markets but the highest projected growth in fashion spending among Organization of Islamic Cooperation (OIC) countries is Sudan, Iran and Ghana, with each country showing triple digit growth.

Consequently, a Turkey-based hijab producer – or any other modest fashion players who are serious about growing their business, for that matter -- would be well-advised to adjust their strategies to account for multiple geographic markets along their enterprise life cycle in order to attain sustainable growth long into the future.

A good example of a company that has implemented this strategy is Shukr. Shukr has three websites from which customers can place orders: Shukr USA, Shukr UK and Shukr International. This arrangement allows Shukr to handle orders in the most cost-efficient manner based on a customer’s geographic location.

TIMING

Scaling needs to be done carefully, at the right time and in the right way.

According to a 2011 report by the Startup Genome in Canada, premature scaling is the prime reason why 70 percent of the 3,200 startup companies they surveyed went out of business.

Although this survey primarily focused on technology startups, an important lesson to take away from this study is that scaling a business should be planned carefully – more so if crossing borders.

The capital investment and steep learning curve required in regional expansion may deplete a young firm’s cash reserve far too quickly. The best time to invest in expanding your business is:

·       When you are seeing your products gaining traction in a market.

·       You have a pretty good understanding of the market, and

·       You have the resources to carry out the expansion.

Good timing is everything, as evidenced by the case of Harvey Nichol's entry into Indonesia. The high-end department store opened its first Southeast Asian outlet in Jakarta during the height of the global recession in 2008, only to close it two years later.

MARKET ACCEPTANCE

It is also important to adapt your offerings to the characteristics of the new target market.

For example, a UK-based label might want to consider lighter materials and colors for their hijab line when expanding into the tropical Southeast Asian countries.

Adapting the product as such will optimise the probability of the brand getting a warm reception in the new market.

If you are unsure on the right course of action to undertake in adapting your marketing mix, take a cue from fashion labels DKNY and Uniqlo, both of which collaborated with modest fashion bloggers to conceptualise their Ramadhan collections.

Tap into leading local fashion bloggers; they are an important resource as they have their finger on the pulse of local fashion and can therefore provide valuable insight regarding new target customers.

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