Profit

Profit arguably is one of the most important pillars from a business perspective out of people, planet and purpose. Profit can be described as “money that is earned in trade or business after paying the costs of producing and selling goods and services” (Cambridge Dictionary). Simply said, profit is the monetary benefit a business receives after selling its goods and services. 

The size of the fashion industry is something that is not only hard to determine but also changes according to whether the informal sectors of the economy are being included or not. Generally speaking, the United States of America and China possess the largest apparel retail markets in the world. Before Covid-19 hit the world, the fashion industry was worth $1.7 trillion. During the pandemic, the worth of the fashion industry had decreased to $1.45 trillion, that is by -18.1%. (McKinsey, 2022). Post pandemic, consumers indulged in something termed as ‘revenge-shopping’, bringing up the industry’s worth between $1.5 and $1.7 trillion in 2021. (Fashion United).

The economy is perpetually fluctuating, especially post pandemic, and brands can find it difficult to remain competitive during these uncertain economic times. To help remain afloat, it is important that a brand stay with the trends and keep up with the times. For example, the new way of advertising is through social media and that’s where most consumers look for information nowadays. If a brand did not have a digital marketing team, they would find it very hard to remain profitable. A brand could also use their unique selling point to their advantage and stand out from the rest of the market. Even though good profit is important, it can only be achieved if the consumer is happy. Hence, it is important to make product development decisions based on consumer feedback. (Forbes Finance Council, 2020). Brands also need to be able to bridge the gap between creativity and commerce in order to be competitive. 

As Caroline Steven mentioned (Stevenson, 2019), “Nineteenth Century, Charles Frederick Worth, the ‘Father of Haute Couture’ and a keen entrepreneur, recognised the economic benefit of aligning himself with art and creativity over commerce.” (Berry, 2018) Creative directors can bridge the gap between creativity and commerce by creating a balance between skill, that is art, and the business aspect of the company. More often than not, consumers are more likely to buy something that is visually appealing and are displayed in elaborate pop ups and/or flagship stores. This is the creativity aspect of the business. If a brand is creatively strong, they are likely to make a higher profit, which is the commerce aspect of the business. 

References:

Profit (no date) Cambridge Dictionary. Available at: https://dictionary.cambridge.org/dictionary/english/profit (Accessed: November 9, 2022).

Global Fashion Industry Statistics FashionUnited. Available at: https://fashionunited.com/global-fashion-industry-statistics (Accessed: November 9, 2022). 

State of Fashion 2022: An uneven recovery and new frontiers (2022) McKinsey & Company. McKinsey & Company. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion (Accessed: November 9, 2022). 

Panel, E. (2020) Council post: 13 tips to balance staying competitive with maintaining cash flow in your business, Forbes. Forbes Magazine. Available at: https://www.forbes.com/sites/forbesfinancecouncil/2020/02/18/14-tips-to-balance-staying-competitive-with-maintaining-cash-flow-in-your-business/?sh=7886696b1f02 (Accessed: November 9, 2022).

Stevenson, C (2019) “(I was there) when it all went down”, in Cronberg, A. (ed) Vestoj issue 9: On Capita 

Berry, J. (2018) House of Fashion: Haute Couture and the Modern Interior. London: Bloomsbury 

Introduce the Pillar

Profit can be seen as a measure of business success. Profit is the basic result of running a business. Often, making a profit is the main goal of a company. A positive bottom line indicates that the company is healthy and performing well. Profit is the capital that a company can use for various purposes, such as investing in new products, replacing equipment, nurturing employees, etc. With a good profit base, enterprises can have the premise of continuous development. (Indeed, 2020).

What is the size of the fashion industry?

According to a survey by JÚLIA VILAÇA, the global fashion industry has a total workforce of 3.3841 billion, equivalent to a value of 3 trillion US dollars. A survey released in 2019 by the U.S. Joint Economic Council confirmed that in the U.S. alone, consumers spend nearly $380 billion on apparel and footwear, and that the country employs more than 1.8 million people in the industry. This data does not stay the same. The fashion industry continues to grow, with the Asian market alone expected to account for 38% of global apparel demand over the past year. (VILAÇA, 2022).

At the same time, the hugeness of the fashion industry can also be reflected through the companies. According to Forbes, topping the list of the biggest clothing companies is Louis Vuitton Moët Hennessy (LVMH), which includes big luxury brands like Louis Vuitton, Christian Dior and Givenchy, according to Forbes. With a market value of US$194 billion and assets of over US$108 billion, the company is the 73rd largest listed company in the world. (VILAÇA, 2022).

The fashion industry is of global importance in economic, social and other fields. However, the industry desperately needs to change. Discussions need to continue to drive the social, environmental and economic impacts of the industry. The potential of the fashion industry is huge, and it has huge destructive power. The key is to know how to channel its power for good and bring about positive transformation. In other words, making consumers, industry and society aware that it is possible to remain profitable and high income. However, it has to be done in an honest way with less impact on people’s lives and the health of the environment.

How can a brand remain competitive in uncertain economic times?

Despite the dominance of uncertainty during the current global pandemic, for businesses, an economic downturn does not mean an exit from marketing. Erik Clausen suggested that in order to remain competitive the company needs to focus on existing customers, clients and partners. The cost of meeting new clients during times of economic uncertainty can be very high. And pay attention to internal marketing of existing customers, strengthen relationships with them in times of crisis, and gain certain benefits when the market returns. (Clausen, 2020).

As Henry Ford once said, “A man who stops advertising to save money is like a man who stops a clock to save time.” When a recession hits, marketing often cuts budgets. Doing so could cause long-term damage to the brand. A March 2010 study tracked the performance and recovery of 4,700 companies during the 2008-2009 recession. Of these companies, 17% went bankrupt, private or were acquired. About 80% did not fully recover until three years after the recession ended. But 9% thrived. It turns out that companies that reduce costs by focusing on operational efficiency, while investing in growth strategies such as marketing and R&D, are most likely to beat the recession. (Clausen, 2020).

How do creative directors bridge the gap between creativity and commerce?

Creativity and business have never been separated, have always maintained a relationship of mutual influence, and more importantly, their nature is exchange and for profit. For creative directors, it is not enough to only understand art, but also to understand the market, products, and consumers. “Standardization” is an invisible demand that cannot be bypassed. For the business, using the media to support the development of art is a way of publicity with low investment and high return. For artists, investing in business allows them to seek their ideals, ambitions and pursuits in the creative process, and at the same time obtain economic benefits. For creative directors, they need to juggle many things. The purpose of people’s participation in art is often spontaneous and active, and the influence it brings to people is also rooted in the heart, which is also the expected result of business.

References:

Indeed. (2020). “What Is Profit and Why Is It Important?” Available at: What Is Profit and Why Is It Important? | Indeed.com (Accessed: 30/10/22).

VILAÇA, J. (2022). “FASHION INDUSTRY STATISTICS: THE 4TH BIGGEST SECTOR IS WAY MORE THAN JUST ABOUT CLOTHING”. Available at: Fashion Industry Statistics: The 4th Biggest Sector Is More Than Clothing (fashinnovation.nyc) (Accessed: 30/10/22).

Clausen. E. (2020). “Marketing Rules To Follow During Uncertain Economic Times”. Available at: Marketing Rules To Follow During Uncertain Economic Times (forbes.com) (Accessed: 30/10/22).

Profit is the 3rd pillar of fashion business which focuses on long-term financial success, balanced with brand purpose. This has become more important especially in the new state of the economy since profit is more driven by purpose rather than the other way around.

The size of the fashion industry can be measured monetarily and currently stands at $1.5 trillion USD and is predicted to increase to approximately $2 trillion by 2026 (Statista 2022).

For an economy to be successful, institutions must meet the needs and desires of consumers a major one being disposable income. Each sector in the industry needed to respond to these changes accordingly to remain competitive. When the pandemic hit, the marketing and communications sector of the industry became responsible to bring in sales and regulate profits. This is also faced with new standards that are linked to the environmental impacts of fast fashion and luxury labels on the planet.

Fashion is a necessity but past a certain point, it becomes a luxury, and consuming fashion at a sustainable pace is becoming more and more important but less and less accessible. This opens the door for brands to increase consumer interest in the brand and maintain profitability. Zara is the world’s largest clothing retailer, being responsible for churning out roughly 840 million garments every year in 6,000 stores worldwide. (Chua, 2019) The fast fashion sector has faced the largest impact in this new era of Gen Z consumers and post-pandemic industry changes.

The present overconsumption has raised questions amongst consumers and has seen a shift to find more sustainable and ethical options. Through the use of social media and consumer-driven change, brands can remain financially competitive in this new age since information is filtered to be digestible for the brand’s audience. (Hethorn and Ulasewicz, 2015)

On the other hand, this has given the chance to creative directors in the Haute couture sector to combine art and commerce. Consumers aren’t looking to purchase haute couture since it is already seen as a luxury, pushing artistic expression is a way for couture houses to remain competitive alongside the fast fashion sector, stirring important conversations in modern culture and society.

