Profit
The fashion industry is a major sector in the economy, in the UK alone being worth £26 billion (britishcouncil.org, 2016). In the fashion industry profit is usually one of the main objectives of businesses, with companies primarily working towards increasing their profit margins. Thus leading to fast fashion businesses dominating the market such as Zara and H&M, these brands encourage overconsumption through the constant introduction of new products, often using low quality materials. This helps businesses to consistently meet new demands of consumers, allowing them to optimise the amount of sales and therefore profit that they are making. As well as this, fast fashion brands operate their production in factories, usually in a lower income country, for example h&m outsourcing most of their production to Asia, allowing them to benefit from low labour costs and retain more revenue from each product that they sell and hence become more profitable.
However other markets in the fashion industry are seemingly becoming larger and therefore more appealing for businesses to operate in. Such as consumers that are interested in sustainability, this sector is becoming increasingly profitable with the growth of environmentally conscious cosumers. The luxury fashion sector is also increasing in size and is ‘anticipated to outperform the rest of the industry’ due to those with higher incomes continuing to spend despite fluctuations due to hyperinflation (Mckinsey, 2022). The fashion industry is facing a more challenging situation due to hyperinflation causing declining growth rates in 2022 and continuing to affect businesses in 2023, a new approach may therefore be vital in businesses reducing the affect of this (McKinsey, 2022). H&M although being fast launched a collection partnered with Mugler in May 2023, a luxury fashion designer, allowing them to expand into other markets whilst also giving those who want more affordable luxury fashion the opportunity to buy due to this collaboration. Therefore this allows creative directors to bridge the gap between creativity and commerce by creating new and innovative ideas that can help the business to grow further, like the mugler x h&m collab where the creative director stated that ‘ the capsule collection showcased the best of both brands.’
In uncertain economic times businesses can remain competitive through contingency planning which consists of making a backup plan for situations, allowing for a more effective response if the situation were to occur. For example during economic uncertain times more people are likely to travel less, which encourages businesses to focus more on their online sales and marketing where consumers are more easily reachable.
Britishcouncil.org. (2016). The power of fashion | British Council. [online] Available at: https://www.britishcouncil.org/research-insight/power-fashion#:~:text=Clothing%20has%20always%20been%20big.
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.