Fashion business context

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Alice Johnson Fashion Business Contexnt 2016

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INTRODUCTION

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The fashion industry is made up of different sectors including value, mass, high end high street, designer and haute couture. This report will focus on the designer sector. A brand is defined as designer/ luxury because their products are luxury goods. This means they are designed by an acknowledged designer and created to a high quality, with some goods gaining quality with age as well. The heritage the brand has can also make people want to invest in their clothing and accessories. They may be longstanding brands which has a history that adds to its creditability. Also, the rarity of the brands products increases it exclusivity and therefore makes them more desirable, luxurious and adds value (Vogue Italia,2011).

The biggest designer company in the world is LVMN, formed in 1987 after the merge of fashion house Louis Vuitton with Moet Hennessy (Funding Universe, n/d). It is currently valued at €84 billion (Consultancy, 2015).

Some of the designer brands they own includes Celine, Fendi and Givenchy. It’s biggest holding company is Christian Dior with 42.42% of LVMH’s share capital (Fashion law,2015). It is followed by Switzerland-based company Richemont founded in 1988 whose brands include Chloe, Dunhill and Cartier (Richemont, n/d). They are currently valued at €44 billion (Consultancy,2015). Hermes is the third biggest designer brand after being formed in France in 1837. It is currently valued at €32 billion (Consultancy, 2015).

Clothing is the second biggest personal luxury with a volume market share of 25% just behind accessories with 29% (Consultancy,2015). Research done by Mintel on UK Designer fashion discovered that the most desirable luxury brands for clothing include Armani and Ralph Lauren whose demand is driven by young male consumers. Whereas the brand with the highest consumer perception of quality and reputation was Gucci (Mintel, 2015).

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The core designer consumer in the UK is aged 16-35 with 55% having purchased within the last three years (Mintel, 2016). The foremost albuyers in the designer clothing market is young men aged 16-24.

Females16-24 year olds are the leading designer fashion accessories buyers with 38% buying in the last three years (Mintel, 2015). The shift to a younger shopper has created a new consumer for designer brands to market to. This has led them to discover new challenges which includes finding a balance between being accessible and keeping exclusivity to protect their brand image (Mintel,2015).

This new core designer consumer is found in a group called ‘millennials’ which include anyone born between the early eighties and early 2000s (Main, 2013). They are fully immersed into the digital era and more exposed to what is happening in the fashion industry because of the internet (digital natives).

Fashion shows used to be exclusive events for press and buyers however they are now used as a marketing tool to promote the brand and access this new group (Imran and Abnett, 2016).

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Social media has allowed more people inside the runway shows via features such as livestreams posts, Instagram and messaging from people who are attending the shows. It was reported there was a 400% increase in of Instagram posts from designer brands in 2015 (Rein, 2016). Having a bigger exposure to fashion shows allows Millennials to become a step closer to the designer brands. The researcher believes this is a reason why the number of younger consumers buying designer brands has grown because they are more aware of what is happening and want to be a part of it. As the millennials grow older and their disposable income increases the group’s influence on the fashion designer market becomes stronger(Rein,2016).

Marc Jacobs and Burberry are two brands who speak best to Millennials as they are not afraid to play into the digital platform (Rein,2016). In 2015, Burberry collaborated with Apple Music to create an exclusive channel to offer fans playlists including all the tracks used on their runways and exclusive video footage (Rein, 2016).

MILLENNIALS

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They were also the first brand to livestream their fashion show in 2010, allowing their younger consumer to see the show without having to be there. These brands know that Millennials are the future and are working hard to capture them in their brand. Although their first purchase may be a small lipstick; if they have found a loyalty to that brand as their disposable income grows so will the size of their purchases(Rein,2016).

A key opportunity is for designer brands to capture the Millennial consumers.

In this market, there is a growing trend called Millennial Nostalgia which is becoming increasing popular (McGinley, 2016). As a generation who are always switched on and bombarded with new technology, they have grown tired of keeping up. Instead there is a new trend where Millennials romanticise about their past to escape their constant fast-moving lifestyles (Mcginley,2016).

