Profit
All businesses are profit orientated. Without profit, businesses will eventually fail. In the fashion industry, previously brands considered profit solely on the mark-ups they make from the sale of their garments. However, businesses are now faced with the more prevalent challenge of profit vs ethics. Brands may need to adapt their ethics to keep their customers, without losing their market position. By adapting in this way brands are responding to the dynamic market, with shifts towards customers being more aware of a brand’s ethical stance and their corporate social responsibilities (CSR), particularly Gen Z consumers (McKinsey, 2023).
The fashion industry is one of the most important industries in the global economy, generating revenues of $1.7 trillion dollars in 2021 (McKinsey, 2022). Projected revenue growth levels are expected to increase by 12% from 2023-2027 (Statista, 2023).
Due to rapid growth in the eCommerce fashion market, pushed by factors such as the pandemic and the demand for online shopping, it is no surprise that we see high growth rates within the industry. However, it is the luxury sector that outperforms the industry with sales projected to grow between 5-10% in 2023 (McKinsey, 2023). As the fashion industry grows, more people are becoming aware of appearance and are more willing to spend more money on luxury clothing to enhance their confidence and presence. Evidently, these factors coupled with the ease of accessing clothing online, have been hugely impactful on the growth of the luxury sector of the fashion industry, causing it to enlarge at such a fast pace.
During economic uncertain times, such as Covid-19 where revenues declined to $1.4 trillion dollars (Statista, 2023), brands must engage in new strategies to remain competitive. As economic variables such as inflation increase, customers have less disposable income to spend on luxury and normal goods. Brands could implement lower pricing to remain competitive however many are reluctant to with the fear of reputational damage or decreases in perceived quality of products, particularly in the luxury sector. Instead, brands must drive their online platforms to engage with their customers and reach new audiences globally, maintaining brand awareness and ensuring customers are still willing to buy products.
When expanding a brand’s product portfolio innovation overseen by the creative directors is vital for the business to be profitable. Creative directors must bridge the gap between creativity and commerce to link the two together. This will allow designers and creative roles within the firm to coincide with the business roles, enabling them to create products that are not only different but also market orientated. This will develop a point of product differentiation and allow the business to achieve a competitive advantage against its rivals, which will increase customer loyalty therefore positively impacting revenues.
References
McKinsey (2023). What is Gen Z? | McKinsey. [online] www.mckinsey.com. Available at: https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-gen-z
Accessed: 21 October 2023
McKinsey & Company (2022). The State of Fashion 2022. Available at: https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/state%20of%20fashion/2022/the-state-of-fashion-2022.pdf Accessed: 21 October 2023
Figure 1- https://www.statista.com/forecasts/821415/value-of-the-global-apparel-market
Statista. (2023). Revenue of the apparel market worldwide from 2014 to 2027 (in trillion U.S. dollars). Statista. Statista Accessed: October 21, 2023. https://www.statista.com/forecasts/821415/value-of-the-global-apparel-market