Bibliography

The four pillars of a fashion business are Planet, People, Profit and Purpose. Profit is the most important factor for every fashion brand, and all their efforts are aimed at achieving one ultimate purpose: maximising profit. Profit is one of the factors that a brand is bound to consider before making decisions and planning.

 As can be seen from the data, the fashion industry is huge, and the global apparel market is expected to reach $1.53 trillion in revenue by 2022. This is a very large number and shows that the impact of the fashion industry on society will also be huge, and conversely, the impact of external factors on the fashion industry is unavoidable. The fashion industry is now slowly becoming one of the biggest industries in the world, and before the global outbreak, their annual revenue could even reach the frightening figure of $2.5 trillion, so this has led to a lot of people being unemployed or facing financial difficulties during the outbreak. As for the UK, as a globally developed country, the fashion industry has always been a big industry in the UK as well. Currently, 800,000 jobs in the UK are provided by the fashion industry, providing employment opportunities for a large portion of the population.

 The fashion industry, one of the largest and most fragmented industries in the world, is made up of several levels: the production of raw materials, mainly fibres and textiles, as well as furs and skins; fashion design, where designers provide the inspiration to create fashionable items and assemble the garments; and retail sales, where various forms of advertisement and promotions are used to achieve a purpose, enabling brands to satisfy consumer demand for clothing at a profit. retail sales, through various forms of advertising and promotion, with the aim of enabling the brand to satisfy consumer demand for clothing at a profit. In fashion marketing, where the goal is to maximise the sales and profitability of the brand, success depends on understanding consumer needs and responding with appropriate products. So on another level, the success of these sectors is measured using economic profit.

 In a period of economic instability, consumers’ psychological activities and behaviours will change. What brands should do is adapt to and accept this change in a very short period of time, analyse it, and then make adjustments to the brand’s design, marketing strategy, and tactics to maintain the brand’s competitiveness. Because of the rise of digital media, the current market trend is gradually moving towards digitalization, and more consumers are shopping online, which means that consumer preferences and habits are slowly changing. The priority for brands is to increase their digital efforts and focus more on the feedback from this segment. And since, according to the survey, H&M and Adidas have been able to grow their sales despite the economic uncertainty because of better solutions than rival brands through cost reductions and efficient investments, brands should also consider the need for better distribution channels and in-store experiences, as well as investing in and upgrading their customer relationship management systems.

 The most important thing for a brand is to create an image in the mind of the customer. They will then need a representative adjective, which is the brand’s market position, which also allows consumers to categorise and position them. There is always a need for trust between art and business. When designing and creating a new collection for a brand, the creative director must not erode the brand’s iconic symbols and characteristics but rather build on them to innovate, which requires the brand to have complete trust in the creative director. To bridge the gap between creativity and business, it is important to focus on consumer feedback and preferences. Creativity is important, but consumer behaviour, habits, and preferences are equally important to brands, which need consumers to buy their products. On another level, the creative director of a brand is the soul of the brand, and to a certain extent, it dominates the direction of the brand, so it is necessary to listen to the needs of the consumer, to understand what makes the consumer disgusted and what makes the consumer excited, because the consumer has its own opinion, and the brand’s design is not only to innovate but also to be able to be accepted by the consumer.

To conclude, for fashion brands, the most important thing is that they need to understand the current fashion situation and adapt to some changes, including changes in customer preferences and external factors that may affect customers and change the customer’s consumption psychology. They also need to prepare in advance in order to ensure that profits are maximised.

The two faces of fashion-industry performance | McKinsey (no date). Available at: https://www.mckinsey.com/industries/retail/our-insights/the-two-faces-of-fashion-industry-performance (Accessed: 22 October 2023).

Fashion industry – Design, Manufacturing, Trends | Britannica (no date). Available at: https://www.britannica.com/art/fashion-industry/Fashion-design-and-manufacturing (Accessed: 22 October 2023).

