Profit

A large part of the success of an enterprise depends on profit, which is a reflection of the effectiveness of each enterprise’s operations, and the final outcome of the enterprise is also reflected in the profit point. Profit is a key factor driving the market economy and each business is also a key point that affects each individual and society as a whole. Profit is also one of the four pillars of the fashion industry.

“The fashion industry is the key industry that drives the global economy, that creates the world economy and is one of the most important industries in the world. Before it was affected by Covid-19, the fashion industry generated between $1.7 trillion and $2 buy billion in global revenue (McKinsey, 2017). The fashion industry has brought huge profits to society and has drastically boosted socio-economic development.

The root of profit is human labour, and the level of labour density set in the fashion industry is pretty incredible. The fashion industry employs over 300 million people in the design, distribution, retail, textile and production sectors (The McKinsey Download Hub, 2019). The availability of a large workforce has increased the total volume of production, which has resulted in the global fashion industry producing over 100 to 150 billion garments annually.

The fashion industry is divided into several sectors, which are market research, design, production, marketing and promotion (Admin, 2021). In modern times the fashion industry is also strongly developing the e-commerce sector. Each new generation of consumers has its own value judgement, and the main consumers have shifted to millennials and Gen Z. Using the internet to shop is now the main consumption pattern of Gen Z. The fashion e-commerce segment with the most users is clothing. The global fashion e-commerce market is worth US$668.1 billion by 2021 (Fashion E-commerce Global Market Report, 2022). A large number of luxury and fashion brands have expanded into the e-commerce space. For example, Gucci has partnered with Farfetch to achieve 90-minute delivery. There is also Instagram’s partnership with BigCom-merce and Shopify to add sales functionality to social media. The marketing department understands the needs of consumers and uses the internet significantly for promotion. A large number of advertisements are posted on the internet to enhance exposure and thus attract consumers.

In an unstable economic climate, fashion brands want to remain competitive. The first thing that brands can do to get the most tangible results is to reduce prices. With the economy in a bad state, consumers do not have the money to pay for expensive fashion items. The only way to remain competitive is for brands to lower their prices or open discount shops. Luxury goods can be sold in both discount and regular-priced shops. The regular-priced shops can maintain the brand’s premium image, while the discount shops can bring in a good profit, thus balancing the brand’s profitability and remaining competitive.

The Burberry Group has already begun to reposition and transform the brand, and from 2018 Burberry will begin to launch a new Drop model on a monthly basis, with a limited number of new products available on Instagram, WeChat, Line, etc. The Burberry Group has found a new sales model to increase the brand’s buzz by opening a hunger campaign on social media. The Group’s adjusted operating profit rose to 8% year-on-year at constant exchange rates to £178 million (Fine Textiles, 2018). Creative directors need to plan campaigns that are in line with the brand’s philosophy, and brand culture and that appeal to contemporary consumer perceptions and capture the consumer’s consumer philosophy. Creating innovative products and marketing techniques is the only way to make a profit. For example, if Gen Z is looking at sustainable products, the creative director will need to come up with solutions that use green and recycled materials, which will also reduce material costs in production and increase profitability.

Reference list：

bfashionacademy. (2021). What is Fashion Industry and it’s key factors of Fashion Industry? [online] Available at: https://bfashionacademy.com/key-sectors-of-fashion-industry/ [Accessed 24 Oct. 2022].

Borruso, M., Frey, T., Kostopoulos, E., Mathew, P. and Wilson, N. (n.d.). McKinsey Downloads | McKinsey & Company. [online] www.mckinsey.com. Available at: https://www.mckinsey.com/featured-insights/download-hub [Accessed 24 Oct. 2022].

Fashion United (2022). Global Fashion Industry Statistics. [online] fashionunited.com. Available at: https://fashionunited.com/global-fashion-industry-statistics [Accessed 24 Oct. 2022].

m.sinotex.cn. (2018). Will Burberry rise after changing its creative director? Profits rose 8% year-on-year: According to the latest performance report released by Burberry Group, as of September. [online] Available at: https://m.sinotex.cn/read.asp?id=138568 [Accessed 24 Oct. 2022].

McKinsey & Company (2021). The State of Fashion 2022: In search of promise in perilous times | McKinsey. [online] McKinsey. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion [Accessed 24 Oct. 2022].

Statista. (2022). Revenue of the global apparel market 2012-2025. [online] Available at: https://www.statista.com/forecasts/821415/value-of-the-global-apparel-market [Accessed 24 Oct. 2022].

www.thebusinessresearchcompany.com. (2022). Fashion E-Commerce Market Size 2022 And Growth Analysis. [online] Available at: https://www.thebusinessresearchcompany.com/report/fashion-ecommerce-global-market-report [Accessed 24 Oct. 2022].