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The Matches disaster is the end of luxury fashion as we know it
A downturn across luxury retailers heralds the end of an era... and the beginning of a much needed reset
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On a chilly Sunday morning in March, a group of fashion designers, some visibly in shock, others mutely despairing, drove to a London warehouse to reclaim at least some of the £25 million worth of stock for which they and other British labels had not been paid.
Days earlier, on 7 March, less than three months after it had been acquired by Mike Ashley’s Frasers Group, the once prestigious Matches went into administration, with the immediate loss of 273 jobs. Countless more are yet to be fully accounted for throughout the industry, as the long-term ramifications take their toll.
For many in the fashion industry – from skilled tailors to sales assistants, PRs to designers – this is the worst of times. And there’s no sign of anything easing up. ‘It’s tough out there,’ says Erdem Moralioglu, whose feminine, intricately crafted designs are a favourite of royals and ‘best-dressed’ regulars. ‘What’s really sad is that in the 20 years I’ve been going, things have got harder, not easier, even though there was a huge boom in sales across the market post-Covid. We used to be able to produce more than 50 per cent of our clothes in the UK. Since the pandemic, that’s shrinking.’
As for us, the customers, addicted to cheap, five-minute thrills or priced out of brands we used to love (thank you cost of living crisis and bloated marketing campaigns), we’re not satisfied either, often unable to find clothes we like as we get older – just at the point where we might have more disposable income to spend on them. The illogicality of a system that produces more and more garments each year, approximately 150 billion in 2023 (though no one knows precisely how many are manufactured because clothes have become the ultimate in disposability), and simultaneously fails to furnish many women with what they want, seems almost wilfully self-destructive.
Matches isn’t the only online calamity in the luxury market. Farfetch, another London-based multi-brand fashion e-tailer, valued at $6.2 billion when it listed on the New York Stock Exchange in 2018, had seen its share price plummet by the end of 2023. Meanwhile it was reported in April that Richemont, the Swiss holding group that in 2018 acquired the multi-brand e-tailer Net-a-Porter, together with discount platforms The Outnet and Yoox, in a headline-making deal, was preparing to offload.
There have been rumblings of trouble for some time. Matches’ payments to suppliers are said to have become tardier and more erratic. The look of its website changed: more mass, less class. The extras that made it particularly luxury – including a strong point of view – were being hacked away with what seemed like reckless disregard for what makes a brand stand out.
‘At the start the online Matches experience was very faithful to what was in their boutiques,’ says Deborah Brett, a former fashion editor turned ceramicist who has always been passionate about clothes. ‘But you could really sense that it became increasingly about the spreadsheet. The on-point selection totally disappeared. There was no sense of cachet.’
I was having dinner with the designer-founder of a burgeoning label two nights before the collapse. ‘It doesn’t look good there,’ they told me, recounting their experience. ‘They’re terrible payers.’
My friend was one of the relatively lucky ones. Their store had started to take off so they were less reliant on Matches. ‘I’m pulling out of Matches for next season,’ they said. ‘As for the next few months there – I’m keeping my fingers crossed we’ll sell and get paid.’
So far, they have lost £250,000 worth of stock. Others, still unsure of what they will be able to claw back, may have lost up to £1 million. Those designers who went to the warehouse? Unless they had a specific clause in their contracts pertaining to retention of ownership (and the smaller ones say they didn’t), they didn’t manage to retrieve anything.
It’s estimated that Matches was sitting on £100 million worth of stock when it went into administration. Some of the larger, more powerful brands that had negotiated different terms were able to retrieve theirs. Meanwhile, luxury designs have been heavily discounted by Matches in an unseemly fire sale.
Two CEOs, who asked not to be named, claimed that when they asked Matches to return stock for which it still hadn’t paid, they were told they could buy it back, but at full retail price. ‘Our big worry is that Matches will chuck our products on some outlet site at knockdown prices,’ said one of them. ‘That’s hugely damaging to our brand.’
