PROFIT

As an emerging industry, the fashion industry is gradually shaping people’s lifestyles and consumer attitudes. With its potential for high value-added and high returns, it is of undeniable importance to the health of the country’s economy. According to the latest research report from the Oxford Economics Institute, the UK fashion industry has contributed a massive 26 billion pounds, equivalent to 43.4 billion US dollars, to the UK economy in the past five years. This undoubtedly highlights the positive contribution of the fashion industry to the economy. From the economic perspective, a business’s primary objective is to maximise profits.

McKinsey’s forecasts suggest that global luxury fashion sales will see a 5 to 10 per cent increase by 2023, while other sectors could face negative growth of 2 to 3 per cent. This means that fashion companies will have to revisit their operational strategies. Many will update their organisational structures, bringing in new positions or upgrading existing ones to ensure they can seize key growth opportunities and respond more effectively to the unstable economic environment. Brands must also seek unique selling points to engage consumers and strengthen their supply chain strategies.

The fashion industry faces multiple challenges, mainly from uncertainty and volatility in the retail space. Against this backdrop, brands and businesses need to have accurate information about their target audience, the retail environment, competitor performance, and product analyses to ensure that their strategic decisions are based on reliable data, which will help to achieve more sustainable business models that cater to the products that people need to buy.

For the fashion industry, the first task is to conduct market research to identify target consumer groups and overall fashion trends. At the same time, market research must be consumer-focused but also balanced with competitor and brand analyses, through which data is used to assess competitors’ product performance and potential growth opportunities for new products and to identify gaps in the market so that brands can flexibly and quickly adjust their strategies to stand out by launching new products, services, or unique and innovative angles.

While business pursues clear and quantifiable goals, the fashion industry blends business and art. In this field, it is crucial to build a strong relationship of trust to protect the reputation of the company and the artist and ensure that the collaboration between the two adequately meets market demands and generates sufficient revenue while taking potential risks. As such, the fashion industry blends business and art and requires rigorous discipline to execute impressive work that appeals to people’s needs while generating significant profit for the company.

Reference

https://www.theguardian.com/media-network/media-network-blog/2013/oct/16/bridging-gap-art-business

https://www.forbes.com/sites/forbesagencycouncil/2023/03/01/5-strategies-to-keep-your-fashion-e-commerce-business-competitive-in-2023-and-beyond/

https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion

Profit, the total cost deducted from the total revenue,  is the engine that keeps businesses running, serving as a primary measure of a brand’s success and viability. A profitable business undoubtedly facilitates a brand’s expansion, augmenting its ability to survive and compete.

Revenue of the global apparel market 2014-2027 | Statista (oclc.org)

According to Statista, the revenue of the global apparel market was calculated to be approximately 1.53 trillion U.S. dollars in 2022,  a slight decrease from the previous year however, it demonstrates a continuous increase between 2023 and 2027,  to more than 1.7 trillion dollars by 2023 and reaching a new peak of 1.94 trillion U.S. dollars by 2027 (Smith, 2023)

https://www.statista.com/statistics/1008241/fast-fashion-market-value-forecast-worldwide/#:~:text=The%20value%20of%20the%20fast.

The global fast fashion sector was assessed to possess a valuation surpassing 106 billion U.S. dollars in the year 2022. Per the data illustrated in the graph, a moderate uptick in market worth is foreseen for the forthcoming years reaching an estimated value of around 185 billion U.S. dollars by the year 2027. (Smith, 2023)

https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion

Mckinsey’s analysis of fashion forecast states that ‘the luxury sector will outperform the rest of the industry’, with a predicted growth between 5 and 10 % by 2023(McKinsey, 2022) the luxury goods sector is on the rise despite the uncertain economic climate triggered by events such as covid 19 and Brexit.

The unpredictable economic times present a plethora of challenges for fashion firms to navigate, and brands are forced to continually innovate in order to stay competitive. As consumer behaviour shifts towards digital engagement,  leveraging technology and social media platforms is necessary to enhance online presence and brand awareness,  integrating e-commerce and a potent online marketing strategy is vitally important for better accessibility and brand recognition. To remain competitive, brands must ensure high adaptability and responsiveness to market trends. Moreover, during uncertain economic times, it is imperative that brands reduce unnecessary expenditures and streamline their production processes, making sure each stage is cost-effective, reinforcing their position in a competitive marketplace.  