Demna has reinforced Balenciaga’s reputation as a streetwear brand and says that couture might become the driving force of fashion again. (Campbell, 2020) Balenciaga closed its couture house in 1968 and made a return with its Fall ’22 collection with direct references to Cristóbal Balenciaga’s work. Demna has been able to subtly bridge this gap between modern material technology and traditional patterns whilst marrying the art and commerce of fashion design and presentation.

Campbell, G. (2022) Demna Gvasalia is preparing us to care about couture for the first time. Available at: https://www.highsnobiety.com/p/balenciaga-haute-couture/ (Accessed: 2 November 2022)

Chua, J.M. (2019)  The environment and economy are paying the price for fast fashion – but there’s hope. Available at: https://www.vox.com/2019/9/12/20860620/fast-fashion-zara-hm-forever-21-boohoo-environment-cost (Accessed: 2 November 2022).

Hethorn, J., & Ulasewicz, C. (Eds.). (2015). Chapter 4-social media as a tool for social change Page: 81

Smith, P. (2022) Global apparel market – statistics and facts Available at: https://www.statista.com/topics/5091/apparel-market-worldwide/#topicHeader__wrapper (Accessed: 2 November 2022)

The four business pillars that are examined in the fashion industry are strengthened by “profit.” We can assume that a company’s main objective is to turn a profit, but as Gen z’s concern for the environment and social issues has grown over time, the fashion industry has had to change and adhere to these crucial factors in addition to its focus on profit in order to create a socially and environmentally developed fashion industry.

Fashion plays an enormous role in the economy due to the fact that everyone wears clothes, this leads to the fashion industry being regarded as “one of the world’s most important industries” which is said to drive a significant portion of the global economy (Mckinesy, 2017). The worldwide fashion market generated roughly 1.5 trillion US dollars in sales in 2021 and it said that it will rise to approximately 2 trillion dollars by 2026 (Statista, 2022). 

It is also important to understand that with such large numbers that the fashion industry produces, it’s all thanks to clothes manufacturing. The apparel manufacturing sector holds the fifth-highest employment position internationally, according to IBISWorld (IBISWorld, 2022). An example of this would be Vietnam, The textile sector in the nation employs  3 million people, making it one of the major industries in its economic growth. The sector contributes 16% of the nation’s total GDP and employs nearly 5% of the labour force overall and around 12% of the industrial workers (Marshall, 2022).

Covid was a crucial event for companies to learn how to stay competitive in unpredictable economic times. Figure 3 shows, for example, a rise in the number of individuals who purchase online more than before the epidemic and a drop in the number of people who buy less online than before. This helps brand owners recognise that they must stay up with demand and ensure that their businesses can compete with other brands that specialise in selling online.

Creative directors over the years have lost acknowledgement for their creative works, this is due to the ignoramus influx of marketing that has taken over the fashion industry over the last couple of years. This is a result of social media’s rapid growth and the new fashion industry consumers’ reliance on it. In light of this, creative directors need to devise strategies for expanding their access to the fashion industry’s commercial market. Creative directors like JWadernson working with Uniqlo are a brilliant example of this. JWadernson is a luxury fashion label that emphasises the use of vibrant colours to allow people to express themselves, whereas Uniqlo caters to the general public by curating essential pieces to be more affordable and comfortable. Through this partnership, JWanderson was able to reach a wider segment of the fashion-related commerce industry, which helped him stay competitive and get more exposure.

Reference list:

Figure 1: Kent. S, (2020)

Available at: https://www.businessoffashion.com/articles/sustainability/responsible-fashion-business-sustainability-planet-future/ 

[Accessed Oct 28, 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].

Smith.P, (2022) Global apparel market, Statista.

Available at: https://www.statista.com/topics/5091/apparel-market-worldwide/#topicHeader__wrapper 

[Accessed Oct 28, 2022]. 

IBISWorld, (2022) Global Biggest Industries by Employment in 2022

Available at: https://www.ibisworld.com/global/industry-trends/biggest-industries-by-employment/ 

[Accessed Oct 28, 2022].

Marshall.D, (2022) Immago textile industry in Vietnam, Immago.

Available at: https://immago.com/immago-textile-industry-vietnam/ 

[Accessed Oct 28, 2022].

Figure 2: Akter. A, (2018) Figure 2

Available at: https://www.textiletoday.com.bd/vietnamese-textile-apparel-industry-moving-towards-us50-billion-2020/ 

[Accessed Oct 28, 2022].

Figure 3: Percentage change in online purchases due to the coronavirus (COVID-19) pandemic in the United Kingdom from March 2020 to February 2021. Statista, (2021)

Available at: https://www.statista.com/statistics/1230225/changes-in-online-buying-among-uk-consumers-since-covid-19/ 

[Accessed Oct 28, 2022].

