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The Fatal Flaw: 5 Common Missteps that Lead to Fashion Brands Shutting Down

Updated: Mar 11, 2023

"It's important for entrepreneurs to understand why fashion brands fail to avoid making similar mistakes and ensure their businesses succeed. This knowledge can inform strategy, decision-making, and risk management." Says Professor Gaurav Mandal .

There can be several reasons why a fashion brand shuts down. Here are some common reasons along with examples of brands that have shut down:

  1. Poor financial management: Fashion brands that fail to manage their finances effectively can face serious consequences. For example, American Apparel filed for bankruptcy in 2016 due to its high debt and declining sales.Brands like Toys R Us, Charlotte Russe, Payless ShoeSource, RadioShack are examples of poor financial management.

  2. Failure to adapt to changing consumer preferences: Fashion trends and consumer preferences are constantly evolving, and brands that fail to keep up can quickly lose relevance. For instance, Wet Seal went out of business in 2017 due to its inability to adapt to fast fashion trends and declining foot traffic in malls.Similarly Liz Claiborne & Esprit shutdown for the same reason

  1. Production and supply chain issues: Brands that struggle with production or supply chain issues can face delays, quality control problems, and other challenges that can harm their reputation and bottom line. For example, Forever 21 faced several lawsuits and criticisms for its labor practices and supply chain management, which ultimately contributed to its bankruptcy in 2019.Brands like Laura Ashley,Nasty Gal& Lululemon has faced such issues.

  2. Strong competition: The fashion industry is highly competitive, and brands that fail to differentiate themselves or keep up with their competitors can struggle to survive. For instance, Nasty Gal, a popular online retailer, filed for bankruptcy in 2016 due to increasing competition and declining sales.Brands like PacSun ,Borders,Rue21

  3. Misaligned brand image or marketing: Brands that fail to effectively communicate their brand image or marketing message to their target audience can struggle to connect with customers and generate sales. For example, Juicy Couture, known for its velour tracksuits, lost its popularity due to its inability to adapt to changing consumer preferences and misaligned brand image.Brands like Abercrombie & Fitch,Sears,Go International,J. Crew & GAP has faced similar adversities.

These are just a few examples of why fashion brands may shut down. It's worth noting that each brand's situation is unique, and other factors may also come into play.

About The author

Gaurav Mandal is a fashion educator and leader, dedicated to inspiring the next generation of design professionals. He is recipient of two national awards from the Indian Government for his contributions to the fashion industry. A NIFT Delhi Gold Medalist fashion designer , he completed his Fashion Marketing master’s degree from Nottingham Trent University, UK. He teaches millions of students through his YouTube Channel and works with several NGO’s for imparting creative education.

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