 The design museum’s REBEL exhibition exemplifies how creative directors adeptly bridge the gap between creativity and commerce. The exhibition not only showcased innovative fashion looks including  Harry Styles’ Steven Stokey Daley outfit and Sam Smith’s inflatable latex suit by HARRI(Q42, no date) but also served as a strategic platform for commercial success, educating visitors about background stories, political message, allowing emotional connection with brands and garments, thereby strengthening a brand’s presence and potentially driving sales. 

Citations:

Smith, P. (2023) Revenue of the Global Apparel Market 2012-2025, Statista. Available at: https://www.statista.com/forecasts/821415/value-of-the-global-apparel-market.

Smith, P. (2023) Fast fashion market value forecast worldwide 2022-2027, Statista. Available at: https://www.statista.com/statistics/1008241/fast-fashion-market-value-forecast-worldwide/#:~:text=The%20value%20of%20the%20fast.

Fast fashion market forecast worldwide 2022-2027 (no date) Statista. Available at: https://www-statista-com.arts.idm.oclc.org/statistics/1008241/fast-fashion-market-value-forecast-worldwide/. 

McKinsey (2022) The State of Fashion 2023: Holding onto growth as global clouds gather, McKinsey. McKinsey & Company. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion

‌Luxury Goods: market data & analysis (no date) Statista. Available at: https://www.statista.com/study/55494/luxury-goods-market-data-analysis/. Q42, F. & (no date) REBEL: 30 Years of London Fashion, Design Museum. Available at: https://designmuseum.org/exhibitions/rebel-30-years-of-london-fashion

The profit pillar is potentially one of the greatest concerns among any business. Within the fashion industry, companies, and designers are eager to portray their creativity while also providing the opportunity to make an adequate profit, in order to sustain a successful business. The fashion industry is described to be one of the most rapidly growing industries in the world – with a current amount of 1.53 trillion US dollars (Statista, 2023) and is predicted to show an annual growth rate of 9.45%, meaning that by 2027 revenues will reach up to two trillion US dollars (Statista, 2023). This blog will explain the concerns that the industry is looking to face while striving to create a profitable margin. 

When individuals think of fashion they often only consider small sectors of what it actually takes to extract a piece of fabric into a garment. Furthermore, everyone knows about the captivating fashion shows and luxury brands, however, the industry consists of much wider markets than this, an example is – fast fashion. Over the years, and especially after COVID-19, brands have grown to promote their businesses on social media platforms. A report published by P. Smith in 2022, illustrates that in 2019 the apparel market value was 271.88 billion US dollars and by 2021, it had only grown to 300.37 billion US dollars (Statista, 2022). In addition to this, business were one of the many affected by the COVID-19 and sales dropped drastically. 

So how did companies manage to clear out of this situation? As mentioned before, social media played a vast fragment, thus, magazines and in store shopping became just about historic. In a recent report by Robin Jennings, he stated that “Brands are exploring unexpected platforms like Discord, OnlyFans, and Twitch beyond standard ads” (YellowBrick, 2022). Thibaud Guyonnet – a creative director of Voo Store – explains that the reason for this is: “ We were getting reported on Instagram because it’s like ‘oh you’re showing a bit too much of skin, so we said f*ck it. We have to find a platform where we can actually do what we want to.’” (YellowBrick, 2022).

To conclude this, creative directors, have to think unconventionally in order to unlock freedom for more possibilities, rather than staying in the thinking mind of a merchant. Ajaz Ahmed published a newspaper article in 2013 where he stated, “Art and entrepreneurialism are two expressions of one shared desire: to leave the world a little different than you found it.” (The Guardian, 2013).

Reference List:

https://www.statista.com/outlook/dmo/ecommerce/fashion/worldwide#:~:text=Revenue%20in%20the%20Fashion%20market,US%241%2C103.00bn%20by%202027.

Figure 1: https://www-statista-com.arts.idm.oclc.org/statistics/875613/global-adaptive-apparel-market-size/

https://www.yellowbrick.co/industry-insights/understanding-the-fashion-industry

https://www.theguardian.com/media-network/media-network-blog/2013/oct/16/bridging-gap-art-busines

Profit constitutes one of the fundamental components of sustainability, these are the four pillars . Companies must possess the capacity to comprehend how they should manage their business operations and assess the associated financial implications. To achieve higher profitability while concurrently addressing environmental concerns, businesses must also engage in the production of sustainable clothing through the consistent utilization of eco-friendly fabrics. If consumers demonstrate a willingness to pay a premium for sustainable apparel, such a strategic approach will yield positive impacts on the company’s financial performance, leading to increased profits.