Figure 4: Uniqlo, (2022)Available at: https://www.uniqlo.com/uk/en/contents/collaboration/jwanderson/22fw/ [Accessed Oct 28, 2022].

The pillar, Profit, is understood in the Fashion Business Context as a firm’s goal to maximise financial gain, and therefore boost the brands market share in the fashion industry. Profits can either be reinvested into the business, distributed amongst shareholders, or retained by the owner (Kenton, 2022). 

As stated in McKinsey’s 2016 Report, “fashion is one of the world’s most important industries, driving a significant part of the global economy”. The revenue in the apparel market, including women’s, men’s, and children’s apparel, amounts to £1.14tn in 2022 and is expected to show a volume growth of 10.4% in 2023 (Statista, 2022).  Online shopping is an increasingly prevalent sector of the industry, with an overall market value of 668 billion US dollars in 2021, and an expected value of 1.2 trillion USD by 2025 (Statista, 2022).

Women’s apparel generates over 133 billion USD more than men’s or children’s apparel markets (Statista, 2022). As consumer’s interest in fast fashion increases, Zara, H&M and Uniqlo hold the largest global market share, and 95% of sales in the apparel market are attributable to non-luxury garments (Statista, 2022). The second-hand apparel industry is expected to grow to a value of 218 billion US dollars in 2026, due to increased demand from environmentally conscious younger consumers (Smith, 2022).

Following the COVID-19 pandemic, brands have amplified their focus on how to remain competitive during uncertain economic times. Brands should ensure flexibility and faster decision making in all areas of their operating models to accommodate to disrupted consumer behaviour. Strategic digital adoption is a necessary tool for brands, as young consumers are demanding sophisticated digital interactions that integrate the “human touch” (Amed & Berg, 2021). As 57.7% of the emerging generations in 2022 are concerned with sustainability and ethics (Moran, 2022), brands can utilise social media to “communicate their social and environmental endeavours” (Peterson, 2015) and ensure brand consistency during uncertain times (Clausen, 2020).

Traditionally, creative directors bridged the gap between creativity and commerce by embodying an artistic persona that was “not ordinary”, and thus elevating the value of their designs through elitism (Wolff, 1993), as evident in Charles Frederick Worth’s presentation of himself as an eccentric artist. Former Creative Director of Off-White, Virgil Abloh, tapped into a “certain demographic’s sense of culture and credibility” (Ahmed, 2013) by using “artification” to elevate streetwear products, such as Nike sneakers, as seen in Figure 1, into objects of exclusivity (Crane, 2019). However, the growing accessibility to both fashion (De Souza Crook, 2018) and cultural and social capital (Crane, 2019) has increasingly transformed people into artists, due to the blurring of ideas and knowledge (Crane, 2019).

RESOURCES

Ahmed, A. (2013) Bridging the gap between art and business, The Guardian. Guardian Media Group. Available at: https://www.theguardian.com/media-network/media-network-blog/2013/oct/16/bridging-gap-art-business (Accessed: October 27, 2022).

Amed, I. and Berg, A. (2021) The State of Fashion 2021 report: Finding promise in perilous times, The Business of Fashion. Bloomsbury Publishing. Available at: https://www.businessoffashion.com/reports/news-analysis/the-state-of-fashion-2021-industry-report-bof-mckinsey/ (Accessed: October 27, 2022).

Amed, I. et al. (2016) The State of Fashion 2017 , McKinsey & Co. Bloomsbury Publishing. 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: October 27, 2022).

Clausen, E. (2020) Council post: Marketing rules to follow during Uncertain Economic Times, Forbes. Forbes, Inc. Available at: https://www.forbes.com/sites/forbesagencycouncil/2020/04/03/marketing-rules-to-follow-during-uncertain-economic-times/?sh=55f65d204a36 (Accessed: October 26, 2022).

Crane, D. (2019) “Fashion and artification in the French luxury fashion industry,” Cultural Sociology, 13(3), pp. 293–304. Available at: https://doi.org/10.1177/1749975519853667.

De Souza Crook, J. (2018) Compelling Fashion Business: Bridging The Divide Between Creative Vision And Commercial Reality, London College of Fashion. UAL. Available at: https://www.arts.ac.uk/colleges/london-college-of-fashion (Accessed: October 27, 2022).

Kenton, W. (2022) Profit definition plus gross, operating, and net profit explained, Investopedia. Investopedia. Available at: https://www.investopedia.com/terms/p/profit.asp (Accessed: October 27, 2022).

Moran, G. (2022) Gen Z and millennials 2022 report, Drapers. Ascential. Available at: https://www.drapersonline.com/insight/drapers-bespoke/gen-z-and-millennials-2022-report (Accessed: October 16, 2022).