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This has led to an increase in popularity of retro products from Millennials childhoods.

One of the most successful examples is the Pokemon go app. Nintendo turned their children’s game into an interactive app, allowing the same people who used to play the game as a child to become involved in it once again (McGinley, 2015). It was a huge success with 500 million users joining in 3 months and this may be due to Millennial Nostalgia (Grant,2016). Designers could adapt this idea to try to engage Millennials to their brand. A way to do this would be to think about old trends or specific items which are remembered fondly by the younger consumer and recreate them with their brands aesthetics. This will grab the attention of the consumers they are targeting as they will recognize the distinct designs and hopefully lead to purchasing. Even if the consumers do not buy they will acknowledge the brand and this could begin a relationship.

“ ALTHOUGH THEIR FIRST PURCHASE MAY BE A SMALL L IF THEY HAVE FOUND A LOYAL THAT BRAND AS THEIR DISPO INCOME GROWS SO WILL THE THEIR PURCHASES ”

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LIPSTICK; LTY TO OSABLE E SIZE OF

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The growing demand in Menswear is another trend designers are also adapting to. It has been growing faster than women’s by rising by 4.1% in 2015 to reach £14.1 billion in the UK (Mintel,2016). The growth has caused the London’s Men’s collections, the event were designer brands showcase their collections, to relaunch to Men’s fashion week allowing them to become more align with Women’s fashion week (Mintel,2016).

This a larger higher profiled event and therefore should increase the popularity of the men’s shows. In April 2016 Harvey Nichols relaunched its menswear department which is now measured at 28,000 sq ft followed by Neta-porter, the UK’s biggest online retailer, to launch an own-brand menswear label in July 2016 (WallerDavies,2016). This shows how retailers in the designer sector are expanding in menswear due to an increase financial opportunity.Net-a-porter launching their menswear online presence will mean that it is more convenient for men, and so access the Male Millennials market.

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The proportions of clothing purchases online have increased from 9.3% in 2010 to 20% in 2015 (PwC,2016).

Research has shown men prefer less choice online than women while shopping as they consider 34.8% fewer purchase alternatives (Benton,2012).

With the use of filters such as sizes, colour and style on websites they are easily able to find exactly what they are looking for without trailing through hundreds of different products. This convenience and quick shopping may have made it more appealing to men and explain why demand has increased as on line shopping continues to increase for this key group.

The growth of internet access creating and increasing the use of social media could also be a factor which has caused a growth in menswear with 1 million new active mobile social users are added every day (Smith,2016).

As men are displaying their lives openly on these social media platforms this may have caused them to become more image-conscious.

Both Millennial men and women focus on themselves.

They differ, however, in their emphasis on specific values. Male Millennials attach a greater importance to external recognition, citing values such as status, professional success, luxury, and craftsmanship (Barton et al,2014). They may feel pressure to display themselves in a particular way. Also, if everyone is displaying their fashion style they may also feel the need to differentiate to stand out against the crowd, this could lead them to buying bolder purchases to make bigger statements. This development in men’s fashion could have grown because there is now a bigger platform for it. Net-a-porter have created ‘Mr porter’ just aimed at menswear. It has all social media accounts including Instagram and twitter where it is constantly posting photos of their clothes and accessories.

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This means men are constantly exposed to the latest products and trends allowing them to become more aware of them than before. This is supported

by Jordan Bunker a men’s fashion and lifestyle blogger, who said in an interview with the researcher “What social media has done though is expose more men to menswear and allow them to see fashion and trends on platforms like Instagram without having to go out of their way for it”. The number of men’s fashion magazines and bloggers has also grown immensely meaning more men are taking a bigger interest into what is happening in the market by reading about them. Jordan also said “Now there are blogs, online magazines, even more print magazines and social media for menswear, the influence they are having is that they are making menswear more apparent in the day-today lives of guys.” The way it is being fed into men’s lives now meaning it’s now becoming become relevant to them.

