Profit
Profit, on the face of it, consists of revenue from the sale of goods or the provision of services minus the corresponding costs and expenses. For the fashion industry profit is an important part of the equation. This is because it reflects the success or failure of a part of the industry.
First of all regarding the size of the fashion industry, fashion is an important part of what drives the global economy. It is one of the key industries that create value in the world economy. If it were juxtaposed with the GDP of individual countries, the global fashion industry would represent the world’s seventh-largest economy,” McKinsey said in its 2017 State of Fashion report. From these surveys, it is clear that fashion is one of the largest industries in the world.
Secondly while fashion is the largest industry in the world, it is also one of the most fragmented, divided into multiple product segments and categories, located in many different types of organizations, and widely dispersed across regions. We have recently put the spotlight on value creation, measured in terms of economic profitability, and have found that, as in many other industries, the gap between those who succeed and those who fail is huge. The 20% of fashion companies known to the survey have generated 100% of their economic profits over the last decade, while the bottom 20% have fallen back.
Moving on to the question of how the fashion industry can remain competitive in times of economic uncertainty, it is important to first focus on the customer It is possible to break these down into existing customers, potential customers and partners. This is because when the economy is uncertain it is more important to focus on selling inside to your customers. There is a lot of research that proves that it is more expensive to cultivate current customer relationships versus the cost of acquiring new ones. Another point that supports this is that customers are human beings so they face the same business challenges and decisions as the company. So reaching out in times of crisis strengthens the direct relationship between the company and the customer.
Finally on how creative directors can bridge the gap between creativity and business, the idea that two cultures are stuck at opposite ends of the same bridge can be applied to creativity and business today. They need each other, despite their obvious differences while they care about many of the same things. When and if arts practitioners and brands have a grand and fascinating idea to focus on, rather than dwelling on cultural differences, then surely a more valuable collaboration will result.
Reference
Fashion United (2022). Global Fashion Industry Statistics. [online] Fashion United. Available at: https://fashionunited.com/global-fashion-industry-statistics.
(No date a) Browzine. Available at: https://browzine.com/libraries/479/journals/36584/issues/8230931 (Accessed: 29 April 2024).
McKinsey & Company. (2017). The two faces of fashion-industry performance. [online] Available at: https://www.mckinsey.com/industries/retail/our-insights/the-two-faces-of-fashion-industry-performance.