
Montréal-based Ssense is entering bankruptcy protection to head off a sale by lenders. The Debrief looks at how tariffs, “always-on” discounting and other problems toppled the indie darling of online luxury, and what a reset might look like.
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Brian Baskin
Hello and welcome to the Debrief from the Business and Fash, where each week we delve into Our most popular BoF professional stories with the correspondents who created them. I'm Executive editor Brian Baskin.
Sheena Butler Young
And I'm senior correspondent Sheena Butler Young. Last week, one of online luxury's great disruptors hit the brakes. Canada based essence, once the go to for indie designers Gen Z tastemaking and blowout sales, filed for bankruptcy protection as lenders pushed for a sale.
Brian Baskin
In an internal memo viewed by BoF, co founder and CEO Rami Attallah blamed the Trump administration's tariffs for creating an immediate liquidity crisis. But as our guest reports, the cracks were showing long before the latest trade shock. To explain what went wrong and what's happening next, we're joined by Malik Morris. Malik, welcome back to the debrief.
Malik Morris
Thank you, thank you for having me again. You know, it's my favorite place on earth.
Brian Baskin
We've had you on a lot for that kind of thing, unfortunately.
Malik Morris
Yes, unfortunately. But yeah, there's a lot unpack here and so much has happened in like just the last couple of days. So excited to get into the chat.
Sheena Butler Young
So as you both just alluded to, we've unfortunately had a lot of retail bankruptcies in these last few years. And in the case of essence, though, it feels like I have never in recent memory seen so many readers react to a bankruptcy for BoF the way they did to Essence. Why do so many people care? Malik?
Malik Morris
So it's been around for more than 20 years. In the last decade it's emerged as this online luxury destination for fashion forward Gen Z consumers to discover, you know, new labels like Woo Young, Me or Casey Casey, but also get sort of the more interesting and off kilter options from labels they do know like Rick Owens and La Mer. And ESSENCE has been really, really smart about targeting this sort of younger, aspirational luxury consumer and kind of carving out a niche in that way. But over time it turned into this cornerstone for luxury discounting online, even outside of discounting seasons like Black Friday. And that started to train these consumers who are also already young, not necessarily in the fullest of their spending power and the fullest of their earning potential yet to not buy full price. And that of course started to weigh on its margins and it just became associated with being like the sale place, the discounting place, which, you know, then curbs sort of great credibility with designers and things of that nature. So it's all sort of culminated in what's happened this week, which I'm sure we'll get into. But it really did start out as like this refreshing proposition of online luxury shopping where it had like the best assortment of like really cool things. It had great editorial stories, great memes on social media and it really, really was able to grip that younger consumer. And it felt fresh and it felt exciting. But over time it just became like an off price retailer essentially.
Brian Baskin
But I mean it still has a lot of that cool factor, right? I mean you go to their site and there's great editorial on there still. I think people still go to ESSENCE for a lot of what you just talked. But, but you're right, it's a bad sign when we break the news that they're filing for bankruptcy and half the comments are, I can't wait for that sale. You know that going at a business sale, that's never a good sign.
Sheena Butler Young
Well, that's what people care though. It's why people care. It's back to our first point. It's like these, like Malik just said, it's like cool, hot brands at affordable prices targeting a customer that doesn't have a lot of income just yet. It's like, this is, I would probably care if they were going away. Talk about what happened this week. So they're not going away technically, if all goes well. What happen this last week on the business side with a obviously bankruptcy filing?
