Fashion Nova by CarolynEnglander

FASHION N OVA AND ITS COMM ITM EN T TO CSR AND SUSTAIN A BILIT Y IN THE FAST FASHION IN DUST RY

• By: Carolyn Englander • Capstone in Fashion Marketing MPSM 609 • LIM College • 6/30/21

COMPANY BACKGROUND • Founded by Richard Saghian in 2006 in Los Angeles, California • Fashion Nova has 5 retail locations all in California • Fashion Nova's ideal customers are Millennial men and women who follow the latest fashion trends and seek affordable prices • Instagram is Fashion Nova's main form of marketing – over 20 million followers • Fashion Nova provides elevated styles at affordable prices along with a dedicated social media following • Mission statement: to “mak[e] affordable fashion accessible to customers around the world.”

Based on this influencer marketing chart (above), Fashion Nova is the number one best performing brand when compared to other fast fashion retailers (Anonymous, 2019). 2

• Fashion Nova operates in a particular segment of the fashion industry known as “fast fashion” • The employees who make Fashion Nova’s merchandise are located in several different factories in Los Angeles, along with some factories in China

INDUSTRY OVERVIEW AND GARMENT WORKERS

• According to Alison Morse (2020), “the majority of workers sewing in L.A. factories are undocumented immigrant women from Latin American and Asia” (para. 13) • Some ways the factory owners and managers avoid paying their workers is by claiming bankruptcy, shutting down their factories, or finding other excuses • Factory workers are abused by their managers and are pressured to sew a garment as fast as they can in order to potentially make more money • These types of behaviors in factories are not uncommon and most of the time are kept secret when fashion brands choose to cut costs overseas or even domestically like Fashion Nova • Close to forced labor as it gets, won’t end until the term fast fashion does 3

C O M P E T I T OR S

FASHION NOVA'S MANAGEMENT TEAM

Richard Saghian Founder and CEO 2006 – Current

Ryan Kaneshiro Chief Financial Officer 2018 – Current Previous: Chief Executive Officer of Kapa Collective

Gary Schoenfeld Chief Operations Officer 2019 – Current Previous: President and Chief Executive Officer of PacSun from 2009-2017

THE IDEA • Fashion Nova’s marketing and quick turnaround times hide a dark truth: Fashion Nova employs highly unethical practices • Fashion Nova’s factory workers are paid well below minimum wage and work in terrible factory conditions (see photo on right) • These practices seem to be largely ignored in light of Fashion Nova’s profitability. 6

• The proposed changes include, labor, environmental, and supplier practices

THE WHY

• In turn, these standards will make Fashion Nova more attractive to Millennial consumers, who care about corporate social responsibility, and make purchasing decisions based on corporate ethics.

THE AUDIENCE • Fashion Nova's PR department: This marketing strategy can help Fashion Nova create good publicity by making changes to its labor practices, which will distract from the backlash to the collaboration. • Implementing new labor, environmental, and supplier practices: Millennials—Fashion Nova’s main audience—care about corporate social responsibility and business ethics • Making changes to these practices—particularly labor—will help Fashion Nova avoid costly and publicly damaging fines from the government or private lawsuits. • By implementing more ethical practices, Fashion Nova can become a more profitable company in the long run

THE IMPORTANCE • Fashion Nova’s supply chain: • must be investigated not only to understand how the company is successful on a global scale, but also to make sure its success is achieved responsibly • It is important to investigate what practices Fashion Nova employs and how such practices can impact Fashion Nova’s customer loyalty and overall brand identity. • Understand how Fashion Nova is operating from an environmental standpoint: • According to Environmental Impact of Fast Fashion (2020), “it takes 2,700 liters of water to make a single cotton t-shirt” (para. 23). This number grows to 200 tons of water taking dying fabric into consideration (para. 25). • Much of this water comes from developing countries with less strict environmental laws, meaning that water may be untreated wastewater from factories is dumped directly into rivers or lakes. • Given all this, Fashion Nova’s environmental practices need to be assessed and altered if they are having a negative impact on the environment, which will in turn have a positive impact on consumers 9

Key issues: • Labor Standards • Employee working conditions: how long are shifts? How much are employees paid hourly? Do employees get bathroom/lunch breaks? • Where does production take place? • How big are the factories? • How many people work in the factors? Are the factories overcrowded or are they safe?

