Profit
Profit is a fundamental factor within the fashion industry and determines the overall success of a brand. Profit is made when many components within the supply chain work efficiently to achieve specific goals and targets.
The global eCommerce fashion industry continues to thrive year after year with an estimated revenue of $768.70bn and estimated market value of $821bn for 2023. (‘Fashion – Worldwide.’ 2023) This makes the fashion industry one of the largest and most profitable markets globally.
According to a McKinsey and Company report, ‘The State of Fashion 2023,’ the industry saw a “21% increase in revenues during the 2020-21 global pandemic” (Amed, I. 2023). Many consumers during this time, especially gen Z, saw an opportunity to save substantially and spend the money on day-to-day expenses as well as luxury goods. This propelled the financial market, highlighted in Statista analysis (figure 1), and saw global revenue increase from $633.20 to $759.08 billion following an unexpected decline to $707.29 billion in 2022 due to inflation and mental health. (Statista Fashion, 2023) Brands clever use of innovative and personalised marketing strategies such as user-friendly navigation and customer reviews assisted in the rise of revenue due to such strategies triggering an emotional connection between the consumer and product, encouraging them to purchase it. Brands adopt these strategies, to target and connect with a wider scope of consumers for various backgrounds which, in the long term, will generate more sales.
With reference to figure 1, the chart is divided into categories: ‘Accessories, Apparel and Footwear’ and highlights that most revenue is generated from apparel sales while footwear and accessories follow closely behind. The market is currently dominated by online retailer Amazon whose revenue during 2022, stood at $514.00 bn. (Statista Fashion – Worldwide, 2023) The brand takes advantage of the digital age and fully understands consumer behaviour, values and use target marketing.
To stay competitive, brands should not rely on economic growth/trend forecasts but implement diverse thinking and risk mitigating processes into their strategies. This will enable brands to uphold reputations, keep customers engaged and continue to deliver on targets.
Creative directors must reflect on the values and needs of the consumer while also analysing the state of the economy, as different factors will cause fluctuations in the fashion industry market, resulting in unsteady growth for businesses. Presenting ideas and outcomes to consumers can be in an inspirational and transparent way which develops a trusting and personal relationship with customers.
Reference List
Fashion – Worldwide. Accessed: October 18, 2023. https://www.statista.com/outlook/dmo/ecommerce/fashion/worldwide?currency=usd&locale=en
Francis, T. and Hoefel, F., 2018. True Gen’: Generation Z and its implications for companies. McKinsey & Company, 12.
Figure1 Statista Fashion – Worldwide. Accessed: October 18, 2023.
https://www.statista.com/outlook/dmo/ecommerce/fashion/worldwide?currency=usd&locale=en
The state of fashion 2023: Holding onto growth as global clouds gather (2022) McKinsey & Company.
https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion