Fashion retail faces simultaneous, accelerating disruptions: creative upheavals at major houses, the decline of American department stores, near-complete digitization of marketing, trade tensions, pandemic after-effects, and concentration of tech power. Retailers now allocate far more to IT and digital marketing, with IT rising from about 1.5–2% of sales to 3–5%+, and marketing moving from under 2% to roughly 3–5% of sales. Logistics costs have jumped as retailers try to match Amazon’s shipping and returns. The combined 5–10 percentage-point increase in these cost categories has reduced typical EBITDA margins from around 10–12% to midsingle digits, making legacy models unsustainable and prompting broad strategic reinvention.
"A finger put up to the wind in fashion today will find, not just change blowing through the industry, but a whirlwind threatening to carry away everything not tied down. The headline-grabbing designer debuts this past season - from Matthieu Blazy at Chanel to Demna at Gucci - are just a sign of how powerful a storm is passing through. There's also the continued slide of the American department store, the near-complete digitization of marketing, President Donald Trump's trade war with the world, the after-effects of the pandemic, the tech dominance of a few large players like Meta and Google."
""In retail, IT was somewhere between 1.5 percent and 2 percent of sales," Karabus said. "Now it is anywhere from 3 percent to 5 percent-plus. "Marketing has gone from under 2 percent to somewhere between 3 percent and 5 percent of sales, which is massive," he said. "Today, the cost of digital technology, digital marketing is dominated by Amazon, Facebook, Instagram and Google." Logistics costs have "exploded" from a range of 3 percent to 4 percent of sales to anywhere from 5 percent to 10 percent as the industry seeks to keep up with Amazon's free shipping and returns for Prime members."
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