James Murphy

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Profit

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Since 2020, The global luxury goods market has grown steadily from a mere 259.10 billion US dollars to a staggering 354.80 billion US dollars. Within 3 years, the luxury goods market has grown to around 100 billion dollars, post-pandemic, and is showing no sign of slowing down. According to research conducted by Statista, the luxury goods market is estimated to grow up to 418.90 Billion dollars by the year 2028. Luxury fashion itself accounts for 30% of the global revenue in 2023. The luxury goods market share for 2023 is broken down into 5 categories with the highest market share being taken up by fashion. Fashion takes up 31%, this being only apparel and footwear sold by luxury brands. This is followed by luxury leather goods and watches & jewelry which take up 21% (Luxury Good: in-depth market analysis, 2023).

From all the research conducted by Statista, the main take main point that can be extrapolated is that the US and China are responsible for the largest market share. Globally the fashion market increased from 111.5 billion US  dollars in 2023 to 131.7 billion us dollars in 2028, with a compound annual growth rate of 3.4%. In the US alone, the cumulative sales between 2023 and 2028 are 170.4 billion dollars, and in China, it is 71.5 billion dollars. The statistics alone for apparel and footwear, put into perspective how impactful profit is for a brand(Luxury Good: in-depth market analysis, 2023).

Brands are able to remain competitive during uncertain economic times by adapting to the environment and evolving. A relevant example is in 2020 when the global economy took a hard hit when the Covid Pandemic caused all business to halt as people had to remain indoors. With the pandemic slowing down retail business, many brands had to adapt by adopting online e-commerce. As people were stuck at home for work, most spent time online shopping. Most luxury brands did not have the infrastructure and many had to update their sites to cater to online shoppers. When looking at the economic growth of the fashion market during 2020 and 2021, the clear growth indicated that this adaptation proved to be successful with a growth of 35.1 billion dollar growth in sales (Luxury Good: in-depth market analysis, 2023).

The best method for creative directors to bridge the gap between creativity and commerce is transparency. With society looking down on capitalism, even though capitalism is the bedrock of why the economy remains strong, transparency is key. Most brands try to hide the for-profit aspect of the business by using marketing to manipulate the consumer into thinking that the brand is producing fashion out of a passion for the art. In reality, brands are just trying to maximize profits. With that in mind, it definitely helps to have a very strong marketing department, as they can help reframe the product as being a lifestyle rather than a product. But when artists are transparent about the business aspect of their work, people will feel a level of trust and honesty which they find valuable.

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People

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With a purchasing power of 360 billion dollars, and accounting for 25% of the global population, Gen Z has become the new target market for companies (Schneider et al, 2023). According to the US healthcare company Cigna, Gen Z is the loneliest generation due to the majority being chronically online (Cigna, 2018). Social media has become a vital tool for Gen Z in modern society, as it is a place for self-expression. This alongside the fact that Gen Z has an obsession with romanticizing the mundane, fashion and aesthetics has become such an integral part of many young adults’ lives (Francombe, 2023). With TikTok and Instagram micro trends pushing for curated vibes, it is hard to ignore the importance of understanding the youth.   

Personality cluster (Business of Fashion, 2023)
aggregate spending between the different age brackets (Business of Fashion, 2023)

When trying to attract Gen Z to the brand, understanding their behavior is the most important. The Business of Fashion provided an insightful graphic that showed a modern way of categorizing customers. This modern form of categorizing is called clusters (Schneider et al, 2023). Rather than categorizing by gender, age, education, place of birth, and where one grew up, which are very superficial facts that ignore that people might grow up the same way but have varying different interests and values. With clusters, researchers can understand the psychology of what intrigues a person, it helps to understand are person’s character. This allows for new categories such as The Foragers, the rebels, or the Satellites. This gives a better understanding of a person’s behaviors and interests, as well as, how to target people more accurately by sorting people into clusters based on behavioral psychology(Schneider et al, 2023). 

One concept of attracting Gen Z to a brand is through the idea of rebranding. An example brand that executes this concept well is Aimé Leon Dore. They take the 90’s Ralph Lauren archive and put a modern twist on it. There is very little innovation in the product, but more so in how it is presented, with the focus being on the four Ps in business, product, people, place, and price (American Marketing Association, 2023). So, it is not about trying to appeal to Gen Z but rather, giving them an aesthetic, or culture that the Gen Z crowd might want to be a part of. A movement, or a trend shift that would appeal to young adults. Having stores in Soho, pricing items with premiums to make it seem luxurious.