Niinimäki, K. (2017) ‘Fashion in a Circular Economy’, in C.E. Henninger et al. (eds) Sustainability in Fashion. Cham: Springer International Publishing, pp. 151–169. Available at: https://doi.org/10.1007/978-3-319-51253-2_8.

Global Fashion Industry Statistics (no date) FashionUnited. Available at: https://fashionunited.com/global-fashion-industry-statistics (Accessed: 22 October 2023).

Overdiek, A. (2016) ‘Fashion designers and their business partners: juggling creativity and commerce’, International Journal of Fashion Studies, 3(1), pp. 27–47.

Profit refers to the beneficial gain of a fashion brand; whilst some designers may measure profit in terms of artistic expression, traditionally and most widely the fashion landscape measures profit in terms of financial gain. In this contemporary fashion climate, however, perhaps profit should be redefined to align with the consumer behaviour of Gen Z; according to McKinsey and Company, the primary drive of the hypercognitive generation is the pursuit of the truth, meaning as consumers they value transparency and sustainable innovation. As businesses adapt to new consumer demands and amend how to deliver value to the customer, perhaps the way profit is measured should also be reconsidered, such as in terms of environmental gain being equally important as financial gain. 

Fashion is one of the largest industries in the world, in fact, ‘if it were ranked alongside individual countries’ GDP the global fashion industry would represent the seventh-largest economy in the world’ (McKinsey and Company, 2016). However, fashion brands are challenged with navigating 2023– amid the highest inflation in a generation, escalating geopolitical tensions, climate crises and changes in consumer behaviour – the global economy is in a volatile state (McKinsey and Company, 2022). In these unpredictable economic times, a brand can remain competitive through exploiting the opportunities that also accompany the uncertainty of 2023; for example, if a brands target audience is Millenials and Gen Z, social media is essential to the marketing strategy. A 2011 Pew survey found that Millennials were more supportive of stricter environmental laws, likely to pay more for responsibly made products and roughly 80 percent want to work for companies that care about their impacts (Hethorn and Ulasewicz, 2015); this highlights if brands use social media as a tool to demonstrate transparency and sustainable innovation, they are more likely to appeal to modern consumer mindsets. 

We tend to view fashion as commerce and art as creativity, but perhaps they are inextricably linked. In the 1960s, the fashion world and art world began interacting with each other; one of the earliest collaborations include the ‘Organza Dinner Dress with Painted Lobster’, by Salvador Dali and Elsa Schiaparelli and is considered to be one of the most iconic pieces of that era. There are also contemporary examples of this, such as in 2003 when Louis Vuttion and Takashi Murakami created a very popular accessory collection, conveying the ability for the integration between fashion and art to increase economic revenue. The inclusion of fashion in galleries and exhibitions since the Second World War has enabled fashion to be a cultural product in its own right, not just costumes. Thus, we have seen a shift in the definition of fashion, once a mass produced consumer item, now it is often thought of as an elegantly designed, luxury item – something that can be preserved and displayed, increasing the economic value of an item to a brand after it has been exhibited. 

Ultimately, the conventional measure of ‘profit’ has shifted in the modern fashion landscape; consumers tend to value transparency and sustainability, and by extension brands must respond in concordance with this and reconsider profit as not just financial gain but also environmental benefit. The role of the designer has also changed, not only in terms of environmental accountability, but being able to innovatively exploit the tension between creativity and commerce in the fashion world. 

Bibliography: 

Francis, T. and Hoefel, F. (2018). ‘True Gen’: Generation Z and Its Implications for Companies. [online] McKinsey & Company. 

Available at: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/true-gen-generation-z-and-its-implications-for-companies.

Mckinsey (2017). The State of Fashion 2017. [online] Available at: https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/The%20state%20of%20fashion/The-state-of-fashion-2017-McK-BoF-report.pdf.