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Fashion business journalist Lauren Sherman reported that some pieces by ultra-high-end label The Row (founded by Mary-Kate and Ashley Olsen and considered a benchmark for quality and refinement) had been listed on Walmart, the US mass-market retailer.
A few days after the abortive warehouse swoop, the British Fashion Council (BFC), the part-government-funded body that organises London Fashion Week, held an emergency meeting with scores of international PRs worried about the viability of their clients’ businesses. The Vampire’s Wife, a label set up in 2014 by Susie Cave, a former model and the wife of Nick Cave, and worn by A-listers and royals, was the first to go out of business. Many others are rumoured to be close to the brink.
![Susie Cave of The Vampire's Wife, with Alexa Chung](/https/www.telegraph.co.uk/content/dam/fashion/2024/07/19/TELEMMGLPICT000386138301_17214056009350_trans_NvBQzQNjv4Bq-gaKsLgbA6-uokDv4MbJV2zmqbnjKNpyJg5a3RLRL0w.jpeg?imwidth=350)
![The Vampire's Wife was a go-to label of The Princess of Wales. Above, she wears a dress from the brand](/https/www.telegraph.co.uk/content/dam/fashion/2024/07/09/TELEMMGLPICT000384986559_17205441035440_trans_NvBQzQNjv4BqziXedDgd_9g57L1OBW6j2SwH8TmLAs2sqIeannjF6Xw.jpeg?imwidth=350)
The question of who will get paid when the last discounted item on Matches is sold is complex. Meanwhile, retail journalists are picking over the entrails, still piecing together exactly what went wrong. It’s not as if no one was shopping on Matches, although sales had slowed, as they have across the market; it’s more that the business model no longer worked.
To be fair to Apax, the investment fund that bought the business from founders Tom and Ruth Chapman in 2017 and later sold to Frasers Group, it was running an uphill campaign. The market has changed dramatically since 2020, not least because many brands – Prada, Saint Laurent, Ralph Lauren – have belatedly learned to run their own websites well, so no longer need multi-brand retailers as much.
‘The moment the first lockdown was announced, the super-brands pounced. One by one they told us they would only sell to us on concession,’ says Natalie Kingham, former buying and fashion director at Matches. ‘That meant Matches carried less risk because at the end of the season, any unsold stock could be returned to the brands.’ But it also meant a precipitous drop in its profits.
![Tom and Ruth Chapman founded Matches in 1987 and sold it 30 years later](/https/www.telegraph.co.uk/content/dam/fashion/2024/07/13/TELEMMGLPICT000384888378_17208674566780_trans_NvBQzQNjv4BqgAlh3uZqJyVpD0q9WHrSvk8FchWZRD3tSYOiRwPjWDo.jpeg?imwidth=350)
Traditionally retailers mark up items by just under three times. If they sell something for £1,000, for example, they pay the designer about £380, leaving a margin of £620. Under the sale or return system, they would make £200 on a £1,000 item.
‘Then there are a slew of import and export duties under Brexit,’ continues Kingham. ‘Every time you sold something to a customer in Europe and they sent it back because it didn’t fit or whatever, under the free-returns system it cost the business a small fortune. I remember looking at the numbers and thinking, I just don’t see how this is going to work.’
E-retail is not the cheap alternative to bricks-and-mortar that was once promised. Marketing costs have spiralled. Returns often run at 40 per cent – although no one wants to admit this officially. Photography, copywriting to go with the thousands of items uploaded every week, courier services and – if you want to avoid extra duties – several warehouses inside and outside the UK all add up.
Kingham left Matches in 2021, well before the Frasers Group takeover, and is now a consultant and mentor to many designers and retailers. ‘I kept telling the ones on Matches they had to make sure they got paid. But I think everyone was so reliant on those orders they didn’t want to believe it wouldn’t work.’