As of 2022, the global fashion industry boasted a staggering market value of approximately 1.53 trillion US dollars. It is important to note that the magnitude of the fashion industry’s economic influence can fluctuate, contingent upon various factors within the sector. The industry, however, experienced significant disruptions and financial challenges due to the adverse effects of the COVID-19 pandemic. Consequently, production costs escalated, and the subsequent image portrays the pandemic’s profound impact on the fashion industry. Many businesses, unprepared for the pandemic’s challenges and lacking online retail presence, faced the distressing consequence of store closures and substantial financial losses.

Fashion industry during—and after—the coronavirus crisis | McKinsey

The fashion industry encompasses a multitude of diverse sectors, including manufacturing, advertising, distribution, and promotion. These sectors can intersect with financial and economic domains, with companies often opting for globalized operations by manufacturing and designing their products in various countries to leverage enhanced resources and production capabilities. For instance, the contemporary American fashion industry exemplifies extensive globalization, with brands producing, designing, and selling their products worldwide to benefit from diverse resources and maintain high product quality. Within this industry, the textile and production sector holds the responsibility for fabric production, such as silk, cotton, and linen. Notably, an increasing number of companies are now recognizing the significance of sustainability and are adopting sustainable fabrics, despite their potentially higher costs, to contribute positively to the environment.

To remain competitive, especially during uncertain economic times, brands should prioritize a deeper understanding of their customer base. Achieving this entails collecting and analyzing customer data to forecast their preferences and interests. Moreover, brands should refine their strategies, making them more robust and adaptable to evolving market conditions. Businesses also need to proactively prepare for the future by identifying areas for investment that will bolster their operations. Additionally, focusing on strategic marketing efforts can enhance brand recognition and popularity, while strategic partnerships with other brands can help companies navigate challenging periods successfully.

In bridging the gap between creativity and commerce, companies must seamlessly integrate art into their operations. Presently, art has gained immense popularity as a form of individual expression. Although art and business may seem distinct, they share underlying elements that highlight their commonalities. Both realms encapsulate journeys and narratives, thereby bringing diverse target audiences together, unifying the worlds of business and art. Numerous brands have already embarked on incorporating art into their work, a practice that has historical precedence; for instance, in the 1920s, Chanel collaborated with Pablo Picasso to craft unique custom pieces for the Ballet Russes. Similarly, Louis Vuitton’s collaboration with Yayoi Kusama serves as another exemplary instance, which not only garnered substantial attention but also introduced new dimensions of creativity and color to the brand. This fusion enables brands to access fresh audiences, broaden their skill sets, and create products imbued with compelling stories and meaning, facilitating the emergence of remarkable art-fashion collaborations.

The International Journal of Fashion Studies suggests that today’s fashion houses can find their way with the combined efforts of business partners and designers working together. Furthermore, the connection between designers and businesses has been grabbing quite a bit of media attention. This is all about creativity and collaboration in action.

References:

Global apparel market – statistics & facts | Statista

Marketing Rules To Follow During Uncertain Economic Times (forbes.com)

Why Sustainable Fashion Is More Profitable (leftyproductionco.com)

6 Tips to Help Manage a Business in Uncertain Economic Times (startgrowimprove.com)

The Art of Fashion – Financial Times (ft.com)

infs.3.1.27_1.pdf (oclc.org)

Profit is an important aspect within a business as it tends to demonstrate how successful the brand is currently doing. It shows the brand how much money has been earnt in relation to how much money has been spent.

The fashion industry continues to grow and develop its size each year, with being the 7^th largest economy in the world. The global revenue pre-covid 19 was between $1.7 trillion and $2.5 trillion. However, there has been an estimate 6.1% growth between 2022-2023 to $1.95 billion. (Fashion United, 2021). The luxury sector of the industry appears to be performing relatively well, with a predicted increase of between 5-10%. (Mckinsey, 2022). The Lyst Index demonstrates that many luxury fashion houses are thriving. For instance, within the Q1 Lyst index Moncler has had a +25% revenue. As well, within Q2 it demonstrates that Valentino has had a 10% rise in annual sales, (Lyst Index, 2023). Nevertheless, when excluding the luxury sector there has been a struggle for growth, with low sales within Europe, it is expected to shrink between 1 and 4%. This could mostly be the blame of inflation as well as insecure currencies. (Mckinsey,2022).