Smith, P. (2022) Secondhand apparel market value worldwide 2021-2026, Statista. Ströer Media. Available at: https://www.statista.com/statistics/826162/apparel-resale-market-value-worldwide/ (Accessed: October 27, 2022).

Statista (2022) Apparel – worldwide: Statista market forecast, Statista. Ströer Media. Available at: https://www.statista.com/outlook/cmo/apparel/worldwide?currency=GBP (Accessed: October 27, 2022).

Statista (2022) Global fashion e-commerce market value 2025, Statista. Ströer Media. Available at: https://www.statista.com/statistics/1298198/market-value-fashion-ecommerce-global/ (Accessed: October 27, 2022).

Peterson, D. (2015) “Social Media as a Tool for Social Change,” in Sustainable fashion what’s next?: A conversation about issues, practices and possibilities. London: Bloomsbury Publishing Inc, pp. 76-99. Available at: https://www-bloomsburyfashioncentral-com.arts.idm.oclc.org/encyclopedia-chapter?docid=b-9781501312250&tocid=b-9781501312250-chapter4&pdfid=9781501312250.ch-004.pdf (Accessed: October 26, 2022).

Welty, M. (2022) Ranking all of the off-white X nike sneakers by Virgil Abloh, Complex. Complex Media, Inc. Available at: https://www.complex.com/sneakers/ranking-off-white-nike-sneakers-worst-to-best/ (Accessed: October 27, 2022).

Wolff, J. (1993) “Social Structure and Artistic Creativity,” in The Social Production of Art. London: Palgrave, p. 11. Available at: https://link.springer.com/chapter/10.1007/978-1-349-23041-9_2#citeas (Accessed: October 27, 2022).

Profit focuses on balancing the importance of art and commerce within a brand and understands that the economy within the fashion industry does not solely focus on monetary value. It should be viewed through a more holistic lens, where the economy is a series of systems which humanity provisions the requirements of life and society. 

The fashion industry has been regarded as “one of the key-creating industries for the world economy” (McKinsey, 2016).  Before the Covid-19 pandemic it was generating $2.5 trillion USD in global annual revenue (McKinsey, 2021). However, in 2020 the value of the fashion industry has dropped and in 2021, it was worth $1.7 trillion USD (Fashion United, 2021). Furthermore, the “20% decline in revenues for the 2019-2020 fiscal year” (McKinsey, 2021), exemplifies the effect of the pandemic on the size of the fashion industry.  

The various sectors of the fashion industry include fashion design and production, retail, media and e-commerce. The retail sector “enjoyed a 7.5% growth in 2021-2022” (Fashion United, 2021) and a further 6.1% growth is expected in 2023, where the value of the sector will jump to $1.95 billion USD (Fashion United, 2021) (see fig 1). The booming of the e-commerce sector can be credited to the Covid-19 pandemic and showed it is vital for brands to focus on marketing and e-commerce strategy, particularly appealing to the Gen Z consumer. E-commerce sales have continued to rise to $4.9 trillion in 2022 (Fashion United, 2021) which accounts for almost 20% of all retail sales worldwide (Fashion United, 2021). This became a permanent change where 48.6% of the Gen Z consumers prefer to shop online (Drapers, 2022) and regularly consume media online. Social media influencers are their main source of inspiration for their next purchase and brands can capitalise on this during uncertain economic times. Influencers are viewed to be more authentic because they “have the privilege of far more freedom in what they write” (Mitterfellner, 2019 p.83) and in what they promote.  

The creative director bridges the gap between creativity and commerce through protecting the artistic value of their brand thus protecting its commercial value. Virgil Abloh (see fig 2), the CEO of Off White, a luxury streetwear brand was able to understand the relationship between art and commerce. Through adding his signature label, with the iconic quotation marks, he gave once ordinary objects a sense of exclusivity (see fig 3). This exemplifies that “what is involved is not the rarity of the product but the rarity of the producer” (Bourdieu, 1983 p.137). Creative directors understand that through creating products that are viewed as art, they can ensure the economic capital of their brand will remain high.  

Profit is part of the quartet that makes up the Fashion Business pillars. This pillar keeps the economy afloat and flowing – one that affects not only the fashion industry, but all. The fashion industry can be measured quantifiably, globally amassing to 1.5 trillion USD in 2021 (Statista.com). However, as stated in Fashion Management: A strategic approach, the industry can also be measured through influence and impact, using Victoria Beckham as an example. ‘Public affirmation’ in the fashion business industry is used as a measure of size. 

