PROFIT
Profit is one of the 4 pillars of the sustainable fashion business strategy that focuses on the financial aspects of the fashion industry based on the economy; (a series of components and structures that satisfies the needs of humanity). This is linked with “planet” and “people” as this considers both the environmental and social constituents to make up for the economy.
The value of the global fashion industry in 2021 reached $1.55 trillion and is forecast to be worth $1.7 trillion In 2022 (Dunja Radonic 2022). The growth of social media allowed influencers to dictate trends, promoting fast fashion (Jack Shepherd 2022). Demand increased over time and resulted in an appreciation of fashion and its value. The rise in demand could mean more sales and wider recognition, generating more profit for fashion businesses, leading to an injection of more capital to boost the economy. Fast fashion has a huge economic impact and is responsible for the recent growth of an average of 4.78% and as of 2017, it is forecast to have a 5.91% growth in the next three years of the apparel industry (Ganit Singh 2017). Despite the predicted growth in the upcoming years, uncertainty lies within the global economy due to external influences affect business sales forecasts, as uncontrollable economic factors like inflation, play a role in the business’s profits and the consumer spending power. A prime example is the Impact of Covid-19 that had a 2-year disruption on the global fashion industry, where a 20 percent decline in revenues occurred in 2019–20, resulting in 7% of companies failing to survive the market due to financial distress or were bought by rivals (McKinsey 2020).
Certain brands such as Adidas and H&M, grew by 8% in terms of economic profit and outpaced sales growth over the same period compared to competitors, through cutting costs, efficient investments, and executing better than competitors to stay competitive in economic uncertainty. (Achim Berg, Saskia Hedrich, and Johnattan Leon 2017). Though sustainable fashion is thriving today, costs of sustainability programs are higher which can potentially drive businesses profits down, which may require businesses to manage their costs wisely. Nevertheless, sustainable efforts tend to build value and acts as a USP, as consumers today are willing to pay extra for sustainable fashion, therefore promoting long-term profitability. (Lea Kobeli, Giulia Siccardo 2022). Overall, this all depends on the business’s monetary management alongside external economic influences to stabilize profitability.
Despite the contrast of art and business, Fashion conjuncts both elements with the world revolving around business to boost the global economy, opening doors for opportunities, whereas Art holds history, meaning and representation through a visual format, illustrating creativity and is highly valuable. Designers can be seen as artists as they set themselves a title of being a sole creator of their work, allowing them to market towards their consumers who acknowledge their exclusivity of their creations (Caroline Stevenson 2019). This sets the profit boundary for designers once their Art expands into the market.
REFERENCES:
Berg. A, Hedrich. S, Leon. J. (2017) “The two faces of fashion-industry performance” [online] McKinsey&Company. Available at: The two faces of fashion-industry performance | McKinsey
Kobeli. L, Siccardo. G (2017) “Lessons in sustainability: Q&A with Giulia Siccardo” [Online] Available at: Complex does not mean complicated | McKinsey & Company
McKinsey (2021) “State of Fashion 2022: An uneven recovery and new frontiers. [online] McKinsey and Company. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion [Accesssed: November 7th 2022]
Parkes. J (2022) “Santiago Sierra creates mud runway for Balenciaga during Paris Fashion Week” [online] Dezeen. Available at: Santiago Sierra creates mud runway for Balenciaga (dezeen.com)
Radonic. D (2022) “28 Eye-Opening Sustainable Fashion Statistics for a Cleaner 2022” [online] Fashion Discounts. Available at:28 Eye-Opening Sustainable Fashion Statistics for 2022 (fashiondiscounts.uk)
Singh. G (2017) “Fast Fashion Has Changed the Industry and the Economy” [Online] FEE stories: Available at:Fast Fashion Has Changed the Industry and the Economy – Foundation for Economic Education (fee.org)
Shepherd. J (2022) “Social Media Marketing for Fashion Brands: A Strategy That Works” [online] Available at: Social Media Marketing for Fashion Brands: A Strategy That Works… (thesocialshepherd.com)
Stevenson, C (2019) “(I was there) when it all went down”, in Cronberg, A. (ed) Vestoj
issue 9: On Capital