Fashion

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Revision as of 22:27, March 18, 2012

The fashion industry can be divided into five segments:

Haute couture is the most expensive and exclusive of the segments. It is made up of a handful of companies which produce custom-made clothing for the world's wealthiest individuals.
The luxury segment is a step down in terms of quality and price, but still serves a wealthy clientele.
Affordable luxury targets "aspirational" consumers, those who are not rich enough to afford luxury brands but will accept lower-priced alternatives.
The goal of mainstream brands is mass appeal; they sacrifice an air of exclusivity for popularity.
Discount brands cater to low-income consumers.

At the highest levels, the fashion industry is relatively insulated from economic changes. For example, recessionary fears in the United States have done nothing to harm haute couture, which is actually seeing an increase in customers in a time when so many other companies are fighting decreasing sales. The luxury market is doing well compared to mainstream, affordable luxury and discount brands, where its customers have less financial security and thus are not spending as much money on clothes and accessories as they used to.

Industry Breakdown

The term "haute couture" is thrown around a lot in mainstream fashion circles. However, the term actually means something very specific. Haute couture consists of custom-made clothing made from expensive materials for the world's wealthiest consumers. Prices for a couture piece range from $25,000 to millions of dollars^[1] and though the market is small it has been expanding due to the explosion of new wealth in emerging markets such as India, China and the Middle East.^[2] In France "haute couture" is a protected term and only a handful of companies have the right to call themselves "couture houses." They must fulfill criteria set by the Chambre syndicale de la haute couture(Trade Union of Haute Couture), the governing body of the French fashion industry.^[3] Some couture houses are:

Giorgio Armani Privé (segment of Giorgio Armani)
Christian Dior
Chanel
Givenchy (owned by LVMH Moet Hennessy L.V. (LVMUY))
Christian Lacroix
Emanuel Ungaro
John Galliano
Alexander Mc Queen
Elie Saab

All couture houses produce ready-to-wear as well as couture pieces. Despite its high prices, haute couture is much less profitable than mass-produced ready-to-wear collections. However, haute couture serves to preserve a high-fashion, luxurious image of the brand which fuels sales of its other collections, namely ready-to-wear, accessories and cosmetics.^[4] It is also important to note that couture includes only women's garments. There is no such thing as haute couture menswear.

Ready-to-Wear

Ready-to-Wear is an umbrella term that applies to all clothing and accessories that are not custom-made. The ready-to-wear segment is further separated into different levels according to price, exclusivity, and quality of garments.

Luxury

Luxury goods is a large category and includes all clothing, shoes and accessories from designer names such as:

Louis Vuitton
Hermes
Gucci
Chanel

Luxury goods are generally regarded by consumers to be of high quality with a price tag to match.

Exclusivity

There are no clear-cut criteria for a brand to be classified as "luxury," however one important factor is the concept of exclusivity. A person who can afford anything does not want to own something anyone can buy; they want something special and unique. As a brand becomes more popular, it is not regarded as highly by the wealthy clientele. For example, around 2002 the trademark Burberry plaid was seen on everything from expensive bags and coats to cheap caps and scarves, becoming affordable to the middle and lower classes as well. Since the plaid was everywhere, it was no longer exclusive or "special," which turned off many of its wealthy customers. Today, in an effort to regain its exclusive status, Burberry has greatly reduced the presence of its trademark plaid.^[5] As a result, Burberry has reported record sales (over $1.5 billion for fiscal year 2007, over three times more than its sales ten years ago)^[6] and its stock price increased by 51% from 2006 to 2007.^[7] Many luxury companies walk a fine line between increasing market share and maintaining the elite image that is so important to rich consumers with a lot of money to spend. Some examples of luxury retailers are: Saks (SKS), LVMH Moet Hennessy L.V. (LVMUY), and Bloomingdale's (owned by Macy's Inc. (M)).

