3 Things You Must Consider Before Investing in a Clothing Company

Designing, manufacturing and marketing clothing that will sell is a difficult task, because today's consumers are extremely demanding. Apparel brands need to be agile enough to respond to rapidly changing market conditions and fickle consumers with new initiatives that will maintain cash flow and customer loyalty. With that in mind, here are three things to look for when making your next investment in an apparel company: 

1. The Company Recognizes the Importance of Content Creation

We know consumers are spending more money on experiences and less on physical products, so it's essential that brands work that into their retail strategies. In order to do this effectively, brands need to regularly produce and distribute original content. Additionally, they need to be thinking about their target customers' interests. An example of an apparel brand that does this particularly well is Lorna Jane, which sells women's athletic wear. Lorna Jane targets active, fashion-forward women who prioritize healthy living. To engage that audience online, the brand created a lifestyle blog titled "Move Nourish Believe." The blog provides information and inspiration for women leading an active lifestyle, from healthy recipes to workout ideas and interviews with health and wellness experts. These are all topics relevant to the brand's target demographic. It also does an excellent job of blending content with commerce. For example, a recent post featuring fitness sensation Kayla Itsines wearing Lorna Jane gear is the perfect way to capitalize on this fitness expert's affinity for the brand without being overtly promotional.

2. The Company Recognizes the Importance of E-commerce and Appreciates the Challenges That Come With It

With both Forrester Research and eMarketer predicting e-commerce sales to grow to more than $400 billion by 2018, there's no denying that digital spending is on the rise. Furthermore, clothing was the top-selling product category for three out of the four quarters in 2015, PYMNTS.com reported. As such, e-commerce should be a top priority for apparel brands. Selling online might not appear too complicated at first glance, but it's a lot trickier than most people realize. Building a digital storefront that's visually appealing while performing at optimal speeds is challenging on its own, but when you consider online fulfillment, digital marketing and customer service, you start to see just how much work is required to keep an e-commerce site running efficiently. If a brand isn't outsourcing e-commerce operations to an established service provider, it should have an experienced in-house team dedicated exclusively to maintaining and marketing its digital channel.

3. The Company Has a Sound Distribution Strategy

Unifying the experience across distribution retail and direct-to-consumer is critical for survival -- especially given the transformation that technology is bringing to the industry. Brands certainly should be investing in their own direct-to-consumer channels, but it's also imperative to distribute products through well-established retailers for consumers to learn about and handle them. Department store sales might be sluggish, but local shopping malls still play a huge role in building brand awareness for new lines. At Onestop Internet, we handle e-commerce for a variety of apparel brands, and we find shoppers often discover a brand and make their first purchase at a Nordstrom or Bloomingdale's store before buying directly from the company that makes the brand. The same goes for digital: Brands need to be selling through established digital marketplaces. Ten years ago apparel brands might not have considered Amazon as a promising sales channel, but analysts at Cowen have predicted the Web giant will become the No. 1 U.S. clothing retailer by 2017. Regardless of the channels bringing the majority of sales, customers expect a singular view of the brand and available inventory across digital and traditional channels. The brands making investments in infrastructure in this area now are the most likely to prosper in the long run.

Building and growing an apparel brand is a challenge, but investors shouldn't discount the industry as a whole. Brands that make content creation, e-commerce and merchandising top priorities are positioned for continued growth and success despite the current economic climate.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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