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This could be why there is an increase in the number of men interested in the latest trends with 25% aged 16-24 seeing it as one of the most important factors when purchasing goods because they are seeing and reading about them more (Mintel,2016).

A way brands can benefit from this trend is to invest in their menswear. The researcher believes the best way to develop it is for brands to merge Men’s and Women’s collections together. This will follow suit with brands such as Gucci who has all decided to merge their shows. Gucci’s creative director Alessandro Michele stated that displaying them separately is an out of date concept (Stansfield,2016).

As fashion moves forward and the lines between men’s and women’s becoming blurred with the increasing number of unisex pieces on the market it would make more sense to display all the pieces together. This will allow menswear pieces to gain more exposure as Women’s fashion weeks are bigger events in terms of popularity. Giving them a bigger platform should hopefully increase engage a bigger audience and increase demand even more.

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“ THIS MEANS MEN ARE CONSTANTLY EXPOSED TO THE LATEST PRODUCTS AND TRENDS ALLOWING THEM TO BECOME MORE AWARE OF THEM THAN BEFORE. ”

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Another area which is having a large effect on the designer sector is the introduction of ‘See-nowbuy-now’ model. The ‘seenow-buy-now’ model is when designers/brands allow their pieces to be available to purchased straight after they are showcased at their shows during fashion week (Hoang,2016). This is an adaption to the traditional fashion calendar where pieces are ready to buy 6 months after they were shown. Brands would display their summer pieces at the September shows so they would be released to order 6 months later in February.

Then in February brands would display their winter pieces. This way designer brands were 6 months ahead all other fashion retailers allowing them to be the creators of the next season’s biggest trends.

However what designer brands such as Michael Kors, Tommy Hilfiger, Tom Ford and Prada are doing is allowing consumers to purchase straight off the runway (Abnett,2016). Burberry, the prestige British designer known for being one of the most innovated brands, put its entire collection on sale after its September 2016 runway show.

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Burberry are also ditching the season based collections and will now have two shows simply labelled ‘September’ and ‘February’ which will be seasonless. A benefit of this should be that the collections will now be more appealing to global consumers with different climatic patterns and therefore should hopefully increase sales (Amed and Abnett,2016). Also, where they displayed their women’s collections at London Fashion Week and Men’s at London Collections they will now merge the shows and only have two a year at London Fashion week and just have a presence at London Collections (Amed and Abnett,2016). Looking at this from a sustainable view this should also benefit the brand. Halving the number of shows a year should decrease both time and costs for the company as they have less large productions to produce.

For Burberry to create all these changes they have had to completely change their retail cycle for the ‘seenow-buy-now’ model. Before they began designing their September collection in May, Burberry moved it forward several months and began in January(Williams,2016).

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Buyers and press were given restricted access to the collection during July to allow them to pre-order whereas before the collections first debut would be at the September show (Williams,2016). A benefit to this new model is that it closes the gap between initial presentation at fashion week and when the products are available to buy. This then makes it harder for other retailers to copy their designs.

In the traditional model, it was common that retailers in the mass market such as Zara and Topshop would copy a trend off the catwalk and have it in their stores before the original was available to buy.

However, putting products on sale straight after the show eliminates this problem as their copies would be in stores long after the original was released.

This is very appealing to designer brands who invest a lot into their designs and ideas.

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Christopher Bailey, Burberry’s chief executive officer said in an interview that “You create a lot of energy when you do the shows then you close the doors and say, ‘Forget about it now because it won’t be in the stores for five or six months.’ And then you’ve got to create that energy again” (Amed and Abnett, 2016).

However, allowing consumers to purchase after the show means they no longer need to create the same buzz six months later to get people to buy. The excitement of the show and this ‘energy’ Bailey speaks about should hopefully capture consumers to create immediate purchases. People will be attracted to the idea of wearing a piece straight off the catwalk and them believing they are instantly on trend by wearing the most current items.