si c'e9tait la religion qui cre9aient ce genre de eopmlexcs dont vous parlez chez les gens dans les pays "laefques" tout irait bien alors ! j'habite en france , j'ai e9tudie9 dans le syste8me frane7ais on ne m'a jamais parle9 de l'he9ritage en islam ni en chre9tiente9 ni dans le judaefsme et pourtant je peux vous dire que s'il existe dans ce monde un syste8me d'he9ritage qui soit le plus e9quitable et sfbr c'est bien le syste8me en islam ! par ailleurs on ne vas pas corriger une erreur par une autre erreur monsieur , e0 ce que je sache un enfant issu d'une relation ille9gale ce n'est pas une action qui soit admirable ...je m'attaquerais plfbtf4t aux parents qui ont mis cet enfant au monde , qui l'ont abandonne9 qui n'ont pas su prendre leurs responsabilite9s pluf4t qu'e0 l'islam qui sanctionne cette erreur par une punition justifie9e ! je trouve qu'il est inutile de cre9er de faux proble8mes le0 of9 il n'y en a pas monsieur ! j'ai e9galement fait une partie de mes e9tudes au maroc et jamais dans mon entourage je n'ai entendu quelqu'un se plaindre d'apprendre des cours sur l'islam d'autant plus que le nombre d'heures est vraiment minimal par rapport aux autres matie8res ...c'est incense9 ! si vous e7a vous de9range , c'est votre avis e9videmment mais je pense qu'en tant que la religion est une science comme une autre et le9tudier ne signifie pas toujours y croire prenez les choses comme e7a et vous verrez que c'est bien mieux que de vouloir priver les reste des gens d'e9tudier une religion en laquelle ils croient et une religion qu'ils aiment ! la laicite9 c'est laisser le choix e0 chacun de croire en ce qu'il veut et pratiquer ce qu'il veut et non ce que vous cherchez e0 faire ...cordialement

Mainstream

Mainstream brands such as:

are generally perceived by consumers as being of lower price and quality than affordable luxury goods. These brands market to middle-and-lower-class consumers. Since their prices are much lower than their luxury counterparts, these brands make less money per garment. Thus, they focus on volume, selling as many goods as they can and appealing to a large number of people. In this case the concept of exclusivity no longer applies, as their goods are made (and priced) to appeal to a large number of people.

Discount

Discount brands serve low-income consumers. This category includes not only those stores that sell goods from other stores at a decreased price (i.e. outlet stores), but also those that price their clothing lower than most other brands; such as:

Old Navy (owned by Gap (GPS))
Payless Shoesource (owned by Collective Brands, Inc. (PSS))
Cato (CTR)
Target (TGT)
Wal-Mart Stores (WMT)

Although haute couture and luxury have been doing well, the downturn in the United States economy has had an adverse effect on affordable luxury, mainstream and discount brands. Their target demographic is middle-to-lower class individuals who are more susceptible to poor economic conditions than their richer counterparts. These individuals are no longer splurging on clothes and accessories as much as they used to, which is bad news for all three segments.

Demographics

Demographics are important to fashion companies. They need to know what kind of person is buying their products. It heavily influences the kinds of advertisements a company makes, what products they advertise most and where those advertisements appear. Below are brief descriptions of a number of important demographics to fashion companies: By: Ankit Gupta (B.FAD)

Note: Unless otherwise indicated, these demographics are subsections of the American population.

Affluent Households

An affluent household has an annual income greater than $100,000. They make up only 18% of American households yet spend almost one out of every three dollars in the United States.^[8] Affluent households are the fastest-growing segment of the American population, increasing 12.7% from 19.7 million in 2005 to 22.2 million in 2006.^[9] Affluent Americans tend to be highly educated and work-driven.

^[10]

The above graph ranks the retailers affluent households are most likely to frequent. Affluent households are interested in value: highest quality at the lowest price, meaning that though they can afford luxury retailers such as Saks (SKS), they have no problem shopping elsewhere if they see more bang for their buck. Stores that cater best to affluent households are:

Saks (SKS)
Neiman Marcus
Nordstrom Rack (the outlet store segment of Nordstrom (JWN))
Costco Wholesale (COST)
Lord & Taylor

Middle-Income Households

Middle-income households have an annual income between $30,000 and $100,000 and form the primary market for affordable luxury. These are people who cannot afford high-end luxury, but are not so poor that they cannot splurge every once in a while. Brands such as:

cater to this demographic by providing lower-priced merchandise in addition to their more expensive products.

Low Income Households

Low-income households have an annual income less than $30,000. A greater proportion of their money goes towards necessities like food and utilities than affluent or middle-income households, leaving much less to spend on clothing and accessories. These households are more likely to be attracted to discount brands such as:

Wal-Mart Stores (WMT)
Old Navy (owned by Gap (GPS))
Payless Shoesource (owned by Collective Brands, Inc. (PSS))
Target (TGT)
Kohl's (KSS)

in order to stretch an already tight budget. For that same reason, these households would also be more interested in sales.