It especially didn’t work for the designers. Thanks to the torturous economics of the clothing industry, it’s always been the case that they have to invest in fabrics and design at least 18 months before they see any revenue.
The story of how one visionary British couple built Matches, arguably the most glamorous and fashion-forward global online empire of them all, over the course of 30 years from a single boutique in Wimbledon; then sold it in 2017 to private equity firm Apax, at which point it was reported to have been valued at £800 million; before it fell into the hands of Mike Ashley, founder of Frasers Group, for a mere £52 million, is a cautionary, roller-coaster tale for our times. But it’s not even the whole picture. Merchants like Ruth Chapman, Natalie Kingham and Natalie Massenet, the former fashion editor who founded Net-a-Porter in 2000, were arbiters and mentors whose taste shaped a generation of consumers and helped guide designers as to what they needed to have in their collections.
‘Ruth had the best eye,’ says JJ Martin, founder of La DoubleJ, a clothing and homeware brand that looked so promising that in 2023 Maureen Chiquet, a former CEO of Chanel, joined as chairwoman. There is no indication that La DoubleJ is at risk, but Martin knows that Matches’ demise leaves parts of the industry hollowed out.
‘It’s not just money lost… It’s not having someone like Ruth, Tom and Natalie to provide mentorship. As a young brand, being picked up by Matches was as important as being featured in American Vogue.’
Until, that is, more recently, when Matches entered a going-for-growth Armageddon, stocking more middling brands with similar products. An online shopping experience that had felt luxurious and thoughtfully curated evolved into a doomscroll. ‘Urgh, the scroll,’ says Deborah Brett. ‘They had page after page of almost identical items – shopping on it became the antithesis of enjoyable.’
When Matches celebrated its 30th anniversary by opening a new bricks-and-mortar flagship in a grand Mayfair town house in 2018, many considered it a retro throwback. The future was all about virtual shopping. And yet they may have been on to something. ‘I loved that place, it made shopping seem glamorous and fun again,’ continues Brett. ‘You could call up the team there and tell them what you liked and didn’t like and they’d pull together several rails for you. You’d make an appointment, be led to a suite, and feel like you were entering a 1950s couture salon. You’d never be able to afford to order all of that to try on at home, even if you sent most of it back after. The service was extraordinary. It was fun and I never came out without the perfect outfit.’
The town house, which also offered VIP customers special access to meet designers and attend Q&A sessions, may have represented a glimpse into the future of personalised shopping. But as of now, it’s empty, its high ceilings fogged with cobwebs.
Was it inevitable? For a while, the post-pandemic shopping surge in sales was the biggest story and few business journalists were keeping a close eye on Matches. Unprecedented pent-up demand propelled turnovers at individual brands to new highs. Year-on-year profit increases of 20 to 40 per cent were not uncommon. Emboldened, super-brands hiked their prices: the Chanel Classic flap bag has shot up from $4,900 in 2016 to $10,800.
‘Everyone wanted to be an Hermès, even brands that manufacture in far greater quantities to lower standards,’ says Hikmat Mohammed, a fashion editor at Women’s Wear Daily. But Hermès is famous for its superlative quality, slow manufacturing process and limited output. ‘Brands blamed their punchy new prices on a spike in the cost of raw materials. That was true – but only to an extent. Some of this looks very much like brands wanting to make bigger and bigger margins.’
The British fashion and retail industry, worth tens of billions a year, is now experiencing the mother of all hangovers. First we go to the shops that have left our high streets in recent years – Topshop, Burton, Debenhams. But, unthinkably, the luxury brands are also now shivering. Even the glossy, landmark money magnet that is Selfridges is battling a slowdown in demand. Earlier this year, after 130 years there, Fenwick closed its doors on Bond Street, which was until recently one of the busiest luxury thoroughfares in the world. Now retailers report tumbleweed – ‘worse than the financial crash of 2008’, says one industry observer. Meanwhile, in Knightsbridge, the best that can be said for Harvey Nichols is that the haemorrhage has slowed. In the year to April 2023, pre-tax losses for the retailer shrunk 29 per cent from £30.4 million to £21.3 million.