Malik Morris
Well, before we even get to the bankruptcy filing, you have the tariffs and the tariffs were just kind of catalyst. The company had already conducted a few round of layoffs in the past year. Last year they had a big round of layoffs and in May they had another round that affected more than 100 staffers across departments. And part of that most recent layoff was precipitated by the Trump administration's imposing more than 20% tariffs on goods from Canada earlier this year. And that's just based in Montreal and its only warehouse is there. From what I understand, they had a warehouse in Europe for a time, but that closed down a few years ago. So most of the goods that they're shipping to the US Are coming from Canada and it's leaving it fully exposed to tensions happening with cross border fulfillment to the US and obviously the company being based in Canada means that they're going to have to market share in their home market in Europe and Asia as well. But from our reporting, we've learned that 60% of their sales are actually coming from the US so not great that, you know, there's all this trade war tension happening. And again, going back to the fact that they target this sort of younger, aspirational luxury consumer, those shoppers, their pockets aren't bulletproof in an economic downturn the way that you'll have like really ultra wealthy big spenders who are shopping at like a Mytheresa, which we talked about in the past. So, you know, the company was already succumbing to the luxury slowdown that was industry wide. And then you get the news that the end of the de minimis tax loophole, which allows shipments with goods valued below $800 to enter the US duty free, was finally coming to pass. Trump was finally making good on those threats. It looked like ESSENCES lenders had no choice but to try to put the company up for sale under what's called the company's Creditors Arrangement act, which is a process in Canada akin to bankruptcy protection. And that will likely lead to the kind of fire sale that's becoming common and online luxury. We talk so much about Farfetch and their sale to the South Korean e commerce company Coupang at the end of 2023 that we were pretty much first on the news of, and then matches Fashions their sales to Frasers Group that actually unfortunately ended in that company completely shuttering last year, which really sent a ripple effect throughout fashion and really disrupted the businesses of indie designers across the world, some of them themselves shuttering as a result. So now ESSENCE is fighting back by filing its own C application which will allow the company to keep control of its assets and operations while it conducts a restructuring plan that will likely include more layoffs, downsizing and pullbacks galore. But yeah, it's a long time coming for essence and again, an unfortunate to see it meet this fate. However it all plays out, especially since you have so many Lovely consumers under our Instagram post about the bankruptcy filing saying, save Essence and we can't wait for the sale to go crazy. Like, it's a company that matters immensely to the fashion ecosystem. So we'll all be watching closely to see what happens next.
Brian Baskin
So we're in this unusual situation, at least from an American perspective of rival bankruptcy filings. Help me understand this and what potentially will happen next. I mean, how is it determined whether the company gets sold or they manage their own affairs and try to fix this themselves?
Malik Morris
So I not fully, fully versed in all this, but try to do my own little research. My understand. So their creditors file to the Superior Court, Court of Quebec, because obviously the company is based in Montreal, Quebec, and there's now dual filings. So from what I understand, it's now up to the court to rule whether they're going to allow the creditors to put them up for sale, or if they're going to allow Essence and their leaders to retain control of the brand and enroll in a restructuring program in terms of, like, the need for liquidity and like this sort of liquidity event that I'm not super versed in what that will look like and the sort of, like, fallout that that will contain. But actually, I'm curious, Brian, you're usually incredibly versed in this. Like, what do you make of this? I fully know because as a reporter, you know, we lean on our editors who also have great knowledge as well, and you've seen so much of this happen. And there's also our brilliant colleague Kathleen Chen wrote about Luciferi Aroma kind of going through something similar as well. So there's so much of this happening and it's so complicated. But I'm curious, like, what you make of this. You've seen so much of this happen over the past decade or so.
Brian Baskin
Oh, I think you're selling yourself short here because you covered all of the big online retailer bankruptcies of the last couple years, and there have been so many of them. But I think you had it exactly right. It's either it gets sold in a fire sale to whoever out there wants to take this thing on. And I do think there are. We should get into this. There's a lot still going for ESSENCE that I think would make it quite attractive to a buyer, potentially more so than a Farfetch or Matches would have been. But we should also talk about the unique ownership structure here and some of the incentives at play there. I think even more than probably any of these retailers, other than Farfetch'd, there's going to be an incentive by the current management to hold onto this thing. And I think things could get quite ugly in that kind of situation. Unless the judge unambiguously says, this is no longer, you know, the Atala brothers running this thing, it is the lenders running this thing.
Sheena Butler Young
Good point.
Malik Morris
Yeah. I think to that point, you know, to get to enough story that it really is the Atala brothers in that family, like, this is their baby, like this is their company and they did get outside investment from Sequoia, but I believe that's like, that's a minority stake. So, like, they're not a majority stakeholder here. It really is this family. And so the tug of war, which is a term I love to use, is going to be even more personal in this case than like Afar Fetched, which had so much venture capital, which had already gone public and so many stakeholders, so many shareholders to account for. This is like, no, this is the thing that we created from the ground up.
