PROFIT
Profit is the third pillar in fashion industry, and it is crucial for companies to maintain their business. Without profitability, businesses in the fashion industry cannot sustain operations, pay employees, invest in growth, or continue to provide products to consumers.
The size of global fashion industry will vary depending on the specific segments: wide range of products and services. This including apparel, footwear, accessories, and textiles in the value market and luxury brands. According to a report from Statista, “The apparel market was calculated to worth around 1.53 trillion U.S dollars in 2022 and it is expected to increase more than 1.7 trillion dollars in 2023”. Luxury markets is a key market in the apparel industry. After the COVID-19 pandemic small-scale lockdown, many luxury brands have recovered and experienced a growth, for example, LVMH had a market capitalization of 317 billion dollars in September 2022 (P. Smith, 2023).
The performance of various sectors in the industry based on a variety of factors, including consumer preferences, economic conditions, technological advancements, and global event. As a part of fashion industry, fast fashion brands are well known for their ability to quickly produce affordable clothing. However, with the emphasis on protecting the environment, fast fashion brands are scrutinised on their environmental and ethical practices. Zara, one of the world’s largest fast fashion retailers, has faced criticism for its production practices and labour conditions in the past. The brand has been working to improve its environmental efforts by committing to using sustainable materials and improving waste management. However, it still faces challenges in terms of transparency and labour practices in its supply chain (Maddie. D, 2022).
Along with the global economic gloom, customers’ shopping habits has changed, it is more obvious when we are looking at the shopping habits between low-income and high-income family. During economic downturns, low-income family tend to prioritise thrift and value in their purchase. They are seeking discounts, use coupons, and opt to comparing prices between different brands when they are buying clothes. High-income families, on the other hand, may also become more value-conscious during economic uncertainties, seeking out sales and discounts, but they might not experience as significant a shift as low-income families. In this situation, focus on understanding and meeting consumers’ needs and preference become crucial. According to a report from McKinsey (2022), consumers have reduced spending money on clothing in 2023, brands have more opportunity to keep customers engaged through providing rental channels and off-price retailer websites.
Creative Directors need to strike a delicate balance between creativity and commerce. They adapt to market dynamics, embrace innovation, and measure success through data-driven insights. Budget management, brand identity guardianship, and innovation are among their core responsibilities.
Bibliography:
Maddie. D (2022) How Ethical Is Zara? Available at: https://goodonyou.eco/how-ethical-is-zara/ [Accessed: 22/10/2023]
McKinsey (2022) The State of Fashion 2023: Holding onto growth as global clouds gather. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion [Accessed: 22/10/2023]
P. Smith (2023) Global apparel market – statistics & facts. Available at: https://www.statista.com/topics/5091/apparel-market-worldwide/#topicOverview [Accessed: 22/10/2023]