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Burberry has issued profit warnings. Mulberry contracted by four per cent in the year to March. Kering, the French group that owns brands such as Alexander McQueen, Saint Laurent, Bottega Veneta and Brioni, has seen the value of many decline, and back in April it issued a profit warning, saying it anticipated a first-half operating drop of 40 to 45 per cent, after a fall in sales at its golden goose, Gucci. And while the omnipotent LVMH, run by one of the world’s richest men, Bernard Arnault, and in ownership of Louis Vuitton, Dior, Fendi, Bulgari, Tiffany & Co and Celine, will dominate the Paris Olympics, behind the scenes, logo belts are tightening.
Another problem is that the UK is the only major European economy not to offer tax-free shopping to overseas visitors. According to the BFC, while tourism to the West End had recovered to 2019 levels, income generated there was down 15 per cent in the final quarter of 2023. Compare this with France or even Spain, where retail spend has nearly tripled among certain nationalities since 2019. Around the country, factor in the lost trade to hotels, restaurants and other services, and the UK economy is missing out on an estimated £2.3 billion – an independent study says reinstating the tax break, scrapped in 2021, could create 78,000 UK jobs. But last autumn, Tanmanjeet Singh Dhesi, then Labour’s shadow exchequer secretary, said that changing the status quo was not a priority.
Yet in some corners, fashion retail is flourishing. The once beleaguered M&S has seen the decline in its clothing reversed. Next has, in addition to its own label, become a marketplace for brands as diverse as Reiss, Joules and Mint Velvet; at the start of 2024 it posted record pre-tax profits of £918 million – a rise of five per cent – as group sales rose to £5.84 billion.
Further upstream, Phoebe Philo’s £3,200 ‘Mum’ necklaces sold out almost immediately when she launched her eponymous collection last autumn. And Métier, a small, luxurious British leather goods brand set up by Melissa Morris, an American with sophisticated minimalist leanings and a solid grasp on how to build a business gradually, is also thriving.
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‘A beautiful, well-edited multi-platform online store can be a great place for customers to discover you,’ says Morris, ‘but after the initial introduction, they often come directly to our website or to the shop… And it means I and my team can really talk to them and understand their needs.’
‘The idea that people have stopped shopping is a fantasy,’ agrees Madeleine Schulz, a reporter at Vogue Business. ‘The brands that are doing well are listening to their customers and also investing in creativity. If you don’t do that, ultimately, you just become a shell for selling sunglasses and perfume.’
Mytheresa, the German answer to Matchesfashion, is doing fine – despite, or because of, it being so much smaller than Matches in terms of the number of labels carried. Matches had as many as 600 at its zenith, 450 by the time it collapsed. MyTheresa, meanwhile, has a one-in, one-out approach. This too began with one family-run store in Munich and that shop has remained central to its philosophy.
‘You undervalue stores at your peril,’ says Clare Hornby, founder of Me+Em, which has 11 branches in the UK, including concessions. Around the same time that Matches was imploding, Me+Em opened three new stores in the US. North America is notoriously the rock on which successful British brands crash. But so far, so good.
![A three-piece suit from Me+Em](/https/www.telegraph.co.uk/content/dam/fashion/2024/07/19/TELEMMGLPICT000386139077_17214081291980_trans_NvBQzQNjv4BqqVzuuqpFlyLIwiB6NTmJwfSVWeZ_vEN7c6bHu2jJnT8.jpeg?imwidth=350)
It’s partly benefitting from the customers who used to shop at the likes of Prada and Celine but now find the prices fanciful. At Me+Em, an average dress is priced at £200 to £400, and a blazer about £350. But it is not just Me+Em’s prices – aspirational but not absurd – that appeal. ‘We’re working on making them [stores] more beautiful – more special places for the customers to be. Digital is noisy now so you have to break that.’