‘Haute Couture’ – an extremely niche, ‘strictly defined’ and luxurious sector of the industry where bespoke tailoring comes into play. Polarised from modern trends such as fast fashion, haute couture slows down the fashion industry with its prestige craftsmanship, only sixteen houses are legally granted the right to use the term haute couture, e.g. Maison Margiela, Schiaparelli, Giambattista Valli etc. As of 2021, the global haute couture market is forecasted to have a growth at a compound annual growth rate of 5.4% during 2021-2028 (Datainetlo, 2021.). Compared to streetwear which takes up 10% of the global apparel and footwear market (Strategy&, accessed October 2022).

Certain economic times, such as a recession, can cause strain on brands and their profit. What seems like the obvious answer is also the most judicious – affordabilty. Understanding geo-politics and the economic climate in each country and accommodating pricing to such so that consumers keep brand loyalty intact. On average, 60% of consumers in Japan spend 300$+ per item, whereas 61% of consumers in Europe and North America spend $100-300~ (Strategy&, accessed October 2022). Matthew Williams, founder of 1017 ALYX 9SM and creative director at Givenchy, bridges the gap between creativity and commerce by envisioning himself as the consumer, “I’m always saying, ‘I’m designing for me and what I want.’ I always try on the clothes myself, and I feel them. I wear them, I live in them, to understand them.” (Matthew Williams for GQ, 2021) Knowing what they desire in clothing, Williams embodies the average Givenchy consumer while working with the atelier designers. 

Smith, P. (2022) Topic: Apparel market worldwide, Statista. Available at: https://www.statista.com/topics/5091/apparel-market-worldwide/#topicHeader__wrapper (Accessed: October 23, 2022).

Varley, R. et al. (2019) Fashion management: A strategic approach. London: Red Globe Press. (Accessed: October 22, 2022)

Osman Ahmed, M.S. (2022) In 2022, Haute Couture isn’t just surviving – it’s thriving, i. Available at: https://i-d.vice.com/en/article/z34xq8/haute-couture-aw22-round-up (Accessed: October 21, 2022). 

Global Haute Couture market by type (jackets & coating, vests, pants and bibs, boots, others), by application (catwalk, Daily wearing) and by region (North America, Latin America, Europe, Asia Pacific and Middle East & Africa), forecast from 2022 to 2030 (2022) Dataintelo. Available at: https://dataintelo.com/report/haute-couture-market/ (Accessed: October 22, 2022). 

PricewaterhouseCoopers (no date) Streetwear: The new exclusivity, PwC. Available at: https://www.strategyand.pwc.com/de/en/industries/consumer-markets/streetwear.html (Accessed: October 22, 2022). Battan, C. (2021) The very tactical ascent of Givenchy designer Matthew Williams, GQ. Available at: https://www.gq.com/story/givenchy-designer-matthew-williams-profile (Accessed: October 22, 2022).

One of the most crucial pillars of the Fashion Business School is Profit. Profit represents the financial aspect of the industry. This particular pillar depicts the difference between the amount earned and the amount spent in the production of a garment.

Fashion is one of the key industries, which contributes to a large amount of the overall global economy. With the fashion industry growing at such a fast pace and fast fashion booming, its value of the industry is equivalent to 3 trillion dollars. “That means, it corresponds to 2% of the world’s Gross Domestic Product” (Fashinnovation, 2022). These numbers showcase the huge impact the fashion industry has on the global economy. Therefore, the financial status of a country can be majorly dependent on this industry. For instance, in Bangladesh, the garment industry employs over 4.4 million people which contributes more than 11 percent to the country’s GDP. In other words, the fashion and garment industry is a central pillar of the country’s economy.

Within the fashion industry there are several sectors that dominate the market including womenswear, menswear, kidswear, footwear, luxury… These different sectors specialize themselves in individual markets which makes them more profitable. For instance the womenswear sector is one of the dominating sectors in the industry, “the global women wear market size was valued at USD 1,386.1 billion in 2018” (GrandViewResearch, 2019). With the immense profit and economic growth this market brings to the industry, it is clear to see why this sector is flourishing.

In addition, to keep a sector thriving a brand needs to become adaptive in uncertain economic times. For example, during the COVID-19 pandemic most of the brands had to transition from in store shopping to online shopping because of the restrictions. This was a great alternative to keep business alive, create profit and exceed customers expectations.

Percentage change in online purchases due to the coronavirus (COVID-19) pandemic in the United Kingdom from March 2020 to February 2021, Statistica, 2021

As visible on the graph above, the majority of the respondents started online shopping more than before the pandemic. That is exactly why a brand should be clever about their distribution since the demand in the industry is always growing.