THE HOW

• Environmental Standards • Water consumption: does Fashion Nova use certain technologies that help reduce water use? • How often does Fashion Nova ship out its products? • Does the company have a program in place to cut down on it carbon footprint? • Can the company change its packaging to better suit the environment? • Supplier Standards • Where is the material sourced from for Fashion Nova’s products? 10

• Fashion Nova’s biggest differentiator is their strong social media presence specially on Instagram • The brand’s business model dependency falls under three major tactics:

FASHION NOVA'S BUSINESS MODEL

1. 5 brick-and-mortar stores located in retail malls 2. Continued expansion of brand extensions as well as their global presence 3. Supply chain • The domestic supply chain of Fashion Nova allows for quick merchandise to be made and shipped out promptly and globally, along with having products in its physical stores 11

SWOT ANALYSIS

VRIO ANALYSIS

Resource Internal Environmental of Shops

Value

Rare

Unique Design/Aesthetic

Customer Experience

Ability to Raise Capital

Location of Shops

Imitability Organization

X X X

Reputation of Brand

Corporate Leaders

NEW MARKETING STRATEGY, DEVELOPING AND IMPLEMENTATION • Pay their factory workers at least minimum wage. In addition to, having proper bathroom breaks and food breaks • Develop a CSR program that focuses on donating some of its money to a nonprofit organization that help bring clean and safe drinking water to people in developing countries. One charity that does this is, Charity: Water • Collaborate with Stella McCartney who is a sustainable designer • Introduce eco-friendly packaging (see photo on left) • In addition, to help Fashion Nova create sustainable packaging, Fashion Nova should be a part of the New Plastics Economy—a foundation that ensures that plastic is Global Recycled Standard (GRS) certified— as well as find partners to manage reuse and recycling on industrial and domestic scales.

P ROP O S E D S T R ATE G I C MARKETING/MANAGEMENT MODEL

NEW STRATEGIC MARKETING STRATEGY • Fashion Nova will continue to post every 30 minutes of their Instagram page, but this time to bring awareness around certain topics such as: • Being more transparent with their customers about how their factory workers are treated • Posting on Instagram about their new CSR campaign • Posting on Instagram about a new collaboration with a well-known designer, Stella McCartney to create a sustainable collection

NEW STRATEGIC MARKETING STRATEGY • Year 1: 2021

• Year 2: 2022

• Year 3: 2023

• Year 4: 2024

• Year 5: 2025

• The CSR efforts in 2022 are • Introduce a new • Complying with • Focus on, transparency the United in management, partnership with centralized around Nations on their physical expansion of a well-known sustainability 17 sustainable retail stores in various sustainable • Continue to strengthen the • Update shipping mailers to development cities/having pop-ups, company’s involvement under the designer: Stella recyclable mailers Code of Conduct for external goals to help and developing McCartney manufacturers and suppliers • Focus on the transparency change human responsible products rights conditions and reduce chemicals • Create a CSR campaign around of Fashion Nova and making global issues that impact around the and emissions sure factory workers are consumers choices when world. being treated fairly and choosing to shop at fast fashion getting the pay they retail stores and donating a deserve portion to Charity: Water • Fashion Nova will focus on operating on becoming more environmentally friendly

ASSESSMENT AND SUCCESS • Social media: Instagram will be the most important factor has to how well their customer’s responds to these new strategies/changes • Success through revenue: With every purchase, part of the company’s proceeds will be donated to Charity: Water. In addition, Fashion Nova will also be providing a healthier work environment to their factory workers and increasing their wages • Collaboration: See how much their new collaboration with Stella McCartney helped to increase sales on their sustainable collection 18

CONCLUSION • To maintain its strong positioning in the fast-fashion market, Fashion Nova should develop a CSR campaign like the one addressed in this new strategy • By becoming more transparent, Fashion Nova is able to build trust on a new level that has not be achieved before • In addition to being transparent with their customers, Fashion Nova needs to be transparent with their factory workers and build a bond that has yet to be seen in the fast-fashion industry • Fashion Nova is able to grow by creating a CSR campaign that focuses on donating to developing countries that need clean water • By implementing a strong, transparent CSR campaign, new packaging, and a sustainable collection, Fashion Nova will be able to differentiate themselves from their competitors in the very competitive fast-fashion market. 19

REFERENCES

• Fashion Nova Marketing Strategy. (2021, February 18). Seamless Integrated Mobile. https://seamlessim.com/0x3yb7/fashion-nova-marketing-strategy-d64075 • Hoovers (2021). Fashion Nova. Hoovers Company Profiles. Retrieved from D&B Hoovers database. • PrivCo. (2021). Fashion Nova. PrivCo Private Company Reports. Retrieved May 16, 2021 from PrivCo database. • Momoh, T. A. (2020, November 10). How Fashion Nova CEO Richard Saghian Changed the Fashion Industry. Deythere. https://deythere.com/2020/11/10/how-fashion-nova-ceo-richard-saghian-changed-the-fashion-i ndustry/ • Morse, A. (2020, July 25). The Dirty Truth Behind Los Angeles’ Garment Sector. Remake. https://remake.world/stories/news/the-dirty-truth-behind-los-angeles-garment-sector/ 20