Business advice from Vetement’s founder

Demna may be the brand’s creative leader, envisioning the world in his ahead-of-the-curve street-cast wardrobe, and subsequently taking Balenciaga by storm, but 30-year-old Guram is the articulate strategist and number cruncher who has carefully propelled the brand to the same level as those that are two decades older than it (the brothers insist that they never, ever have personal conversations in the workplace). After gaining degrees in International Business, European Management and Law at German universities, Gvasalia studied MSc Strategic Fashion Management at London College of Fashion, before working for a handful of luxury brands, including Burberry.

You may remember that when Burberry and Tom Ford announced plans to challenge conventional ready-to-wear schedules, Vetements announced via Vogue.com that it would be showing combined womenswear and menswear in January and June, the months typically reserved for the international menswear shows. As it transpires, it makes complete sense considering that the Paris-based label also refuses to create pre-collections, which stay on the shop floor for much longer than spring / summer  and autumn / winter, arguing that it’s the overproduction of clothes that diminishes the idea of luxury and outstrips demand. Rather, what the Gvasalia brothers are aiming to do is staying ahead of demand and remain scarce by producing a limited run of products that sell out so quickly, that they never go on sale and instantly increase in second-hand value.

We picked the seven most interesting talking points that are vital for any student or recent graduate considering a career in a design studio. Interestingly, Gvasalia also added that Production Managers earn up to five times more than designers, so either it’s time to brush up your Italian or pay a lot more attention to the business side of the strange industry we call Fashion.

1 – LUXURY IS SCARCITY

“Luxury was always something that was scarce. Today, I don’t consider Louis Vuitton to be a luxury brand – yes, the quality is luxury, but if you can go to the store and get whatever you want, it’s not luxury. For us, the important thing is that we don’t restock and once you come to the showroom, it’s the only chance you’re going to have to place an order. Once it’s sold out, it’s sold out. We had hoodies from the first season that sold out super quickly and we had thousands of requests to make the hoodies again. If we were to, we would probably be able to make a million in a day. It’s out of respect to the people that bought them first that we don’t.”

2 – START WITH THE BASICS: SUPPLY AND DEMAND

“There’s a basic model you learn in business school. It’s called supply meets demand. There are two curves and the point where they intersect is how much you are suppose to produce. It always feels like everyone is ignoring this very simple thing. Because if something goes on sale, it means it was overproduced. We are always trying to change the supply curve, making it just a little bit less than the demand curve, to make sure that you sell out. It is always better to sell one piece less to a store and to be sold out than to sell one piece extra and to go on sale. Because once you go on sale, there’s no going back.”

3 – MOST MEGA-BRANDS SELL TO THEMSELVES TO INCREASE TURNOVER

“The numbers that you see from stores and brands: 2/3 of them are not real. Most brands that have hundreds of their own stores are not making any money – it’s just so that they can be in a certain market. For example, they need to have a presence in China, but the Chinese consumers don’t shop in China. They shop in Paris. The brands spend so much money on the stores, because each one is a buyer and you are selling to your store, and you don’t care what will happen to the merchandise afterwards. Basically, you’re artificially increasing your turnover numbers by selling it to your own stores and increasing your shares. Then, the merchandise gets burned or destroyed, and it causes waste and pollution.”

4 – YOU MUST BE SELECTIVE IN ORDER TO GROW SUSTAINABLY

“It’s very important that once you start growing, you slow down the process of the growth. And you try to stay on a certain level. For us, we had a lot of men buying the clothes from the womenswear collection. It is also figuring out and understanding how many of those men are going down [to the shop] to buy menswear. Are they still going to buy women’s? The sales for women’s was insane last season. We delivered in the beginning of February and the sell-through has been between 70 and 80%. It is very high for industry standards. Then, the stores come and they want to give you a bigger budget, and you get a little bit afraid that you are selling too much. So basically, we reduced the men’s and just limited the amount of stores that can buy it. We put caps on women’s orders; for example, stores cannot buy more than ten pairs of jeans and Italian stores are not allowed to buy more than four pieces of jersey in one style. In November, Barney’s asked us what the minimum for the order was. And I said: there’s no minimum, but there’s a maximum. And they said that no one ever speaks about maximum.”