Hethorn, J., & Ulasewicz, C. (eds). (2015). Sustainable Fashion: What’s Next? A Conversation about Issues, Practices and Possibilities. New York: Bloomsbury

ogin.arts.idm.oclc.org. (n.d.). University of the Arts London WebLogin. [online] Available at: https://www-bloomsburyfashioncentral-com.arts.idm.oclc.org/encyclopedia-chapter?docid=b-9781501312250&tocid=b-9781501312250-chapter4&pdfid=9781501312250.ch-004.pdf.

Editors, A. (2019). Top 10 Most Iconic Art and Fashion Collaborations. [online] Artland Magazine. Available at: 

https://magazine.artland.com/top-10-iconic-art-fashion-collaborations/#:~:text=The%20%E2%80%9COrganza%20Dinner%20Dress%20with [Accessed 22 Oct. 2023].

Among the four pillar in fashion business, profit is an ultimate goal chased by brands and entrepreneurs, for which all strategies and solutions to people, planet, and purpose are for. Brands need profit to maintain all departments running smoothly, especially in this era where various kinds of skilled people are required and cost are controlled and used for its best advantage because of uncertainty of finance and calamity.

According to the statistic provided by Profiletree, the global fashion industry is valued at nearly $1.7 trillion as of 2022. Above this, the fashion market, excluding the luxury sector, was estimated to struggle to deliver significant growth in 2023. According to a McKinsey examination of fashion forecasts, sales growth will be rather moderate, ranging from -2 to +3 percent. This is due in part to a contraction in the European market, which is predicted to fall by 1 to 4 percent (see exhibit) (The State of Fashion, 2023). These anticipated figures are projected globally, and are based on factors like inflation, the conflict in Ukraine, the energy crisis, and dwindling consumer confidence. Dividing into more specific sectors, according to the press release from LVMH, the top three best-sold items are fashion-leather goods, watches and jewelry, and persumes&cosmetics, which all witnessed stable growth in the first quarter of 2023. And the counterpart of Richemont are jewelry, watches, leather goods, which also increase by approximately 20%.

But in the three months that ended on September 30, 2023, LVMH’s revenue increased by just 1% year over year to 19.96 billion euros, with organic revenue growth of 9%—much less than the 21 billion euros that analysts had predicted—and 10% year over year to 62.2 billion euros in the first nine months, with a 14% increase in organic sales, a marked slowdown from the performance in the first half (Ladymax, Huining Zhou). This news release highlights the vulnerability and indetermination of the global fashion industry and raises more concerns about how businesses and brands can maintain stability and competitiveness in the face of volatile economic conditions.

The McKinsey senior partner, Achim Berg, responds to this question in his interviw that brands ought to be well-prepared for any possible situations that they might have to face. In this case, scenario planning may be a crucial tool for brands to foresee the upcoming hazards, such as financial woes and the energy crisis resulting from the war in Ukraine, and initiate solutions that can carry out to cope with risks. On the one hand, changing consumer needs and their consumption patterns need to be taken into serious account as a result of the decency of consumer confidence. On the other hand, maintain appropriate cost control while continuing to make investments in technology, sustainability and other strategies. The whole fashion industry should have a hyper-vigilant insight into the ever-changing world, including politics, finance, and culture, and grasp every fleeting opportunity.

Creative directors, who always play a vital role in constructing brands’ reputation and impression among consumers, have a direct impact on sales and online volume. In addition to designing, they also have to supervise fashion designers, multiple teams, be brand visionaries, and the ambassator of their brands.. When conducting all this work, they may face the conundrum of juggling creativity and commerce at the same time. In this situation, creative directors should consciously target their present and potential clients and launch products, campaigns, and even catwalks with uniqueness and creativity that align with brand positioning and customers’ anticipation. Try to establish a solid and ironic persona among consumers and find the balance between creativity and commerce, express values and an impressive figure in the annual financial report.

In summary, brands and entrepreneurs need to base themselves on the present but prepare in advance for future obstacles and issues.