Lastly, economic leverage is not the only skill a brand needs to be profitable, creativity and commerce go hand in hand when discussing a brand’s financial algorithm and appeal to the public. Creative directors have to adapt to the new way of shopping – social media, that is exactly why most brands are in search of ambassadors to represent them in the media. Brand ambassadors can be anyone from influencers, bloggers or even celebrities who would promote a brand in exchange for a fee. According to Olga Mitterfellner, there are several criterias of how a brand chooses their ideal ambassador. “X has several thousand or hundred followers and they are a perfect fit for the brand” “The blogger is active on different platforms such as blog, YouTube,Instagram, Twitter etc. The brand can choose to do a campaign either on several platforms or just the strongest one.” The idea of teaming up with a public figure benefits both parties since the brand gets to grow their audience and make more profit and the influencer receives PR, builds a relationship with the brand and gets paid.

References:

Mitterfellner, O 2019 Chapter 5- social media, blogs, and opinion- leaders: who is leading your opinion? 

https://ebookcentral.proquest.com/lib/ual/reader.action?docID=5981798

Ilana Winterstein and Christie Miedema of Clean Clothes Campaign for Aljazeera, The garment industry is ignoring the plight of its workers, 2021

https://cleanclothes.org/blog/the-garment-industry-is-ignoring-the-plight-of-its-workers

GrandViewResearch, Women Wear Market Size, Share & Trends Analysis Report By Type (Top Wear, Bottom Wear, Sports & Active Wear, Intimates & Sleepwear, Footwear, Accessories), By Distribution Channel, And Segment Forecasts, 2019 – 2025, 2019

https://www.grandviewresearch.com/industry-analysis/women-wear-market

JÚLIA VILAÇA, FASHION INDUSTRY STATISTICS: THE 4TH BIGGEST SECTOR IS WAY MORE THAN JUST ABOUT CLOTHING,Fashinnovation, 2022

Fashion Industry Statistics: The 4th Biggest Sector Is Way More Than Just About Clothing

FashionUnited, Global Fashion Industry Statistics, 2021

https://fashionunited.com/global-fashion-industry-statistics

TopConcept, Freepik, 2020 

https://www.freepik.com/premium-vector/shopping-mall-sales-illustration-cartoon-customer-buyer-people-choose-clothes-hanging-hangers-retail-store-shop-boutique-modern-interior-buy-fashion-trendy-garments-background_10216481.htm

Percentage change in online purchases due to the coronavirus (COVID-19) pandemic in the United Kingdom from March 2020 to February 2021, Statistica, 2021

https://www.statista.com/statistics/1230225/changes-in-online-buying-among-uk-consumers-since-covid-19/

“Profit” is the pillar of all industries. If there is no profit, there will be no perfect economic system, and human social security will only stay in the era of barter. In the fashion industry, it makes sense that designers benefit from their creativity and labor.

A record 69 percent of companies were value destroyers in 2020, according to the latest reading of the McKinsey Global Fashion Index (MGFI), compared with 61 percent in 2019 and just 28 percent in 2011. About 7 percent of companies left the market entirely, either due to financial distress or because they were bought by rivals. （McKinsey’s Retail Practice， 2022）

We kick off our ten key themes for this year by taking the temperature of the global economy and analyzing the complex impacts of the pandemic as it continues its unpredictable progress. Amid these challenging dynamics, the imperative for brands will be to secure their recovery. At the same time, they must adapt to evolving consumer demand and ensure they take the opportunities offered by new digital frontiers. As sustainability becomes a more urgent concern, brands need to ramp up their efforts to reflect customer values in their assortments, supply chains, and ways of working. Finally, amid rising competition for talent—particularly tech talent—brands need to find new ways to attract the best and brightest, with cybersecurity likely to be near the top of the agenda

A big trend is that fashion brands are investing in new digital applications, and they use this to protect systems and customer information. Some fashion brands are grabbing market share of web traffic. Those fashion companies with a good market share win the attention of young people and make more profits. Amid intense competition, cybertalent will be at a premium. And more broadly, all-time-high vacancy rates mean brands must find novel ways to attract and retain employees—as other industries compete hard on salaries, sustainability, and job security. Authenticity and employee well-being will be more important than ever.

The metaverse is not quite here yet, but it has already blended in the digital strategy of retail brands. Many names in the fashion and luxury retail sector have geared up for the envisioned virtual and immersive future, releasing virtual clothing, dropping NFTs, and minting their presence in the gaming world. Gaming, in particular, has been key in the soft launch into the experiential, digital and immersive experiences that metaverse promises. This picture is about the things you do in the metaverse but never in real life(show below).

