Profit
An economy as described by Investopedia is “ a complex system of interrelated production, consumption, and exchange activities that ultimately determines how resources are allocated among all the participants. The production, consumption, and distribution of goods and services combine to fulfil the needs of those living and operating within the economy.” (Kenton, 2022) Our current economy is one that is of a capitalist kind, therefore profit, the third of the the four pillars of fashion business school comes of great relevance. Profit is essentially the amount of revenue a business makes in which it exceeds the price of its costs to make and sell the item it is selling. Profit is a key factor in determining the success of a business as it is taken into account in Elkington’s Triple Bottom Line theory. The more profitable a business is, the more successful it is seen as the amount of excess money can allow it to reinvest and produce better outcome. Fashion makes up a great part of the world’s economy as the McKinsey report states it to be “one of the world’s most important industries” (Mckinesy, 2017) Fashion United states that true fashion industry has a labour force of 3,384.1 million and that its value is equivalent to that of three trillion dollars. Therefore, it is 2% of the world’s Gross Domestic Product. (Henrique, 2022). Through this we can see the size of the fashion industry and how large it actually is.
A great sector of the fashion industry is that of manufacturing. The market size of the manufacturing industry is £2bn in the UK which expresses the size of it. Though previously manufacturing from home with the “Made in Britain” label was seen as an exclusive aspect, bringing higher revenues to a brand, this is now changing and is beginning to become more common. With the demand on fast fashion trends speeding the trend cycle, provide a need for brands to produce close to home. Not only this though as the pandemic proved the importance of having manufactures be close as well as the current cost going up, it is now no longer cheaper to produce in the Far East (No Author, 2022).
An uncertain economic time can raise many strains in the fashion industry whilst also becoming difficult to remain competitive. The COVID 19 pandemic showed this as many businesses such as Debenhams and the Arcadia group went bust however interestingly, Missguided, the online retailer went into administration in May 2022, though flourishing during the pandemic, issues arose when shops reopened and sales dropped. (No Author, 2020) Amazon’s fast delivery service and variety of products allowed for the company to remain competitive and even having to close down non-.essential items due to not being able to meet the amount of demand. (No Author, 2022)
Issues rise in the tension between commerce and creativity especially recently due to consumers having a stronger voice, it has become less about what the artists create and more so about what the consumers demand. Demand these days is severely affected by fast fashion and the high expectations set due to them (Norris, 2022) and the speed in which the trend cycle is currently working at. With the expectation of all brands to produce whatever is in the current trend, this limits artists and creatives to producing unique pieces and that which they desire to do so. However, brands are sharing their creativity and bridging the gap between art and commerce for example, Burberry commonly sponsor British music groups to help gain leverage on either side with common consumers (Ahmed, 2013).
Kenton, W. (2022) Economy: What it is, types of economies, economic indicators, Investopedia. Investopedia. Available at: https://www.investopedia.com/terms/e/economy.asp (Accessed: October 30, 2022).
Amed, I. (2016) The State of Fashion 2017, McKinsey & Co.
Available at: https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/The%20state%20of%20fashion/The-state-of-fashion-2017-McK-BoF-report.pdf
[Accessed Oct 28, 2022].
Henrique, E. (2022) Fashion industry statistics: The 4th biggest sector is way more than just about clothing, Fashinnovation. Available at: https://fashinnovation.nyc/fashion-industry-statistics/ (Accessed: October 30, 2022).
Industry market research, reports, and Statistics (no date) IBISWorld. Available at: https://www.ibisworld.com/united-kingdom/market-research-reports/clothing-manufacturing-industry/ (Accessed: October 30, 2022).
Prospering in the pandemic: The top 100 companies (2020) Financial Times. Available at: https://www.ft.com/content/844ed28c-8074-4856-bde0-20f3bf4cd8f0 (Accessed: October 30, 2022).
Prospering in the pandemic: The top 100 companies (2020) Financial Times. Available at: https://www.ft.com/content/844ed28c-8074-4856-bde0-20f3bf4cd8f0 (Accessed: October 30, 2022).
Norris, O.J. (2022) The age of fast fashion: How consumer behaviour has changed and how it’s impacting our environment, AMPLYFI. Available at: https://amplyfi.com/2022/01/10/the-age-of-fast-fashion/ (Accessed: October 30, 2022).
Ahmed, A. (2013) Bridging the gap between art and business | Ajaz Ahmed, The Guardian. Guardian News and Media. Available at: https://www.theguardian.com/media-network/media-network-blog/2013/oct/16/bridging-gap-art-business (Accessed: October 30, 2022).