New models for the Fashion industry?

New models for the Fashion industry?

After a period of particular contraction, the fashion industry is experiencing a good recovery, mainly driven by the US and the Far East markets. Worldwide experts agree on one point: we must wait until the end of 2011 to talk about real recovery of the fashion business and return to pre-crisis levels. In fact, in the last two years the business world of luxury had a relevant decrease. It's time to regain lost ground.

The consumption has focused in particular on some brands that have managed not to reduce their own market share, thus damaging many other brands even among the leaders.

The US market has indeed demonstrated to be the critical factor in the crisis years and today represent - at the same way - the way out for recovery.

Only very strong brands have driven the market trend, those having a large network of stores, being not afraid to invest in spite of the storm on consumption. So did Tod's, that had been able to get better results through the direct chain of boutiques (+4.1% revenues) than in multi-brand stores (-2.2%). The good presence in Asia (+7.5% sales) has also enabled the group to offset the declines in the U.S. and Europe (-21.7% and -6.4%).

Those who failed to grow in time of crisis has taken the opportunity to cut costs by innovating the product, opening more stores with greater efficiency. There are examples of companies that have managed to improve profitability despite shrinking revenues.

For the short and medium term, the locomotive will be just as China, where luxury will grow. A small upturn will come soon in the U.S., and later in Europe. To recover the positions there is a lot way to go. Especially for those who have been slow to change the strategy to adapt to new environment and for those with a focus in the early stages of the production chain (fabrics and yarns or accessories).

The context then forces companies to rethink their business models and to review development strategies with new focus.

Given that we will start our discussion today around this topic: GROWTH

Growth is no more an option, a  “nice to have” element for all the fashion companies, it’s becoming more and  more a MUST. Even if the global conjuncture is almost in regression (with very different performances in OCSE area and in the BRIC one), the fashion industry is still experiencing a positive trend. Companies have to face the competition in the global marketplace and this requires a sound structure and a suitable dimension.

In the next days, we will address four different questions

1) Why growing
2) Where growing
3) How to grow
4) What are the ingredients for the growth

SDG - Fashion & Retail want to bring new ideas and to facilitate the sharing of best practices in various business areas, also through this channel. Stay tuned, stay Fashion!

12/Apr/13
Matteo Verdari
Coordinator of Business Solutions