Profit Blog
The Profit Pillar examines the difference in price between the cost of production and how much the product is sold for, a business requires profits in order to be financially stable in the industry.
The scale and expense of the fashion industry is immense, due to multiple components and processes involved. The fashion industry had an annual income of between $1.7 and $2.5 trillion globally according to Euromonitor and McKinsey before Covid-19. (Ogbiti, 2023)
McKinsey in its State of Fashion 2017 report said, ‘if it were ranked alongside individual countries’ GDP, the global fashion industry would represent the seventh-largest economy in the world’. (Karl, 2017)
The State of Fashions 2022 report predicts that the luxury sector will outperform other sectors in the industry, as wealthy consumers can afford to travel and shop luxury brands despite hyperinflation. The report says according to McKinsey ‘the luxury sector is expected to grow between 5 and 10 percent in 2023’. In comparison to ‘a relatively slow sales growth of between -2 and +3 percent’ in 2023 for non-luxury products. (Amed, 2022)
To remain competitive, businesses must adapt their operation techniques, becoming more digital, enabling global and local advertising for the brand. Reducing overproduction and taking into account what is in demand will help keep the profits stable. (Amed, 2022)
Modernised operational techniques and AI will benefit the business by introducing new and exciting ideas. The efficiency and reliability of these digital designs will save time for the creatives and attract consumers. Virtual designs will reduce the environmental damages and reduce production pricing, resulting in preferable pricing for the creatives and consumers. (Langer, 2020)
In order to be successful, brands have to be unique.To be unique FIAT eliminated ‘grey’ toned cars. Instead, promoting bright colours that fused ‘emotion’ and ‘life’, with the intention of boosting sales. (Fiat, 2023)
A London College of Fashion report explains that ‘Creatives’ and ‘Consumers’ should communicate, and consider how much consumers would pay for a product. Understanding the products true value and seeing how comparable it is to its selling value. Other brands can replicate designs, so making sure you don’t deceive the buyer is crucial to ensure customer loyalty. (De Souza Crook, 2017)
‘Dual leadership’ is becoming more common within the fashion industry, the designer collectively works with their business partner or other creative leaders, emerging creativity and artistic views with commerce which leads to economic success. (Overdiek, 2016)
Mitterfellner, O. (2023). Luxury fashion brand management [image]
Consumer behaviours are changing, favouring sustainability and second-hand purchases as well as the potential thrill of making a profit upon resale, on platforms such as Depop and Vinted. Meaning for consumers to connect with a brand, shopping ‘experiences’ need to be modified to keep shoppers on their toes and attract them to buy the original sustainable products. (Hu, 2023).
References
Amed, I, et al. (2022). The State of Fashion 2023: Holding onto growth as global clouds gather. McKinsey&Company.
https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion
De Souza Crook, J. (2017). Compelling Fashion Business: Bridging The Divide Between Creative Vision And Commercial Reality. London College of Fashion.
Fiat, 26 June 2023, No More Grey,[Video] (Youtube) https://www.youtube.com/watch?v=uWLX94pzYVk.
Hu, Z. (2023). What’s driving the rise of pre-loved fashion?Drapers. https://www.draperonline.com/insight/analysis/whats-driving-the-rise-in-pre-loved-fashion
Karl, C. (2017). The State of Fashion 2017. McKinsey Global Institute.https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/The%20state%20of%20fashion/The-state-of-fashion-2017-McK-BoF-report.pdf
Langer, D. (2020). Brand Strategy: Rules for Uncertain Times, FIBRE2FASHION.
https://www.fibre2fashion.com/industry-article/8630/brand-strategy-rules-for-uncertain-times
Mitterfellner, O. (2023). Luxury fashion brand management: Unifying fashion with sustainability. Taylor & Francis Group.[image]
https://ebookcentral.proquest.com/lib/ual/detail.action?docID=7260416#
Ogbiti, J., & Uddin, O. (2023). Development of a Computerized System for Fashion Business. International Journal of Science for Global Sustainability, 9(1), 10-10.
https://www.fugus-ijsgs.com.ng/index.php/ijsgs/article/view/399
Overdiek, Anja. (2016) Fashion designers and their business partnershttps://www.ingentaconnect.com/contentone/intellect/infs/2016/00000003/00000001/art00003?crawler=true&mimetype=application/pdf&casa_token=bWKqzrApMCcAAAAA:ITOt9LYqzXtqUoEXA_3TdF4bKb18zz-1R5IWz1-gEdsf8nNaL51PnOBmTAFhc1NJLE6WsQ84fPSqH-4LOw