The researcher learned there was some element of this happening when on a visit to the Burberry flagship store on Regent Street. The researcher interviewed a member of Burberry staff who said “There was an instant buzz following the show where people who weren’t even our regular customer were wanting to come in and see the collection. I feel for a fast-developing and innovative brand this model really works for Burberry.”

However, there are some possible drawbacks to the ‘see-now-buy-now’ model.

This model could create a large divide within the designer market between well established brands such as Burberry and up-coming designers. This is because Burberry have the funds to invest into this new model meaning they can afford to pre-order stock and have it available in stores after the show.

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Whereas for an up-coming designer this would be more of struggle (Morand,2016).

Pre-stocking and having it made before it’s even been displayed on a runway is a massive risk for designers.

This is because there is a danger of creating hundreds of garments which they may not be able to sell.

This cost could be so big that they decide to not adapt this model and stick to the traditional one. The researcher believes this will create a large problem in the future of the designer sector as it could create a divide between who adapt the ‘see-now-buy-now’ model and others which don’t. It may become confusing to consumers and the press with what brands have products available straight away and which don’t.

It is also hard to predict how consumers and the press will adapt to the shift in the fashion calendar which they have worked to for many years. Brands could also see a divide in their consumers between who want to buy straight away and consumers who prefer their traditional shopping pattern. You can see this divide starting as Chanel stated they will not be changing their model as Karl Lagerfeld states “It’s a mess. The reality is that you have to give people the time to make their choice.”

(Mulligan, 2016). This shows he believes purchases shouldn’t be impulse buys, pieces from a designer collections should be thought-through especially as they are highly priced. This thought process contradicts the entire see-now-buy-now model which is fuelled by instant buying.

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“IT’S A MESS. THE REALITY IS THAT YOU HAVE TO GIVE PEOPLE THE TIME TO MAKE THEIR CHOICE.”

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However, there may be other reasons influencing their decision to not adopt these big changes. In 2015 the designer global market saw only a small growth with Louis Vuitton earning a 3% sales growth when the market expected 4.1% (Hoang,2016).

Reasons for this is because of economic factors including a decrease tourism in Europe. Due to increased terrorist activity, with France having three attacks in 18 months’, tourism decreased (Hoang,2016). This means that less consumers are traveling over and purchasing designer goods in Paris from brands such as Hermes, Louis Vuitton and Chloe (Hoang, 2016).

This fall in expected growth is a major problem for the market as it will cause brands to feel less confidence with the market’s future. In such an unpredictable time in the market brands will hold back in investment plans, such as adjusting their retail cycles, as they may not see the benefits if sales decrease and profits fall.

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This could therefore mean plans to adapt to the seenow-buy-model will be stalled.

A solution for brands would be to instead focus on their online market. This means they will be less reliant on traveling tourists. They would need to ensure they have a strong e-commerce website which operates in locations there consumers live as well as an effective delivery and returns process. A large part of the purchases in cities such as Paris is the whole experience that comes with it. This includes the service they receive from staff and the visual mechanising they see in the stores. Brand must invest in ways to transfer the same level of experience online.

They may want to offer a ‘online chat’ feature where customers can ask more questions about products or get recommendations. This should hopefully invite more people to shop online and therefore help the brand while their footfall in stores is lower.

ECONOMIC FACTORS

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In conclusion, it’s important for designer brands to constantly invest in and adapt their companies for them to continue to move forward with the fast-moving industry.

Being innovative, challenging traditional models and having thorough business strategies which allows them to adapt is key. The core customer moves and growth in Millennials luxury fashion is an opportunity during harsh social/economic times. More specifically male millennials group is a growing area which brands shouldn’t be ignoring. They also need market strategies to help them react to unpredictable market circumstances such as terror attacks. To compensate this, they need a strong e-commerce website to adapt to low footfall in shops but to also allow them into the growing online market.