 5 – THE PRE-COLLECTION CALENDAR IS FAR MORE EFFECTIVE FOR SMALLER LABELS

“70 to 80% of the stores’ budgets are the pre-collections. One of the reasons for that, is that the delivery calendar is much better. On one hand, you have stores that make so much money on pre-collections, and on the other, you have designers who don’t care about the pre-collections and they are forced to do them. The designers care about the main collections, but the buyers are interested in the pre-collection. A lot of money is invested in the show, and it is only 20% of a store’s budget. When you show the main collection in Paris, the best case scenario is that you can deliver in July. Today, it is very difficult to get stock fabric. So you need to order fabrics, and it can take up to eight and twelve weeks to get them, depending on the fabric. If you order Japanese fabrics that are very complicated, you need to ship them, and they need to go through customs. It costs extra time and money. Then you have production, which is at least two months. Then you have Italian people [laughs]. By the end of July, you don’t get your delivery. August is their summer break. They start shipping your product in September. By the time they get to your warehouse – and if you ship it outside of the EU – you need customs papers that take at least two days to fill out. You send it to the department stores and they take two weeks to put it on their shelves. Your product ends up on the shelf in October. And then there’s Thanksgiving and Black Friday. The best case scenario is eight weeks. Then you show your pre-collections in January. You have six months in comparison to two months. You have four months of competitive advantage and you have four months to be longer on the shelves. So your product’s expiration date has been moved, and you have better chances of getting sale numbers.”

6 – THE REASON WHY VETEMENTS ISN’T CHEAP

“There are a few reasons. One is that we work with amazing factories. These factories are not cheap. Another thing is the fabric. For example, the hoodies Demna likes to use molton cotton that is very heavy. It is almost 480g compared to the usual 240g. The price of creating this heavy cotton is double the price of creating a regular one. For the normal ones you can go up to 1.5m, but for the oversized pieces it can go up to 3 or 4.5m of fabric. It all comes together with the shipping costs. It is nicer when people save up. They can buy this one piece that they cherish for a longer time, rather than spending money on clothes every week that they throw away afterwards. The whole idea is to limit the production, having less pieces and making sure that people who buy these pieces can cherish it for a longer time. It’s moving away from this idea of fashion fashion, to this idea of slow fashion.”

7 – HAVE A CONNECTION TO YOUR WORK AND TREAT YOUR LABEL LIKE FAMILY

“People keep dividing their private life from their work life. But when you think about it, if you get about eight hours of sleep a day, a third of your life you’re asleep. The other third of your life is your work and the other third is for all other things. Your work life is such a big part of your life, that you cannot actually split it up. I never considered going to work as ‘going to work’, because it’s such a big part of what I do. For me, working in fashion is actually having fun. Sometimes, we just need to relax and take it more easily and realise that in this industry, you need to have fun. This industry is also missing honesty and kindness. I consider Vetements as a living being. It has its own circle of life, and all the people who are a part of it: their lives overlap. The brand is much more than just design. The brand is about the people who are involved. It is very difficult for us – because we grew exceptionally quick – to put new people in. The people that we have are like family and it needs to be nurtured.”

Post-talk, we caught up with a few of the audience members, to hear what their thoughts were on Demna’s words of business wisdom.

John Skelton, MA Fashion Menswear

“He only speaks about business, which is the antithesis of what I want to do. I think the whole thing around them changing the show system is not really new. It’s not like they’re the first people to do it. Alaia has been doing it for ages – and Guram kept mentioning him throughout the talk. They hope that everyone will follow them, but they may not. Before fashion even existed, people sold things at a localised level, and I think that a localised industry would be much more beneficial for designers in terms of production and the environment (clothes travel around the world several times). I’d like to see more designers making their own fabrics and trying to do more to reduce their carbon footprint.”

Michael Halpern, MA Fashion Womenswear

Guram touched on a lot of different issues. Did one particular issue strike a chord with you?

I think they started really small and organically. I think there’s a focus on each of their strengths: Guram’s business insight and Demna’s design. I think it is amazing how the brand is equally spread. I think so far what they’re doing is really inspiring for anyone who wants to build a brand, so I don’t think I would be greedy and ask for more.

Austin Snyder, MA Fashion Womenswear

“We’re all in the phase in which we’re trying to figure out what we want to do, and whether we should take the plunge and do our own thing. The talk was so cut and dry in that sense; really informative and all about reality. Everyone was thinking: how do I apply this to what I want to do now? He knows more than a lot of guys twice his age from huge brands that have come into CSM to speak to us.

I think when you want to succeed, you almost become blind to logic. So much of what he was saying, it was like, duh: of course we should be doing it this way! What Vetements did, was that they stuck to what they felt was right, and that gave me a sense of calm. I am asking myself: well, what do I feel right now?”

Harry Evans, MA Fashion Knitwear

Guram touched on a broad range of industry issues and revealed a few personal anecdotes along the way. Is there anything particular that resonated with you?

Vetements was a little bit secretive and it was great to hear him tell it all. It was really nice and unexpected that he painted it as a family business. I think they’re changing the mechanisms of the industry, and the rest might follow. I don’t know anything about business or running a brand at all. I think I’m going to wait and see how the industry evolves before I start my own thing.

A special thank you to Sarah Mower

This article was revised on the 13th of April, with regards to an incorrect statement made about the Italian fashion market.