In fact, within these uncertain economic periods, it is essential for brands to remain competitive. A way in which this could be done is if a brand has a celebrity or an influencer as an ambassador or even promoting their products. This allows the brand to gain engagement from the right consumers in return. (Mitterfellner, 2019). A way in which this has been successful is with the brand Glossier. Within the pandemic in 2021 sales started to decline 22%. This was at a cause of multiple things, like bad publicity, failed brand strategies as well as the resignation of the chief executive Emily Weiss. (Financial Times, 2023). Nevertheless, her replacement Kyle Leahy has aided the brand to regain its momentum, by reopening its flagship store in New York as well as opening multiple in various locations. In addition, they have appointed singer Olivia Rodrigo as their brand ambassador allowing consumers to emulate with her, the brand’s marketing department stated that there are “many parallels between Glossier’s ‘come as you are’ ethos and Olivia Rodrigo’s songwriting nature”. (Vogue Business,2022).

The late Karl Lagerfeld would bridge the gap between creativity and commerce within his large and extravagant fashion shows. Some examples are when an airport was created in Paris’ Grand Palais for the S/S 2016 show, as well as a giant rocket for the Fall 2017 show. (Mitterfellner, 2019).

Reference list:

• Global Fashion Industry Statistics (fashionunited.com)
• State of Fashion | McKinsey
• The Lyst Index: Fashion’s Hottest Brands and Products Q1 2023
• The Lyst Index: Fashion’s Hottest Brands and Products Q2 2023
• Mitterfellner, O. (2023) Luxury Fashion Brand Management and sustainability: Unifying fashion with sustainability. – Chapter 5
• Where Glossier went wrong (ft.com)
• Glossier’s new CEO on why she’s backing influencers, ending the DTC era and opening stores | Vogue Business
• Mitterfellner, O. (2023) Luxury Fashion Brand Management and sustainability: Unifying fashion with sustainability. – Chapter 2

The fashion industry has always been a lucrative sector, and profit plays a significant role in its success. Profit not only signifies the growth and success of a brand but also serves as a crucial indicator of business performance.

According to statistical data, the fashion industry contributes significantly to the global GDP, estimated at around 2.5 trillion USD, accounting for 2.3% of the world economy. (Geneva Environment Network, 2023) . Furthermore, the fashion industry has a significant impact on employment, with approximately 6 million people engaged in related jobs worldwide. These figures highlight the essential position and influence of the fashion industry in the global economy. However, the performance of different sectors within the fashion industry varies. Fashion industry is divided into various sectors including apparel, accessories, footwear, and luxury goods. Each sector has its unique challenges and opportunities. Retail performance depends on factors like consumer demand, market trends, and brand positioning. For example, the luxury goods sector tends to have higher profit margins due to exclusivity and brand prestige. (Global Powers of Luxury Goods, 2022)

During economic downturns, brands need to adopt strategies to maintain competitiveness. One way is to focus on value proposition to attract price-sensitive consumers. Brands can offer affordable alternatives without compromising on quality and design. Another strategy is to invest in marketing and innovation to differentiate from competitors and create a strong brand image despite economic uncertainties.

As a brand director, bridging the gap between creativity and business is crucial. It requires striking a balance between artistic vision and market demand. Brand directors need to understand consumer preferences, market trends, and competition while maintaining the essence of their brand’s unique identity. (katesharp, 2023) Collaboration between creative and business teams is essential to ensure that innovative designs align with commercial viability.

In conclusion, profit plays a vital role in the fashion industry’s growth and success. The fashion industry has a significant global scale and influence, contributing to the economy and providing millions of jobs worldwide. Effective brand management, strategic decision-making, and continuous innovation are essential for brands to thrive in a competitive market and sustain profitability.

References:

Environmental Sustainability in the Fashion Industry. [online] Geneva environment network. Available at: https://www.genevaenvironmentnetwork.org/resources/updates/sustainable-fashion/.

Global Powers of Luxury Goods 2022 A new wave of enthusiasm in luxury Contents. (n.d.). Available at: https://www2.deloitte.com/content/dam/Deloitte/pt/Documents/consumer-business/global-powers-of-luxury-goods/gplg-2022/Global_Powers_of_Luxury_Goods.pdf.

The Role Of A Creative Director In Branding & Photography. [online] Kate & Co. Available at: https://katesharp.co.uk/the-role-of-a-creative-director-in-branding-photography/ [Accessed 22 Oct. 2023].