Continuing to offer what the customer wants will still be an essential asset that ensures they maintain or build their reputation of a prestige designer brand.

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Amed, I. and Abnett, K. (2016) Burberry Aligns runway and retail calendar in game-changing shift. Available at: https://www.businessoffashion.com/ articles/news-analysis/burberry-aligns-runway-and-retail-calendar-ingame-changing-shift [Accessed 17 October 2016].

Barton, C., Koslow, L. and Beauchamp, C. (2014) How Millennials are changing the face of marketing forever. Available at: https:// www.bcgperspectives.com/content/articles/marketing_center_ consumer_customer_insight_how_millennials_changing_marketing_ forever/?chapter=3 [Accessed 30 October 2016].

Benton, J. (2012) Lasoo discovers male online consumers like less choice and quick results. Available at: http://www.powerretail.com.au/news/ lasoo-discovers-male-online-consumers-like-less-choice-quick-results/ [Accessed 25 October 2016].

Cochrane, L. (2016) Michael Kors finds inspiration in old Hollywood for new collection. The Guardian, 16 September. Available at: https://www. theguardian.com/fashion/2016/sep/15/michael-kors-finds-inspiration-inold-hollywood-for-new-collection [Accessed 14 October 2016].

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Mallevays, P. (2016) Luxury sector pays the price of fear. Available at: https://www.businessoffashion.com/articles/market-pulse/luxury-sectorpays-the-price-of-fear [Accessed 20 October 2016].

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Stansfield, T. (2016) Gucci is merging its men’s and women’s shows. Available at: http://www.dazeddigital.com/fashion/article/30636/1/gucci-is-mergingmen-s-and-women-s-shows [Accessed 25 October 2016].

Waller-Davies, B. (2016) Analysis: Why retailers are banking on a growing menswear market. Available at: https://www.retail-week.com/sectors/ fashion/analysis-why-retailers-are-banking-on-a-growing-menswearmarket/7009709.article [Accessed 14 October 2016].

Williams, R. (2016) COMMENT: ’See now, buy now’ trend is forcing a fashion retail revolution. Available at: http://www.retailgazette.co.uk/blog/2016/09/ comment-see-now-buy-now-trend-is-forcing-a-fashion-retail-revolution [Accessed 25 October 2016].

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IMAGE REFERENCES Figure one: http://www.vogue.com/fashion-shows/spring-2017-ready-towear/christian-dior/slideshow/atmosphere#7 Figure two: http://www.vogue.com/slideshow/13483427/milan-fashion-weekspring-2017-best-street-style/#10 Figure three: http://www.vogue.com/13483232/best-street-style-beautyspring-2017-milan-fashion-week-phil-oh/ Figure four: http://theimpression.com/dior-london-flagship-store-scout/ Figure five: https://uk.pinterest.com/pin/219057969353509607/ Figure six: http://theimpression.com/cote-mer-fashion-show-spring-2017ready-to-wear/ Figure Seven: http://theimpression.com/chloe-montaigne-store-scout/ Figure eight: http://theimpression.com/burberry-barneys-get-mutuallyexclusive-the-new-see-now-buy-now/ Figure Nine: http://www.vogue.com/fashion-shows/fall-2016-ready-to-wear/ burberry-prorsum/slideshow/atmosphere#32 Figure ten: http://theimpression.com/vetements-fashion-show-spring-2017ready-to-wear/ Figure eleven: http://theimpression.com/timo-weiland-mens-fashion-showspring-2017-ready-to-wear-backstage/ Figure twelve: http://theimpression.com/milan-fashion-week-womens-streetstyle-fall-2016-day-5/ Figure thirteen: http://theimpression.com/haider-ackermann-mens-fashionshow-fall-2017-ready-to-wear/ Figure Fourteen: http://theimpression.com/burberry-fashion-show-fall-2016ready-to-wear-atmosphere/ Figure Fifteen: http://theimpression.com/burberry-fashion-show-fall-2016ready-to-wear-backstage-2/

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