Sheena Butler Young
A thesis project.
Malik Morris
Yeah, yeah, you're not going to pry out of our hands. Which would make for much even more interesting shakeout in the coming weeks and months.
Brian Baskin
And the reason that I say that is also your reporting talking to people who work there, which is that even by the standards of founder run companies, Rami in particular was really driving the ship there. Right. I mean, there weren't a lot of major decisions happening that weren't coming directly from him.
Malik Morris
I mean, yeah, for whatever. The CEO is not necessarily as amenable to new ideas or acts on them as quickly as maybe they should. Like one example that we had is they have this cadre of personal shoppers that deals with their version of VIP customers. And there was talks and meetings about ramping that up to boost full price selling, but that never came to pass. In fact, they decided not to do that. And it's like this sort of inertia there that's detrimental when the current formula stops working. This idea of like, let's lean on what is continuing to work. And a part of that is just leaning on the sales, you know, and leaning on the discounting, like. So I will preface this by saying, if I may, that I am actually an avid ESSENCE consumer.
Brian Baskin
Understatement of the year here.
Malik Morris
Understatement of VOF's amazing. Lovely compensation goes to Essence and it caps with so much of my wardrobe. And I. A part of that was last year. I, you know, have been writing about online luxury for a very long time and hadn't ever really shopped there and just was Kind of like, let me take a good look at all these sites and kind of what they have to offer. And I noticed it's all sales button on Essences product page. And I mean, I was expecting it to be like the dregs of like whatever, you know, but it was like a beautiful assortment of brands that I love, like Le man and you know, a legacy. We're going great things that like, it wasn't like, you know, odd colors or things that, you know, look like they didn't sell, look like pieces that may have even just been a part of their current or like classic offering. And for my reporting, I realized that button actually came last year and it came in, you know, a time where their revenue was starting to drop off a bit and allowed it to keep consumers on the hook that are looking for these discounts. Instead of waiting twice a year, you can have it all the time. And they also have these private sales as well. And there's a button if, you know, you have a login that's there for you to prove that quite often. So again, it's like this constant need to feed consumers these year round discounts to keep sales going and this inertia of like continuing this playbook that obviously is eating at its margins and also kind of again, curbing its credibility with any designers and with even some people in fashion who are saying, well, this is just becoming an off price retailer rather than an arbiter of taste and innovation.
Sheena Butler Young
You mentioned that there was an interest in maybe doing more of the private shoppers that could actually court more luxury consumers. What else could ESSENCE have done, like holding for a moment, tariffs and de minimis aside, I always think about it as like, you know, when there's a positive shock to the economy and it's like the tide that raises all boats. I think it's the same thing. When something negative happens, every company hides for cover. Oh, it's the tariffs. It's the tariffs. Like what else could they have been doing if you hold the tariffs aside for a second?
Malik Morris
So one thing that we get at in the story a bit is this idea that they actually have this sort of brand incubator. And so there are certain brands on the site, like Luldan or still Kelly, that actually were kind of in a sense created under their umbrella. So they give them access to, you know, staff and, and studio and, and you know, manufacturing, you know, contacts and things of that nature and in a bit of funding as well. And I think sort of investing in that where it's like, you're creating these brands that are indie, that are contemporary, where the pricing is right, you know, rather than these astronomical prices that are then having to be discounted. But you're also keeping the assortment fresh and doing in a way that's economical. I think focusing on that to me would have been something that was probably a missed opportunity for them. But again, we're not working in a world that's free of the tariffs. We're also not working in a world that's free of like a luxury slowdown. Like basically what happened was like many e commerce companies, Essence soared in 2020, 2021 because, you know, you have all these custom stimulus money and they can't go outside the shopping online. And then essentially the economy overheats and then you get all this inflation. And so like the price of essential goods goes up and like, again, these are aspirational luxury consumers. So they're now having to choose between the price of eggs going up or the La Mer$700 La Mer pipe loafers. And which one is going to go.
Brian Baskin
Which one did you pick, Malik?
Malik Morris
Well, I would, I would, I work in fashion. Okay, So I would.
Sheena Butler Young
We don't need eggs.
Malik Morris
Okay, we don eggs. But for a lot of consumers, they do need eggs. And so even a solution that I can think of, in my mind it's is a lot more complicated by the fact that you can, you have these external factors that all these companies have to contend with. And to be frank, we're talking about essence, but this is an industry wide issue. You know, like, we're talking about like vendor payments and that being stalled. Saks is the poster child for that right now. Again, our brilliant colleague Kat has been covering that, you know, kind of in a way no one else has. And, and everyone has been dealing with this luxury slowdown. Even you know, LVMH sales are not doing great, the fashion division is not doing great. So it's not just an ESSENCE specific problem. So it's hard to decouple it from the external factors. I think internally what's happening is that they're not acting fast enough to respond and that's then led them to having to do this bankruptcy filing, this filing for bankruptcy protection in a way that other companies don't have to. But so much of this just industry wise issues that has fallen onto them in a particular way.
Brian Baskin
I think one reason they probably haven't tried to pivot is their selection and their customer. And just like their approach to curation was supposed to be the moat that protected them from this exact scenario and made them different than all these other retailers and I'm still a little surprised how quickly it unraveled. I mean what they're offering is different than what you see on any other retailer's site. And I know we've written a million articles saying that's what you need to do to get customers. I guess. Why wasn't that enough?
Malik Morris
That's why I love having conversing with you both because like you explained it so ESSENCE was so fixated on keeping it's in with Gen Z consumer. Like I said, you know they wooed them with indie designers and quite frankly they've actually kept their grip on the culture of fashion with fabulous editorial content like on the website they highlight emerging designers and evolving trends and also their memes on their Instagram like as recent as last week they posted a meme that said science teacher and astrocartologists are getting married and they had a man in a full look by the Japanese brand or Lee and the woman is in full. We're going. And it's an obvious play on Taylor Swift's engagement to Travis Kelce. It's all so clever. But again the first thing why this fell so fast with the constant sales, you know and when we were thinking about companies in the luxury e commerce sphere that are doing well like a mytheres or even smaller ones like Garmentary is full price selling. That's actually keeping them afloat. And I think another part of this too really is about much of Estes trouble is the wholesale model itself. You know, like the buying and storing of inventory payment terms, not knowing to do with that inventory when it doesn't sell and being forced to offer too many discounts to sell through those goods. When I'm writing about emerging e commerce platforms that are excelling right now, they often operate on a marketplace dropship model where they don't take on any inventory and they can list and delist item based on performance much easier. Obviously the marketplace model is a lot of work on the back end. They have to make sure that the brand partners have the proper logistical have to fulfill orders. But it can be a high margin business and win win for all parties involved. So some of this is really about rethinking the multi brand format in general as much as it is about essence's missteps and scaling their business.
Sheena Butler Young
What about that indie cultural authority thing though? Like when you start to want to court a higher priced consumer, sometimes it feels like it's at odds with being cool and indie and young and hip. Do you see ESSENCE doing both well.
Malik Morris
So that's so interesting because, you know, in the story, we, we do kind of get at this idea of like, I've seen experts saying smart things like ESSENCE should have a tighter, more edited assortment and create an air of exclusivity around his offering. And that's worked well for my Teresa. But ESSENCE can't copy mytheresa and going after big spenders. They need to maintain their coolness factor with the younger generation. What's working well in E commerce is having a niche and being clear in how you're going to serve the best customers within that cohort, those who are willing to spend and bring more people on board to do so as well. And in my mind, ESSENCE needs to refine its niche and make sure that it's attracting the consumers within that group who will purchase without the need for always on sales. There are sharpers in that Gen Z group, many of whom are almost 30, who have the pockets and the temperament to be seduced by curation and not by the fact of like, the Next S&SIL is going to hit different as that Instagram comment, you know, displayed. There are tons of them out there, and it's about reaching them and it's about homing in on that particular cohort. How they do that is why you pay these executives big money to join these companies and devise those strategies. But I think that that is a way to go. Like, again, consumers still love this company. There's so many people in those comments saying, save essence, right? It's about understanding the psychology of those customers. Are they going to buy items at full price? You know, it's not necessarily about, we need to woo them with these VIP trips. The way my Teresa is, it's like, how do we do our version of that, our version of curation, our version of discernment? And I think that that can definitely take them a long way. How they do that will be exciting for me to cover, but I definitely think that's a way to go.
