Executives at big name, mid-market fashion retailers should be doing one of two things right now: either they should be differentiating the brand and redesigning the supply chain, or looking for a new job.

That’s because unless a fashion retailer has something unique to offer customers and low operating costs, it simply isn’t going to survive.

Be honest, could you put your finger on what made Ted Baker any different from Karen Millen and Jaeger? Was the difference in USP at Oasis, Topshop, and Warehouse big enough? Did any of those trading in 2020 and beyond adapt to the post-pandemic trends in casualwear, stay-at-home shopping, and digital influencing?

The remaining big retailers are now trying to serve the whole spectrum of needs for low and mid-market shoppers. This is true for both bricks-and-mortar and online (Next, M&S, John Lewis) and online only (ASOS and BooHoo) businesses. Shoppers can get a special outfit for a wedding, a grey hoodie, and a child’s birthday gift all in one place. By diversifying stock and sales, these retailers should always have enough cashflow to cover their outgoings.

And like in any business, cashflow is king.

For smaller and newer apparel businesses like those we work with at Risecap, entrepreneurs are keeping their cashflow moving by avoiding the constraints of traditional operating models, like those used at Ted Baker.

For example, they don’t look to sell as many units as possible. They are looking to sell out of what they order. And when something sells out, that’s it.

This difference means they can create a supply that is lower than the demand, creating hype and exclusivity.

They also don’t look to sell a wide range of products. Instead, they offer a narrow selection that are tangibly different from the competition in terms of design, quality, or both.

These tactics allow them to tap into a new consumer trend of pre-ordering, where customers are happy to wait a week or even a month or two for an exclusive product. This further manages cash flow for the retailer because they can see in advance how popular a product will be and order accordingly.

For businesses with this operating model, funding can be used to support growth, for example stock finance or a fixed-term loan.

With no clearly differentiated, in-demand style nor  low-cost operating model, it’s actually a surprise that Ted Baker lasted so long after the pandemic to fold.