Profit

Profit is another of the four pillars and is, arguably, the most important pillar. Fashion brands are, ultimately, businesses and businesses need to generate profit to thrive. Due to this, profit is usually the underlying motivation behind the moves taken by a brand as they strive to maximise their monetary commercial success.

The fashion industry is one of the most lucrative and largest due to its incredibly strong impact on human culture. The fashion industry is the 4th largest industry, estimating at $1.5 trillion in 2021, post pandemic. There is also an expectation for revenue to increase to $1.7 trillion in 2023, this year (Statista, 2023). There are various sectors in the fashion industry each with different commercial strategies. The luxury fashion sector has high price points and more prestige reputations which mean that even during uncertain economic times, they can maintain their high profit margins as the high-income consumer market they appeal to wouldn’t be as affected by the pandemic as lower-income consumers (Kim, 2023). Alternatively, the fast-fashion sector has lower profit margins than the luxury sector but higher profit margins than typical fashion brands due to lower price points and higher international presence. (Childs, Jin, 2015)

Figure 1: Graph showing the decline in footfall in January 2021 compared to January 2020 (Pre-Pandemic) Image Credit: BBC, ShopperTrak

n 2020, a global scale event which nobody could’ve predicted happened with the pandemic putting the world in lockdown. This had a huge impact on the fashion industry because they relied on their in-person stores to sell their products. During uncertain economic times brands need to evolve to remain competitive. In response to the pandemic, many brands had to adapt to develop a stronger online presence due to the decline in retail footfall. The e-commerce sector saw a significant increase due to the rise of online activity. The cost of living crisis also poses a threat to the industry as clothing is a necessity but after a certain price point, it becomes a luxury. Due to this, brands need to be careful with how they combat a recession. In 2008, an overwhelming percentage of companies were negatively affected but 9% flourished. This was due to those companies cutting operational costs and investing in growth strategies instead, such as marketing and R&D (Clausen, 2020).

Figure 2: Image Credit: Mitterfelner

Creative directors are the face of the brands they work for and shoulder a large amount of responsibility to bridge the gap between creative and commercial success. A creative director has to be innovative and creative whilst also maintaining leadership and management skills. They have to have a deep understanding of their brand’s visual DNA whilst also having the ability to develop and evolve the brand in order to adapt to the modern environment to meet the aesthetic need of the customer (Mitterfelner, 2023). A brand’s ability to stay true to their core DNA and identity whilst also being able to translate their designs to fit modern expectations is vital for commercial success and longevity.

Bibliography:

Figure 1 – Image Credit: BBC, ShopperTrak

Figure 2: – Image Credit: Mitterfelner

Figure 3 – Image credit: David X Prutting/BFA/REX/Shutterstock

Childs, M. & Jin, B. (2015). Internationalisation Of Fast Fashion Retailers: Does It Follow The Uppsala Model?. Springer. [Online] Available at: https://link.springer.com/chapter/10.1007/978-3-319-10912-1_221#:~:text=For%20example%2C%20profit%20margins%20for,higher%20for%20fast%20fashion%20retailers.

Clausen, E. (2020). Marketing Rules To Follow During Uncertain Economic Times. Forbes. [Online] Available at: https://www.forbes.com/sites/forbesagencycouncil/2020/04/03/marketing-rules-to-follow-during-uncertain-economic-times/?sh=55840c374a36

Kim, M. (2023). The Surprising Reason Luxury Goods Are Blooming. Vox. [Online] Available at: https://www.vox.com/money/23728283/luxury-designer-boom-nike-lvmh-pandemic-le-creuset

Mitterfelner, O. (2023). Luxury Fashion Brand Management: Unifying Fashion With Sustainability. Taylor & Francis Group. [Online] Available at: https://ebookcentral.proquest.com/lib/ual/reader.action?docID=7260416

Statista, 2023. Global Apparel Market – Statistics & Facts. [Online] Available at: https://www.statista.com/topics/5091/apparel-market-worldwide/#topicOverview