Reference:

周惠宁 (no date) 财报速递 | 富人也撑不住？LVMH最新季报显示奢侈品需求急剧降温, Weixin Official Accounts Platform. Available at: http://mp.weixin.qq.com/s?__biz=MjM5OTAxMTE4MA==&mid=2652339318&idx=1&sn=a9a28f7f1d15a4d475dbcd295e629c8f&chksm=bd222a758a55a363bafec76611275d04285419db04950848f631a01662f5139ecf8a51706786#rd (Accessed: 20 October 2023).

Fashion industry challenges and global disruptions | McKinsey (no date). Available at: https://www.mckinsey.com/industries/retail/our-insights/how-current-global-trends-are-disrupting-the-fashion-industry (Accessed: 20 October 2023).

‘Global Fashion Industry Statistics: All You Need to Know | ProfileTree’ (2023), 2 April. Available at: https://profiletree.com/global-fashion-industry-statistics/ (Accessed: 20 October 2023).

Mitterfellner, O. (2023) Luxury Fashion Brand Management: Unifying Fashion with Sustainability. Milton, UNITED KINGDOM: Taylor & Francis Group. Available at: http://ebookcentral.proquest.com/lib/ual/detail.action?docID=7260416 (Accessed: 21 October 2023).

State of Fashion | McKinsey (no date). Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion (Accessed: 20 October 2023).

Overdiek, A. (2016) ‘Fashion designers and their business partners: Juggling creativity and commerce’, International Journal of Fashion Studies, 3(1), pp. 27–46. Available at: https://doi.org/10.1386/infs.3.1.27_1.

Profit can be used as a measure of success within a business, it is defined as money that is earned in trade or business after paying the costs of producing and selling goods and services. (Cambridge dictionary). It is assumed that a business’s main objective is to make a profit however with growing concerns over the environment, equality and accountability from Gen z consumers, businesses must adhere to these factors as well as their goal of profit.

In 2022, the revenue of the global market was estimated at $1.52 trillion with China and the USA accounting for 41%.(Statista., 2023) The industry experienced 18 months of robust growth between early 2021 and mid 2022, after Covid 19 lockdown restrictions were lifted in parts of the world (McKinsey., 2022). Hyperinflation has already resulted in declining rates of consumption in 2022 and 2023. The luxury sector however is expected to outperform the rest of the industry, it’s expected to grow between 5-10% in 2023 in China and the US. In Europe however with high pressure from currency rates and the growing energy crisis the growth in the luxury sector is likely to result in modest growth in the luxury sector. (McKinsey 2022) 

Uncertainty within the industry is rife, with many consumers, especially in Europe having less disposable income due to cost-of-living crisis. Successful social media campaigns are crucial in order to attract consumers. A study by SDL in 2014 revealed that 5 out of 6 millennials connect with companies on social media platforms (Hethorn, J & Ulasewicz, C., 2015). Companies who pay attention to consumers beliefs such as trying to stop further climate change will have a better chance at staying competitive. A 2011 pew survey found that millennials are more supportive of stricter environmental laws and are more likely to favour environmentally friendly policies. With the internet it is easy to research brands and see whether they are adhering to environmentally friendly practices. Millennials and Gen Z are more likely to pay for more responsibly made products and 80% say they want to work for companies that care about their impacts on the climate. 

Karl Lagerfeld’s work with Fendi and Chanel is a great example of how creative directors combine creativity and commerce. Whilst working with Fendi, Lagerfeld was behind the scenes. After 50 years as creative director, they created the Fendi book and the Karlito fur toy design, this started a wide trend of furry bag accessories across the industry, which is still popular today and creates revenue within brands of all price points. Lagerfeld then became the openly showed face of Chanel where he created impression insulations and brought Chanel’s heritage to life through film and photographs used in advertising. (Mitterfellner, 2023)

