PROFIT
Economic profit is a measure of value production that takes explicit and opportunity costs into account. It is defined as invested capital multiplied by the spread on that capital (return on invested capital minus weighted average cost of capital). (Berg, Hedrich and Leon, 2017)
The concerns surrounding the fashion business are complex and important. It has a massive impact on the environment, society, and the economy. According to fashion industry data, the garment and textile sector is the world’s fourth largest.According to Fashion United, the industry employs 3,384.1 million people. Its monetary value is three trillion dollars. This equates to 2% of the world’s Gross Domestic Product (GDP). (Vilaca,2022)
“Fashion is one of the world’s most important industries, driving a significant part of the global economy (Fashion United).The global fashion sector will battle inflation and changing consumer patterns in 2023. The luxury industry is predicted to outperform, led by rich consumers in China and the United States, while Europe is expected to rise modestly due to exchange rates and energy difficulties. With the exception of luxury, the fashion market is projected to see moderate sales growth impacted by inflation. Companies must adapt to changing consumer demands, implement efficient digital marketing tactics, and engage in environmentally friendly production. Regional differences exist, with China and the United States outperforming Europe. Managing the impact of inflation and focusing on supply chain efficiency will be key for industrial resilience. (McKinsey 2022)
Creative directors play an important role in the fashion business, particularly in luxury firms. They develop a brand’s individual personality by injecting their original creative vision into all aspects of the organization, from collections to communication strategies. ‘The fashion industry is the quintessential example of an industry whose marketing has profoundly shaped and manipulated consumer tastes and, indeed, society. This creative direction creates a brand’s distinguishing feature, heavily affecting its visual design. Hedi Slimane’s reinvention of Yves Saint-Laurent in 1999, despite early controversy, resulted in tremendous success. Slimane bridged the gap between business and creativity by rebranding as Saint Laurent and introducing modifications such as unisex monochrome fashion, leading in increased brand recognition and profitability. Hence, creative directors bridge the gap between commerce and creativity and play an important role in the fashion industry, balancing artistic expression and commercial success. (Mitterfellner, 2019)
REFERENCING:
Berg, A., Hedrich, S.H. and Leon, J. (2017). THE TWO FACES OF FASHION- INDUSTRY PERFORMANCE. [online] Available at: https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/The%20two%20faces%20of%20fashion%20industry%20performance/The-two-faces-of-fashion-industry-performance.pdf [Accessed 20 Oct. 2023].
McKinsey (2022). The State of Fashion 2023: Holding onto growth as global clouds gather. [online] McKinsey. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion[Accessed 22 Oct. 2023].
Mitterfellner, O. (2019). Fashion marketing and communication : theory and practice across the fashion industry. Abingdon, Oxon ; New York, Ny: Routledge.[ Accessed 20 Oct. 2023]
Vilaça, J. (2022). Fashion Industry Statistics: The 4th Biggest Sector Is More Than Clothing. [online] Fashinnovation. Available at: https://fashinnovation.nyc/fashion-industry-statistics/ [Accessed 22 Oct. 2023].
IMAGE REFERENCING:
Fig 1. Mckinsey (2023). Year-over-year growth in fashion retail sales. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion [Accessed 22 Oct. 2023].
Fig 2. Wilson , E. (2013). Hedi Slimane, the creative director of Yves Saint Laurent, has introduced a vision for label that has proved divisive. Available at: https://www.nytimes.com/2013/04/18/fashion/hedi-slimanes-first-year-at-saint-laurent.html [Accessed 22 Oct. 2023].