(Statista, 2022)

References：

AnitaBalchandani. (2022) In 2022, the fashion industry can return to growth as changing category landscapes, new digital frontiers, and advances in sustainability continue to present opportunities. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion

Tugba Sabanoglu. (2022)Fashion in the metaverse – Statistics & Facts. Available at:

https://www.statista.com/topics/9013/fashion-retail-in-the-metaverse/#dossierKeyfigures

(Accessed Jun 1, 2022)

Fashion is a $1.2 trillion global industry, with more than $250 billion spent annually on fashion in the United States, according to industry analysts. Fashion and apparel industries employ 1.9 million people in the United States and have a positive impact on regional economies across the country (LeadFerret, 2014). 

Fashion is a structurally diverse industry, ranging from major international retailers to wholesalers to large design houses to one-person design shops. It employs people across occupations—including fashion designers, computer programmers, lawyers, accountants, copywriters, social media directors, and project managers. According to a report by the California Fashion Association, manufacturing is only a fraction of the modern apparel industry as “it is a highly sophisticated industry involving fashion and market research, brand licensing/intellectual property rights, design, materials engineering, product manufacturing, marketing and finally, distribution.” (California Fashion Association, 2011).

In the fashion industry, as one of the four pillars of fashion business school, profit occupies a significant position, which reflects the social and economic situation. The profit pillar in the fashion business school discusses economy being less about monetary value and more about it being a series of systems through which humanity provisions the requirements of life and society.

In the past few years, the fashion industry’s profits have been constrained by the COVID-19 pandemic. Revenue in the fashion industry fell 20 percent in 2019 and 2020, as the earnings before interest, tax, and amortization (EBITA) margins declined by3.4 percentage points to 6.8 percent. As Covid-19 continued to spread, performance inequality, which has become a challenge in recent years, is more pronounced than ever. According to the latest data from the McKinsey Global Fashion Index (MGFI), a record 69% of companies were value destroyers in 2020, compared with 61% in 2019 and 28% in 2011. About 7% of companies have exited the market, either because of financial distress or because they were acquired by competitors. From a geographic perspective, China was the standout performer in 2021, as its economy recovered much faster than other countries. In 2022, the industry’s growth will likely be driven by both China and the United States, but growth would be less imminent for Europe (McKinsey & Co., 2021).

At the same time, in the context of capitalist decision-making in the post-pandemic global economy, contemporary artists are forging a new and positive relationship with the social relations of mass culture and production. Many brands are starting to think about the balance between creativity and commerce.

The global pandemic has pushed physical footfall to a historically low level, with many brands facing challenges from supply chain disruptions and changing consumer demand. On top of that, the acceleration of digitalization has provided brands with a dizzying range of services and media channels to advertise their products, while consumers have a greater variety of choices. These factors are forcing brands and retailers to work harder than ever to keep pace with the market and adapt to the adversity they face. Therefore, brand collaboration has become a strategic marketing solution to meet these challenges.

Brand collaborations enable consumers to experience familiar brands in novel ways, using social media to create buzz around the products and the brands who make them, leading directly to sales — and all at a fraction of the cost of equivalent digital advertising. H&M, for example, regularly collaborates with different high-end fashion brands. From Moschino to Karl Lagerfeld, H&M have successfully, and repeatedly, brought high end fashion to the high street by annually co-creating an affordable capsule collection with a high-end brand. By doing so, H&M ‘cash in’ on the exclusivity factor of these high fashion brands and continue to position themselves as an attractive place to shop. 

The high-end fashion brand also benefits as they gain access to a wider customer base, greater brand recognition and broader advertising potential with more people wearing their logos and brand imagery day to day (not to mention the royalties they are presumably entitled to in respect of sales of the H&M range) (FootAnstey, 2022).

Reference:

LeadFerret, “LeadFerret Releases a Directory of Contacts in the Fashion and Apparel Industry” (press release, January 16, 2014)

The Los Angeles Area

J. Blank. (2011). FASHION INDUSTRY PROFILE. California Fashion Association. Available from https://www.econ-jobs.com/research/34815-Los-Angeles-Area-Fashion-Industry-Profile.pdf [Accessed October 22, 2022].

Available from https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion [Accessed October 22, 2022].

Stevenson, C. (2019). “(I was there) when it all went down”, in Cronberg, A. (ed) Vestoj issue 9: On Capital. Available at https://moodle.arts.ac.uk/pluginfile.php/1463893/mod_label/intro/Week%204-Pre%20seminar%20read%20-Stevenson%20%28I%20was%20there%29%20when%20it%20all%20went%20down.pdf [Accessed October 22, 2022].

Batten. (2022). The Rise of the Brand Collaboration. FootAnstey. Available from https://www.footanstey.com/our-insights/articles-news/brand-x-brand-the-rise-of-the-brand-collaboration/ [Accessed October 22, 2022].