The other thing that a brand can do to appeal to Gen Z is to have a strong brand identity with a message that people can get behind. Brands such as Denim Tears or the leading fashion brand Nike, have an incredibly strong brand identity. With Denim Tears, founder Tremaine Emory brought African heritage and history to the center stage. Including themes such as African Diaspora, or putting a twist on the classic polo American flag sweater by featuring an African American flag. These ideas and concepts speak to people, and in many ways transcend fashion becoming part of culture. Similar to Aime Leon Dore, who not only copied a concept but rather created a culture based on memories of the past, in a sense nostalgia core.

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Planet

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The Fashion industry is one of the leading polluters with about 8-10% of global carbon emissions being produced by the fashion industry alone (Ro, 2020). The production of clothes as well as the manufacturing of fabrics requires more energy than both the aviation and shipping industries combined with the EU causing the third-highest pressure on water and land use and the fifth-highest in raw material use (Ro, 2020 & EEA, 2023). And about 1.2 billion tonnes of greenhouse gases are being released into the atmosphere (Beall, 2020).  The significance of those facts is a good indicator of how impactful the fashion industry is on the planet. With new trends on TikTok Tok people in the UK alone have spent on average 56 million tonnes of clothes, and over 60 percent of people buying more clothes than 15 years ago (Beall, 2020). The fashion epidemic has caused many governments and organizations namely the United Nations to create and commit to sustainability development goals, one of which is “Responsible consumption and production”. This alongside another SDG, “Industry, innovation, and Infrastructure”, is crucial for the plant in regard to fashion. Changing consumer behavior to be more responsible with the way products are consumed, especially those made of harmful materials, is important to creating a sustainable industry. This is alongside Industries innovating production methods and revolutionizing new technologies that can benefit the planet. A circular economy is the most optimal because, with the growth of cotton requiring 22’500 liters to produce 1 kilogram of cotton, better methods including recycling old fabrics and clothes for new products like clothes or mattress stuffing can help in the fight against climate change as well as create a self-sustaining industry (Leahy, 2015). But while the circular economy in fashion is a leap forward, the energy and water required to wash, shred and respinning are significant, but recycling and reusing fundamentally is a better solution. An example of innovation is Patagonia. The family of Chouinard sold all their shares to a designated trust and a non-profit organization (Gelles, 2022). Patagonia has set up as many systems to regulate its sourcing and manufacturing to make sure it is as responsible as it can be. This has included sourcing organically grown cotton or wool, supply chain environmental responsibility programs, and bio-based polyester (Patagonia, 2023). The key to creating an eco-friendly fashion industry is ensuring longevity and responsibility not only from the producers but also the consumers, and as the planet passes the tipping point change is required with decisive action.

Beall, A. (2022) Why clothes are so hard to recycle, BBC Future. Available at: https://www.bbc.com/future/article/20200710-why-clothes-are-so-hard-to-recycle (Accessed: 09 October 2023).

EEA (2023) What are the environmental impacts of the textile industry?, European Environment Agency’s home page. Available at: https://www.eea.europa.eu/en/about/contact-us/faqs/what-are-the-environmental-impacts-of-textiles#:~:text=Clothes%2C%20footwear%20and%20household%20textiles,materials%20and%20greenhouse%20gas%20emissions (Accessed: 09 October 2023).

Gelles, D. (2022) ‘Billionaire No More: Patagonia Founder Gives Away the Company’, The New York Times, 14 September. Available at: https://www.nytimes.com/2022/09/14/climate/patagonia-climate-philanthropy-chouinard.html#:~:text=Rather%20than%20selling%20the%20company,trust%20and%20a%20nonprofit%20organization (Accessed: 09 October 2023).

Leahy, S. (2015) ‘World Water Day: the cost of cotton in water-challenged India’, The Guardian, 20 March. Available at: https://www.theguardian.com/sustainable-business/2015/mar/20/cost-cotton-water-challenged-india-world-water-day (Accessed: 09 October 2023).

Patagonia (2023) Environmental responsibility, Patagonia. Available at: https://www.patagonia.com/environmental-responsibility-materials/ (Accessed: 09 October 2023).

Ro, C. (2022) Can fashion ever be sustainable?, BBC Future. Available at: https://www.bbc.com/future/article/20200310-sustainable-fashion-how-to-buy-clothes-good-for-the-climate (Accessed: 09 October 2023). 

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