Sheena Butler Young
We'll be back with more of the debrief right after this.
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Sheena Butler Young
Well, the interesting thing to me, I was in reading the memo from Rami Atala, it's like he was striking this, this balance between urgency. It's like we're going to file within 24 hours. We are forced into this to make this decision while also saying, you know, it's going to be business as usual. So for the people waiting for the sale to hit different or for the employees that are sitting, you know, biting their nails right now, how likely is it that it's business as usual inside the company right now? Like, and how long will that last if it is business as usual?
Malik Morris
So we got the memo, we wrote about the memo and I also did us a bit of a, a sense, you know, no pun intended, a sense, an essence check with some sources and a lot of this was, was they were not surprised or shocked by any of this. So it definitely is business as usual. Like the conservatism that a lot of the execs were displaying in terms of new initiatives, the constant sales people being reached out to by designers saying we haven't been paid. Like all of that led to them thinking and saying this probably is a cash issue here. And so when this comes to the fore, it's like, oh well, well, there you go, there's, there's the proof. So a lot of it probably is just business as usual. I do think something that is interesting for me as a reporter is I honestly do think that a realistic scenario and probably a good one for ESSENCE is a sale. I'm not sure you know, who would make the most sense, but we're seeing consolidation in online luxury in general. Like Mytheresa bought Nataporte last year. Use Nataporte. Obviously there was Farfetch'd to Coupang and then there's Saks and Neiman's. Obviously those are both physical retailer, but they have an online presence as well. And I believe I mentioned this before in a previous episode, but our editor and chief Imran wrote that Amazon should have acquired Farfetch'd and I think that that would actually be a compelling option here as well. You know, Amazon continues to want to be in luxury fashion and has the logistical know how. Like there's also the idea that may equity could take over, but Essence would do best under a company that knows how to manage inventory and would install executives who can push the boundaries when it comes to assortment and editorial. The way that I was saying before. So yeah, I mean the business as usual part of it, it probably does feel like business as usual because it probably has already been so much chaos in the past year. But also I do think that in my mind a great outcome would be new leadership, new ownership and someone that can understand what this brand means, what it means to any designers, what it means to a certain type of fashion consumer, what it means to the ecosystem at large. We've seen what happened with Matches that we've seen before. We literally seen actual brands going under because of that. So no new leader is going to be like, well let's just shutter this company willy nilly. Like there's a whole ecosystem that needs to be maintained.
Brian Baskin
You're right. Like that was a huge deal with Matches where there were these indie brands that had half their inventory locked in a warehouse and some of them went under. I think because of that. This seems like an ESSENCE bankruptcy of that kind could make Matches look like a Minor blip. I mean half their inventory is tiny brands that probably only sell or primarily sell in essence, right, oh 1,000%.
Malik Morris
And I think, you know, from what I my reporting rural is there is this sort of tension because for these brands who are not just smaller and indie, but also their aesthetic is so specific and it's reaching this particular niche that there isn't a lot of other places for them to go where they don't have the resources to have their own direct to consumer businesses as robust as like A La Mer or now Legacy. Obviously you know, the bigger brands like a Dior which no longer sells on Essence or like Prada which only sells like eyewear, you know, on Essence. So it is incredibly important for them too. But I think what you were alluding to earlier, both you, Brian and Sheena was this idea of like there is a meeting ground between who sells in Essence and the consumer there. And so what I'm. What I was alluding to in terms of like them having new ownership is someone who can recognize that and see that as an asset and understand how to hone that in the right way so that you don't get to them shuddering and leaving all of these really small designers in turmoil and potentially them going under themselves. Because you're right, it's not just like Matches Fashion which had like emerging indie brands. You have like really, really, really small brands that are selling on Essence with really, really specific aesthetics that would be difficult for them to just go to a my Teresa or difficult for them to just go and sell on a far fetched and some of these other, you know, multi brand retail options.
