04. The Insider's Guide to Nepo Babies Entering Fashion Tech, a Q1 Recap and How You’ll Survive Tariffgate
Your cheat sheet for all the conversations you'll be having over the next month
Hello to my favorite corner of the internet! I miss you all when we’re only chatting once a week- maybe that’s about to change soon ;) Friday night together is a fun shakeup!
I'm writing to you from my couch with absolutely zero glamorous backdrops to report this week - no Miami terraces, no poolside Four Seasons moments, just me, a Blue Bottle iced oat matcha and an intense curiosity about the quarter (and last 48 hours) we've just lived through.
There’s A LOT to unpack today- Between Kim K suddenly appearing in fashion tech boardrooms, tariff announcements sending supply chains into spiral mode, and Q1 results that have everyone questioning their 2025 predictions...we need to talk.
BTW- so sorry for the delay but there was so much going on yesterday and I truly did not want to put out something with half the information needed.
But today we're breaking down what actually happened this quarter (spoiler: probably not what anyone forecasted in December), answering your most pressing questions, and offering some practical advice on navigating "tariffgate" without losing your mind (no guarantees) or profit margins (srsly not guaranteed). Consider this your cheat sheet for all the conversations you'll be having for the next month.
But first, you know the drill—let’s set the vibe. Light that Sidia Wired candle to help you ground, get comfy under that Guest in Residence cashmere blanket, and overpour a glass of Beaujolais from Avaline (we need all the resveratrols we can get tonight to decompress) into your classiest Ichendorf Milano wineglass. The newsletter ahead requires equal parts comfort and fortification as we navigate fashion tech's nepo baby entry and the chaos that capped off Q1.
Let's get into it, shall we?
I want to live inside the Retrofête pop up in Miami. See here and here and then just send yourself down the rabbit hole like I did.
So fucking random but I just know this one is going to hit for somebody out there: it’s almost hotdog season (rejoice!) and my personal rule is 1-2 a year (when I was like 9 I ate 1 every single day for lunch over the summer. I miss that girl). If you want to feel super bougie while eating one (who wouldn't?), then buy these from EK Pottery. You guys, they have little feet!
There’s a few things I think you should over consume and they are the following: candles, robes, bronzer sticks (finally hit pan on one today, actually. Love you Nudestix!), and books. Am I wrong?
And lastly speaking of books, this is my main argument for the digital twin tech. When I buy a physical book, I want the digital copy. I go back and forth between print and my Kindle and refuse to pay for strictly a digital version.
LOVED THIS! Send me more questions or just feel free to trauma dump / talk shit here!
Answer: The build vs. partner decision ultimately comes down to three factors: resources, control, and core competency.
For most brands, partnering with platforms like Archive or Treet makes strategic sense. Resale isn't just about having a marketplace—it's about authentication processes, logistics infrastructure, customer service protocols, and data management. These platforms have already solved the complex operational challenges that would/could take you months and significant capital to build from scratch.
Where partnering truly shines is in the speed to market. You can launch a resale program in weeks rather than quarters, and the leading providers now offer white-label solutions that maintain your brand experience. The data you gain provides immediate insight into which products hold value, informing future design and pricing decisions.
The only brands that should consider building their own are those with significant engineering resources, unique authentication requirements, or strategic reasons to own the entire tech stack. Even luxury conglomerates like Kering are partnering rather than building (see here) —which tells you a lot about the economics of this decision.
Answer: The wholesale question has fundamentally shifted from "if" to "which" and "how." Selective wholesale is becoming essential for DTC brands reaching scale limitations, but the approach needs to be strategic rather than opportunistic.
Department stores can present significant risk given current market conditions—extended payment terms, markdown expectations, and inventory positioning challenges can quickly drain cash flow (not to mention the effects on brand perception). Instead, I would focus on specialty retailers with aligned customer demos + values. These partners typically offer better terms, more collaborative relationships, and provide the halo effect of curation without the operational nightmare of department stores.
Look at your current customer data and identify geographic concentrations - if you've done pop-ups in certain markets with strong results, target specialty retailers in those same areas. You'll benefit from an existing community awareness, deeper customer relationships, and ultimately lower CAC. This approach helps offset the margin hit since you're selling to customers who might already have familiarity with your brand rather than starting from zero.
The margin hit can become worthwhile when you calculate the full customer acquisition picture. If your DTC CAC has risen (and whose hasn't in the last 5-10?), wholesale can effectively function as paid marketing with inventory attached. The key is negotiating terms that protect your brand positioning and cash flow—never sacrifice both margin and payment terms simultaneously.