Many shoppers I’ve spoken to say they’ve fallen out of love with the digital experience of fashion. Sure it’s convenient, but they’re exhausted by the scroll and tired of settling for things that don’t 100 per cent work because of the faff of returns, however easy platforms try to make them. Inside the industry, several people have told me that buyers who work for retailers are increasingly panicked. ‘They’re inexperienced and buying in totally uncreative ways,’ says a seasoned observer. ‘They’re working on the assumption that if it sold well last season, let’s just double down. That’s not how fashion works.’
The internet will always have its place – particularly if you live outside a city, or are shopping vintage (another reason brands are doing less well; customers can’t afford them new so buy pre-worn). But as a numbing cream for boredom, e-shopping for fashion doesn’t cut it any more.
Even the excitement around Philo’s comeback collection, which was digital-only, fizzled, as fans found the stratospheric prices – £13,000 for a sequinned T-shirt dress – and not being able to try on first a deterrent. Months after launch, Philo announced she would, after all, be going into bricks-and-mortar, initially through a partnership with Bergdorf Goodman in New York.
![When Phoebe Philo launched her eponymous collection last autumn, her £3,200 'Mum' necklaces sold out almost immediately](/https/www.telegraph.co.uk/content/dam/fashion/2024/07/13/TELEMMGLPICT000385432258_17208678185510_trans_NvBQzQNjv4BqToJ0SFKiUwM7P5ZvzIGZn_ApOnwl_ShPuqTrwx7gjFI.jpeg?imwidth=350)
All of this requires a reset. ‘The wisdom used to be that if you were stocked on a prestigious site like Matches it would expose you to a much bigger audience and being on the same platform as Gucci or Saint Laurent added audience to your brand. I’m not sure that’s so true any more,’ says Poppy Sexton-Wainwright, co-founder of British label Asceno. ‘If you can sell on your own platform you have much more control, bigger margins and a lot less waste.’ A few days after we speak, Sexton-Wainwright is off to the Hamptons to host her first US trunk show post-Covid – the latest Brit to go this route.
Big in the 1980s with wealthy Americans, trunk shows are congenial gatherings – often in a private residence or a hotel suite – where like-minded customers meet a brand’s founder, sip Champagne and get to shop in a laid-back, personal environment. Often the spend per customer is far higher than it would be online. ‘Americans think nothing of buying three of our coats at a time,’ says Georgia Dant, founder of Marfa Stance.
Intrepid young designers see this and are adapting. ‘Many are taking the Instagram route,’ says brand strategist Mandi Lennard. ‘That allows them to have direct-message dialogues with customers, who can have myriad queries answered. I’ve seen young designers using it to promote a new model of bespoke service. If a designer is cutting out the retail stockist, they have better [profit] margins, more customer intimacy.
‘The customer might have to wait a bit longer to get their order, but they’re prepared to pay and wait because they know they’re getting an individual piece.’
Deborah Brett recognises this. She uses Instagram to sell her range of ceramics. ‘My sense is that people love having a connection with the person selling or making their clothes. Whenever I’ve done a trunk show I sell double the amount I would just having it sitting on a shelf in a shop, or on a website.’
While shareholders the world over demand ever more growth, it’s possible to do very nicely without being huge (and hugely profligate). Not everyone has to be a $20-billion-a-year leviathan, or take on Louis Vuitton or Chanel – and yet fashion business writers often write about £500-million-a-year brands as if they’re somehow insignificant.
Ian Griffiths, the raised-in-Derbyshire creative director of steady Eddie brand Max Mara (Max Mara Fashion Group did €1.8 billion in 2022), is mystified. ‘I truly believe we’re heading for a long-overdue reset,’ he says.
Stand by. The old adage about turnover being vanity, profit sanity, and cash the only truth, has never been more valid.