Statista (2023) ‘Global apparel market – statistics and facts’  https://www.statista.com/topics/5091/apparel-market-worldwide/#topicOverview (accessed 19/10/2023)

Hethorn, J & Ulasewicz, C (Eds) (2015) ‘Sustainable fashion, what’s next?’

https://www-bloomsburyfashioncentral-com.arts.idm.oclc.org/encyclopedia-chapter?docid=b-9781501312250&tocid=b-9781501312250-chapter4&pdfid=9781501312250.ch-004.pdf (accessed 19/10/2023) 

McKinsey & Company (2022) ‘The state of fashion 2023: Holding onto growth as global clouds gather’

https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion (accessed 20/10/2023)

Mitterfellner, O (2023) Luxury fashion brand management: Unifying fashion with sustainability https://ebookcentral.proquest.com/lib/ual/reader.action?docID=7260416 (accessed 19/10/2023)

Profit is a businesses most important objective as without it there is no business. Profit is imperative for a number of reasons, one of these being reinvestment into the business to improve the quality of their products, expand their company and most importantly invest in technology. The fashion industry is one of the largest in the world reporting a revenue of “$1.7 trillion – $2.5 trillion in 2021” (McKinsey 2019) contributing to “2% of global GDP.”(Vilaça 2022) Instead of focusing on the whole fashion industry, let’s delve into a section of it, accessories, more specifically bags. The Lyst Index reported that in Q2 of 2023 searches for “Goyard were up 95%.” (Lyst index 2023) Goyard is an elusive brand which doesn’t pursue any marketing techniques creating a sense of exclusivity. Seen on the likes of A$AP Rocky and David Beckham the brand contributes to the annual “$153bn” (Statista Market Insights 2022) annual revenue for the luggage and bags industry. Thus showing that the luxury market is on the rise and is expected to outperform the rest of the industry, as high income earners are less affected by the economic turndown that the world is currently facing. 

Post pandemic the world is struggling with rising inflation, a climate crisis, a war and many consumers having less disposable income. As prices rise throughout the industry consumers demand will begin to fall as they turn to cheaper alternatives such as second hand websites EG: Vinted. This will ultimately affect the fashion industry in a negative way. Brands will therefore have to be careful in how they navigate these uncertain times. One way a brand can stay competitive in unforeseeable economic times is to employ enticing marketing which attracts consumers. 

Within a brand it is essential to have a figurehead who leads the design process whilst simultaneously has an understanding on how to create a successful profitable business. Hence why the merging of the traditionally two separate roles, creative director and CEO, has been followed by many brands. As Andy Warhol once famously stated “Being good in business is the most fascinating kind of art.” (Warhol 1970) In order to be a successful creative director it is important to be able to emulate the brand and its values whilst also creating a product that consumers will buy, thus generating revenue. Furthermore, as the world tackles a climate crisis it is imperative for a creative director to be on board with creating sustainable decisions as many consumers turn their backs on brands that don’t support the movement towards more sustainable fashion. As Sussane Tide Frater said “The future is not some place to go to, but one we create.” (Frater 2023)

References:

Euromonitor International, a market research provider & McKinsey report ‘State of Fashion 2022: An uneven recovery and new frontiers’. Source: McKinsey analysis 2019

Vilaça, Julia. (2022) Fashion industry statistics: The 4th biggest sector is way more than just about clothing [Online[. Available at: https://fashinnovation.nyc/fashion-industry-statistics/#:~:text=Fashion%20Industry%20Statistics%3A%20General%20Data,Gross%20Domestic%20Product%20(GDP). (Accessed 21.10.2023)

Lyst Index. (2023) Fashion’s Hottest Brands and Products Q2 2023 [Online[. Available at: https://www.lyst.com/data/the-lyst-index/q223/ (Accessed 21.10.2023)Statista Market Insights (2022) Accessories- worldwide [Online[. Available at: https://www.statista.com/outlook/cmo/accessories/worldwide (Accessed 21.10.2023)