Profit
Profit, the essential factor that turns fashion into business, giving the ambitious mind the ability to generate and monetise success through their creativity. Used as a measuring tool for decision makers within a business such as CEO’s and shareholders, profit can help establish the performance, pinpointing where growth and decline lie.
In a large industry like fashion, many factors contribute into the profitability of a business. Having globally reached a revenue of 1.53 trillion US dollars in 2022, fashion could be considered one of the most profitable industries, especially since its forecast to increase to 1.7 trillion US dollars in 2023 (Smith, 2023).
In relation to the varying aspects that make up the total of the fashion industry, their numerous sectors perform differently. For example, the luxury fashion sector amounts for 111.50 billion US dollars in 2023, with a forecast to grow annually by 3.39% (Statista, 2023). This may be due to the connotations luxury fashion items have with investments. More and more customers are seeing the appreciation on luxury handbags, such as the 12% annual increase on Hermes and Chanel bags, noticing the potential on a return on investment (Nguyen, 2023). Alike to the watch market which generate an even higher return on investment for brands such as Patek Philippe, who over the past five years has a ROI of 207%, or Rolex with 93% (Douglas, 2022). Other sectors that have seen exponential growth is the second-hand market, with an increase of 28% in 2022 (Russell, 2023), considering consumers continual rise in awareness and crave for sustainability (Hethron and Ulasewicz, 2015).
In uncertain economic times like today, where the pandemic took a great toll on finances across the world, it could be considered more difficult for a brand to remain competitive due to the decrease in disposable income for many customers. However, with the dependability of social media, businesses can use it for marketing purposes, communicating with more than just fashion buyers and press. Social media increases the speed in which information flows, with instant updates on new products for consumers. In addition to the use of influencers to drive sales of certain items and the direct links to purchase said items, social media acts as an affordable marketing campaign that is destined to work every time (Hethron and Ulasewicz, 2015).
A creative director, whose job roles include, lead fashion designer, brand visionary, manager of multiple teams, and a brand ambassador, are also left with the task of bridging the gap between creativity and commerce. Their collections must generate revenue or fear being exchanged for a different designer; therefore, their priority is creating pieces that have a greater likelihood of selling, compared to more artistic garments that lack practicality (Mitterfellner, 2023). After this is achieved successfully creative directors are able to refocus on creativity. For this reason, all brands should be handled differently, the greatest example being Karl Lagerfeld, who whilst positioned as creative director for three different brands, Fendi, Chanel, and lastly his eponymous label Karl Lagerfeld, he accommodated for each individual brand, never failing to generate profit (Mitterfellner, 2023).
Reference list:
Douglas, A. (2022), ‘Rolex trails Patek Philippe and Audemars Piguet for 5-year return on investment’, WatchPro, (Online), Available at: https://www.watchpro.com/rolex-trails-patek-philippe-and-audemars-piguet-for-5-year-return-on-investment/#:~:text=Rolex%20might%20be%20the%20most,not%20even%20take%20second%20place. (Accessed 22/10/2023).
Hethorn, J., & Ulasewicz, C. (2015), ‘Sustainable Fashion: What’s Next? A Conversation about Issues, Practices and Possibilities’, New York: Bloomsbury, (Online) Available at: https://www-bloomsburyfashioncentral-com.arts.idm.oclc.org/encyclopedia-chapter?docid=b-9781501312250&tocid=b-9781501312250-chapter9&pdfid=9781501312250.ch-009.pdf#page-204 (Accessed 20/10/2023).
Mitterfellner, O. (2023) ‘Luxury Fashion Brand Management and sustainability: Unifying fashion with sustainability’, New York: Routledge, (Online) Available at: https://ebookcentral.proquest.com/lib/ual/reader.action?docID=7260416 (Accessed 20/10/2023).
Nguyen, H. (2023), ‘Why Hermes Birkin bags are a good investment’, VnExpress, (Online), Available at: https://e.vnexpress.net/news/style/why-hermes-birkin-bags-are-a-good-investment-4575921.html (Accessed 21/10/2023).
Russell, M. (2023), ‘Second-hand apparel market soaring as awareness improves – report’, JustStyle, (Online) Available at: https://www.just-style.com/news/secondhand-apparel-market-soaring-as-awareness-improves-report/:~:text=The%20global%20secondhand%20apparel%20market%20is%20expected%20to%20grow%203X,made%20up%20of%20secondhand%20apparel. (Accessed 21/10/2023).
Smith, P. (2023), ‘Global apparel market – statistics and facts’, Statista, (Online) Available at: https://www.statista.com/topics/5091/apparel-market-worldwide/#topicOverview (Accessed 21/10/23).
Statista, ‘Luxury Fashion – Worldwide’, (Online) Available at: https://www.statista.com/outlook/cmo/luxury-goods/luxury-fashion/worldwide#:~:text=Revenue%20in%20the%20Luxury%20Fashion,US%2427%2C150.00m%20in%202023). (Accessed 21/10/2023).