PROFIT

Although the fashion industry is based on creativity and art, it is also fundamentally reliant on profit. In order for a brand to survive they need to have sufficient cash flow and revenue to cover all of their fixed and variable costs. If they aren’t generating enough profit, they cannot maintain their operations or produce new designs. 

The revenue of the apparel market worldwide in 2023 was US $1.74 trillion and is projected to grow to US $1.94 trillion in 2023 (Smith 2023). The figure has been steadily increasing since 2014, with the exception of 2020, where the industry experienced a decline in revenue which was most likely caused by the global pandemic and the temporary closing of most retail stores. Currently, the largest sector of the global fashion industry is Women’s apparel which possesses a market volume of US$0.91trillion in 2023 (Statista 2023).

In the face of a global slowdown and economic uncertainty, the luxury sector is likely to continue to thrive as those with enough disposable income to purchase expensive goods are likely not going to be greatly impacted by rising inflation and interest rates. However, consumers from lower income households will have to reduce their spending and cut back on non-essential purchases, such as clothing, therefore high street brands may experience a decline during economic hardship (McKinsey 2023).

According to Mitterfellner (Mitterfellner 2023), a successful brand resuscitation consists of multiple steps, made up of, but not limited to, investing in the brand, revitalisation of the brand’s essence and revitalisation through new distribution channels. The collapse of the brand MCM was caused by multiple reasons, one of which being the financial crash in Asia in the late 90s, which due to a lack of adequate contingency planning forced the business to go into administration. However, under new management the brand revived and became internationally renowned once again. Sung-Joo Kim, the new owner, modernised the brand, updating the bags with fresh colours and designs, whilst introducing new products in different markets such as luxury fragrances. 

A way in which brands could connect creativity and commerce is through dual leadership style, which Overdiek (Overdiek 2016) defines as a ‘marriage between a talented designer and a visionary manager.’ This partnership allows the creativity of the brand to be profitable with both exceptional design and economic sustainability being valued equally. 

Overall, profit is what creates the basis for a successful thriving brand and cannot be overlooked by creativity, as without sufficient funding a business is not able to survive or grow.

BIBLIOGRAPHY

McKinsey (2023) The State of Fashion 2023. McKinsey & Company and Business of Fashion. Available at https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/state%20of%20fashion/2023/the-state-of-fashion-2023-holding-onto-growth-as-global-clouds-gathers-vf.pdf (Accessed on 21/10/23)

Mitterfellner, O. (2023) Luxury Fashion Brand Management and sustainability: Unifying fashion with sustainability. New York: Routledge. 

Overdiek, Anja. (2016). Fashion designers and their business partners: Juggling creativity and commerce. International Journal of Fashion Studies. 3. 27-46.

Smith, P (2023) Revenue of the apparel market worldwide from 2014 to 2027. Statista. Available at: https://www.statista.com/forecasts/821415/value-of-the-global-apparel-market (Accessed on 21/10/23)

Statista Market Insights (2023) Apparel- Worldwide. StatistaAvailable at: https://www.statista.com/outlook/cmo/apparel/worldwide (Accessed on 21/10/23)