Most importantly, use this as a complement to direct channels, not as a replacement. The brands winning right now maintain direct relationships with customers while leveraging wholesale as a discovery and acquisition channel. Omnipresence for the win!
Answer: because I’m ADD as fuck and I have a lot of thoughts to get out. I’d like to think I’m a newsletter version of Jess Hastings and her footnotes.
Two new creative directors actually began their roles today- Matthieu Blazy at Chanel (marking only the 4th creative director at the storied house) and Dario Vitale at Versace (a first after a 30 year reign of Queen Donatella). I for one am still sad that I never got an Alber Elbaz at Chanel stint but I am excited to see some newness. While I’ve written a lot recently about luxury shifting to more “safe” choices, I do think that these two have strong product development backgrounds (hello Bottega’s Andiamo, Sardine and Kalimero and Miu Miu’s micro skirts) rather than social media celebrity, suggesting maybe some luxury is recalibrating toward product excellence over personality-driven marketing. We can only pray.
Gap's launch of a premium collection at the helm of Zac Posen represents a strategic bet on expanding their consumer base upmarket rather than competing solely on price. This approach mirrors successful dual-tier strategies from retailers like Target (with designer collaborations) and H&M (with COS), demonstrating how heritage brands can create segmentation without diluting their core identity. For brands facing middle-market compression, Gap's experiment provides a valuable case study in expansion versus focus. I personally fear the middle is dead (and not interested in a resurrection) and am honestly very skeptical on the timing of this and whether it’ll work out. Even with all the recent Gap resurgence, they’re still down over 8% in the last decade. Interested in anyone’s thoughts here. Do I need an upscale Gap? I fear I don’t.
Saks' attempt to "clear the air" with brands was an absolute masterclass in exactly what not to do with your brand partners AND it has revealed a critical flaw in luxury retail's understanding of modern power dynamics. The department store model assumed brands needed them more than vice versa - a catastrophic miscalculation in an era where direct distribution gives brands unprecedented leverage plus strategic partnerships, lower CAC, increased visibility and preserved cash flow. I, for one, have a first hand understanding of why brands miss payments (as I’m sure most of you do) and it’s not because of power dynamics. A truly terrible move for a company whose entire business depends on the strength of the brands it carries. With private label accounting for only 15-20% of inventory, Saks’ success is directly tied to maintaining strong relationships with external brands. If those brands walk away, so does Saks’ relevance. When your entire business is built on relationships, why would you risk burning them?
The closure of the de minimis exemption targets Chinese imports specifically, with shipments under $800 now "subject to a duty rate of either 30% of their value or $25 per item (increasing to $50 per item after June 1, 2025)." As a consumer, be prepared for duty charges appearing on your bill or arriving weeks later via DHL or other carriers. While this directly impacts Temu and Shein's ultra-fast fashion business models, it could potentially give the secondhand market a boost as an affordable domestic alternative, considering it may be the only category of fashion to not get absolutely rocked by these tariffs (98% of clothing sold in the US is imported from abroad). Either way, with tariffs being slapped across all countries, Shein and Temu will likely still be cheaper (or as cheap) as fast fashion coming out of other areas. A loss is a loss is a loss.
This video made the rounds in my group chats this week and I've never felt older than when I had to ask if it was a deepfake and was I getting duped by AI (have I become the mom who thinks the poodle video is real?)? I quickly realized the founders names and that this was authentic and then I just felt even more confused. Climate activist Sophia Kianni and Phoebe Gates' (yes, that Gates) pre-launch brand, Phia, getting instant access to Kim Kardashian's platform demonstrates how celebrity partnerships continue to accelerate brand building in ways traditional founders can't easily replicate. While some might critique the nepo advantage, what's more intriguing to me in this day and age is the strategic waitlist-building approach - using high-profile personalities and engineered social media moments rather than any conventional community building. The approach clearly works regardless of your feelings about it - did I sign up? Yes, and I'm genuinely curious to see what they're building.
P.S. - I searched around and haven’t seen anything that indicates that Phia has raised just yet or that Kim K is on board.
Let's talk about the absolute rollercoaster that was Q1. Not to be dramatic, but we need to discuss what the hell is happening with fashion tech funding right now. I pulled the data and...
The numbers don't lie – fashion tech funding fell off a cliff this quarter. We're looking at $297M across just 22 companies compared to $507M (49 companies) same time last year. That's almost half the money going to half the companies. If you're fundraising right now, I'm sending you strength and espresso martinis. A hug? I’ll text you cute pictures of my dog?