Sheena Butler Young
How likely is that positive scenario of like going to new owners, going to new leadership going to happen under a fire sale? How likely is it that ESSENCE gets the kind of credible leadership that it wants and that it needs and has, you know, new good owners?
Malik Morris
That's a great question. I think under the fire. So that itself makes it harder because it's like we just need somebody to just buy the asset. But I think, you know, with what Brian was alluding to earlier is going to be even more difficult is the leadership structure of Essence itself and the fact that it's coming and is owned by this family, them relinquishing control because the first thing that a new company is going to want to do is to get them out there, out of the door and get someone new in there if they were, if they ran it to this point of it needing to file for bankruptcy protection. So that's probably going to be as difficult as finding a really good, credible owner in a FISO process. The actual current owners wanting to give up their child, you know, give up this legacy, give up this entity, this quantity within fashion that has made such waves, that has been synonymous with cool for a decade or more. So yes, it's all going to be a lot going on and so much fun for us to cover and stay on top of.
Sheena Butler Young
Between that and your new assignment that you just acquired, you're going to be very busy.
Malik Morris
Very busy.
Sheena Butler Young
Malik, thank you so much for joining us. This was so interesting. Thanks as always.
Malik Morris
Thank you. Thank you so much for having me.
Sheena Butler Young
Please be sure to check out Malik's article what Went Wrong at businessofashion.com these and other stories are available to BOF Professional subscribers only and you can find the links in the episode notes. You've been listening to the debrief, produced and edited by Olivia Davies and Eric Ria. I'm Sheena Butler Young.
Brian Baskin
And I'm Brian Battle Askin. We'll be back next week with a new episode. Thanks so much for joining us and be sure to follow us wherever you get your podcasts.
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Episode Date: September 3, 2025
Host(s): Brian Baskin, Sheena Butler Young
Guest: Malik Morris, Senior Correspondent
This episode of The Business of Fashion Podcast’s "The Debrief" examines the recent bankruptcy protection filing of Ssense, a pioneering Canadian online luxury retailer beloved by Gen Z and young fashion consumers. The hosts, joined by correspondent Malik Morris, dissect the causes behind Ssense’s crisis, its unique cultural significance, the impact on the broader luxury retail market, and what might come next as control hangs in the legal balance.
"I've never in recent memory seen so many readers react to a bankruptcy for BoF the way they did to Essence." (Sheena Butler Young, 02:08)
"It really did start out as like this refreshing proposition...But over time it just became like an off price retailer essentially." (Malik Morris, 02:26)
Loss for Indie Designers: By becoming known as the "sale place," Ssense risked alienating independent brands who relied on full-price sales for survival.
Tariffs & Trade Tensions:
Industry-Wide Headwinds:
"This is the thing that we created from the ground up...you're not going to pry out of our hands." (Malik Morris, 10:54)
“There was talks...about ramping that up to boost full price selling, but that never came to pass...there's this sort of inertia there that's detrimental when the current formula stops working.” (Malik Morris, 11:20)
"Half their inventory is tiny brands that probably only sell or primarily sell in essence." (Brian Baskin, 27:01)
"No new leader is going to be like, well let's just shutter this company willy nilly. Like there's a whole ecosystem that needs to be maintained." (Malik Morris, 25:41)
The bankruptcy of Ssense marks another seismic shift in the online luxury retail landscape, exposing deep structural challenges faced by niche, culture-driving platforms. The episode blends financial analysis with observations about Ssense’s cultural resilience and market position, raising questions about where value—and survival—now lie in luxury e-commerce. Listeners come away with a nuanced view of how strategic missteps, industry turbulence, and stakeholder relationships can make or break even the coolest brands.
For more in-depth coverage:
Check Malik Morris’s full article "What Went Wrong at Ssense" at businessoffashion.com (subscriber access required).