*All data pulled from traxcn consumer fashion tech
Acquisitions? Also in the gutter. Only 12 deals closed in Q1 compared to 26 last year. The days of easy exits are clearly over, and founders are feeling it.
I don't want you freaking out though. Market cycles are normal, and Q1 has been absolute chaos across every industry. What we're seeing is likely VCs playing it safe - keeping powder dry for their existing portco while taking fewer bets on new ones. And just because the data looks rough doesn't mean interest has disappeared. Just this week I had two different VC firms reach out wanting to learn more about fashion tech specifically - they're actively looking for opportunities in this space. The money's still out there, it's just being more selective about where it lands.
What ARE investors throwing money at? Internet-first brands are still getting love, but there's been a fascinating shift in how sustainability plays out in investment themes (again- we're just talking investment trends, not necessarily consumer or overall market trends). In Q1 2024, carbon capture and sustainable e-comm were top investment themes, but in Q1 2025, quick commerce and P2P rental platforms have taken their place. While consumer-facing sustainable e-commerce dropped from the top themes, we're seeing investment flow into adjacent areas like P2P rental platforms - which is actually sustainability in different packaging (read this for more info). There's also continued B2B investment in sustainable materials tech that doesn't show up in the consumer-facing data. It's not so much investors abandoning sustainability as much as getting more strategic about which parts of the ecosystem they're backing right now.
Meanwhile, legacy retail is struggling to find its footing. H&M just posted truly disappointing Q1 numbers – operating profit of 1.2B Swedish krona vs 1.9B expected – as they continue losing ground to Shein and other ultra-fast fashion disruptors. Their CEO is putting on a brave face, but when your earnings are "somewhat weaker than planned," that's corporate-speak for "we're in trouble." I expect to see this same theme as more Q1 earnings reports come out from brands on this same fiscal cal.
The one bright spot? Despite investment cooling on consumer sustainable startups, actual brands are doubling down on circular economy initiatives. 153 fashion brands now have their own resale platforms – up 325% since 2021. Turns out selling the same product twice is good business (who knew?). Turns out listening to your customers (who have been begging for in-house resale) is also good news!
My take? We're seeing a massive correction in fashion tech that separates the viable businesses from the hype machines. The smartest founders I know are focusing on extending runway and proving unit economics instead of chasing the next round. They're also laser-focused on category dominance - becoming THE name in their specific niche before expanding laterally. If you're doing resale, don't dabble in rentals yet. If you're doing virtual try-on, nail that experience before adding AI styling. The winners this year will be the ones who pick a lane and absolutely dominate it rather than spreading themselves thin across multiple value props. Profitability and focus are the new growth.
Let's get into the real meat of it all here. I don't want to fear-monger or stress you out (I told you to grab that glass of wine in the beginning), but I do want to arm you with the information you need to navigate this wild ride we're all about to take. Because if these tariffs stick around and this trade war escalates, we're in for some serious economic whiplash (and if they all go away tomorrow, we’re still in for the economic whiplash) - and it goes way beyond just fashion. Everything is interconnected, and everyone is about to feel it. Let’s discuss:
WTF Are These Tariffs Anyway?
Here's the quick rundown on what's happening:
Starting April 5th (literally tomorrow): Every single imported good coming into the US gets slapped with a baseline 10% tariff. That's EVERYTHING.
Starting April 9th: Individual countries get hit with even higher rates based on their trade deficit with the US. Some highlights:
China: 34% tariff
European Union: 20% tariff
Taiwan: 32% tariff
India: 26% tariff
*note that these don’t even cover pre-existing tariffs which brings China to ~54%
Who pays these tariffs? Despite what you might hear (I quite literally do not know how), US importers pay the tariffs directly, not foreign governments. This means American companies bringing in products from overseas are the ones writing the checks to the government.
What happens next? Those companies typically pass most (or all) of the increased costs to us, the consumers. And other countries are already announcing retaliatory tariffs - China just announced a 34% tariff on all US imports starting April 10th.
The White House is essentially using a bizarre calculation method: they looked at a country's trade deficit, divided it by its exports to the US, called that a "tariff" (which it absolutely is not), then cut that percentage in half to determine the new tariff rate. Make it make sense. And let's be real - of course we have trade deficits with these countries. Small countries simply cannot and do not have the budget to compete with how much the US spends on imports. This calculation method is economically nonsensical.
Markets are already freaking out - Wall Street has slumped into correction territory (down more than 10% from recent peaks), and global markets from London to Tokyo are tanking too. As of 2:00pm PST on April 4th, Trump's tariffs have sent shockwaves through the market. It is the worst two-day stretch in the US since 2020, when the pandemic hit.
Here's where things stand as I write this:
S&P 500 -5.98%
Dow 30 -5.5%
Nasdaq -5.82%
All the while Trump is in Miami for a golf dinner! Lovely.
98% of all apparel and 99% of footwear in the US is imported.
60% of that is imported from just 3 countries: China (34% tariff), Vietnam (46%) and Bangladesh (37%).
I could continue to get into the issue of how we don’t have manufacturing set up here, we don’t have skilled workers in these sectors, we don’t have the machinery needed, unemployment is low (so who is working these jobs?), and that the time and investment required to get this set up is a MULTI year process that we are not prepared for (and that companies don’t trust to make due to the constant back and forth)- but this is all easily googleable. And I’m trying my hardest (and it is VERY hard) to keep this as apolitical as possible (aware I’m failing). What I do want to discuss is how you as a consumer and/or brand owner can navigate this shitstorm. Whether these tariffs stay or not, the economic uncertainty effects will be long lasting.
As a consumer:
Let's be real - your shopping habits are about to get complicated. But don't panic (or panic buy pls)! Here's how to navigate this mess:
• Buy That Big-Ticket Item NOW - If you've been eyeing a new TV, laptop, or that designer bag (we all cope with stress differently- I don’t judge), the time to pull the trigger is literally right now. Not next month. Not for back-to-school. NOW. Retailers still have pre-tariff stock, but once that's gone, prices are going up faster than my anxiety waiting for part 4 of the group chat on TikTok (IYKYK).
• Secondhand Is Your New Best Friend - Your wallet and the planet will thank you. ThredUp just launched this incred feature where you can upload Pinterest boards or images and it finds those exact items for you! Plus, secondhand items already in the US won't be hit with these new tariffs. This is the fashion tech we love to see!
• Those Memorial Day sales coming up in a few weeks? Think of them as your last hurrah before the tariff tsunami fully hits. Outdoor furniture, clothes, electronics – all items that will be significantly pricier by summer's end.
• Stock Up Strategically - According to economists, here's the price increase timeline estimate: fresh produce (~a month), packaged foods and alcohol (~three months), and clothing/appliances/cars (~six months). Plan your splurges accordingly.
• Watch For "Tariff Sales" - Companies like Ford are already offering "tariff sales" – they're giving everyone employee pricing until June. Expect more brands to follow with similar "buy now before prices skyrocket" promotions across all categories while they can.
For Brand Owners:
This tariff situation is objectively terrible, but there are ways to minimize the damage and maybe even find some silver linings:
• Rethink Your Entire Supply Chain (Like, Yesterday) - I know you've been putting this off, but it's time to have those uncomfortable conversations. Where can you diversify? Every vendor call you make now could save your business later. Mike Cooers is my go to for all things logistics + supply chain. I’m not saying to completely revamp overnight but I am saying to have a plan b.
• Communicate Price Changes Transparently - Your customers aren't stupid. They know what's happening. Instead of sneaky price increases, be upfront: "Due to the new tariffs, we've had to adjust our pricing. Here's exactly why and what we're doing to minimize the impact." Honesty builds loyalty even when prices go up.
• Get Creative With Your Business Model - Could you offer a subscription that locks in current pricing? Bundle products differently? Create a limited "pre-tariff" collection? The brands that will survive are the ones finding creative workarounds rather than just passing 100% of costs to customers.
• Build Your U.S. Manufacturing Story - If you've got ANY domestic production, now's the time to highlight it. Even if it's just final assembly or customization happening stateside, lean into that American-made narrative.
I won’t sugar coat it, this sucks. But sometimes the biggest innovations come from the toughest constraints. Some of today's most successful brands were born during recessions and economic upheavals. Stay nimble, keep to your meditation schedule, and remember that adaptability will get you further than panic ever will.
And if you made it to here… bless you.
Thank you for bearing with the delay—this one could’ve (and maybe should’ve) been split across three newsletters, but I really didn’t want to leave you without a full picture. I appreciate you for sticking with me through the deep dives, brain dumps, and occasional hotdog tangents.
The good news? The next two weeks are going to be way more fun- I have so much planned. We’ll lighten things up, dive into some juicy gossip, share summer fashion moodboards (one or two words?), and maybe take a tiny break from all the economic doomscrolling (if possible).
LYLAS <3
xx
Carly