Women

Brands that cater to women include:

Women influence over 80% of consumer purchases in the United States and are even involved in a majority of purchase decisions involving stereotypically "male" products, such as electronics and cars.^[11] The fashion industry is heavily focused on women. Although the brands and products they are most into depend on a number of other factors (such as wealth), there are some general trends in how women perceive fashion products. First and foremost, many women are influenced by trends. Also, women of all ages want clothing that flatters their figure and looks modern.^[12]

Plus-Size Women

An especially important demographic in the United States is plus-size women. 62% of American women are overweight.^[13] Many fashion companies do not make plus-size clothing. Some popular retailers that cater to the plus-size market are:

Lane Bryant (owned by Charming Shoppes (CHRS))
Dress Barn (DBRN)
Cato (CTR)
Old Navy (owned by Gap (GPS))
Hot Topic (HOTT)

Men

In the past few years men have begun to have more of an interest in shopping, and thus the male demographic has become even more important for retailers.^[14] Men ages 18-24 are most interested in shopping and brands, whereas older males tend to prefer bargain shopping; in other words to older men a brand is not as important as getting the best deal.^[15] Some retailers that cater to men are:

Note: Both J. Crew and Hermès have opened menswear-only stores in New York City

Young Consumers

Young consumers, especially those aged 15-24, usually have much more time to shop than older consumers^[16]; many of them are students and have more time on their hands, as opposed to older consumers who have many more responsibilities such as full-time jobs and children. In addition, many young shoppers use shopping as a social event, which, combined with their free time, means they are more likely to shop around at many different brands to find the particular item they want.^[17] Brands that cater to young consumers include

Baby Boomers

Stores that cater to the baby boomer population are:

Baby boomers compose about 28% of the American population, have an estimated spending power of about $2 trillion and are currently between 44 and 62 years old.^[18] Boomers are most interested in the "experience" of shopping for clothes, meaning they want to enjoy the shopping process. They want to shop in stores they feel most comfortable in--meaning a store that does not cater to the 18-49 age group, and are most interested in value. Boomers can switch from one brand to another if they see higher value for their purchases somewhere else.^[19]

Trends and Forces in the Fashion Industry

Increasing Focus on Men

Fashion was once seen as almost exclusively a "women's domain." However, in the past few years men as a whole have begun to pay more attention to their appearance^[20] and the fashion industry has responded by focusing more on catering to male clientele. For example, J. Crew Group (JCG)^[21] and Hermès both opened men’s-only stores in New York City.^[22] Although women still do make the majority of clothing purchases, companies are beginning to take advantage of the male demographic and appeal to them in order to increase sales.

Less Affordable Luxury, More "Genuine Luxury"

^[23]

The affordable luxury market, especially in the United States, is facing a problem due to the poor state of the U.S. economy. The middle-class "aspirational" shoppers who are integral to that segment's success are not indulging as much as they used to. In addition, there has been an increase in "extremely high net-worth" individuals in the United States and abroad. In the U.S. alone the number of "ultra high net worth households" increased fivefold from 1996 to 2006, to 1.14 million.^[24] These people are able to afford whatever luxury brand they want and the brands that are able to follow the money. These trends lead to decreased sales of affordable luxury and increased sales of genuine luxury products.

New Markets for Consumers of High Fashion are Emerging Worldwide

Now, more than ever, the nouveau riche in China and Russia are developing a big appetite for high fashion. In China for example, the economy grew more than 10% annually during the last five years, and by the end of 2006 the country had 345,000 U.S. dollar millionaires, 33% of whom were women.^[25] Chinese citizens are becoming increasingly fixated on luxury goods--they are viewed as a status symbol.^[26] China, Russia and the Middle East present large, wealthy markets for luxury goods companies.

Notes

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 There are no clear-cut criteria for a brand to be classified as "luxury," however one important factor is the concept of exclusivity. A person who can afford anything does not want to own something anyone can buy; they want something special and unique. As a brand becomes more popular, it is not regarded as highly by the wealthy clientele. For example, around 2002 the trademark Burberry plaid was seen on everything from expensive bags and coats to cheap caps and scarves, becoming affordable to the middle and lower classes as well. Since the plaid was everywhere, it was no longer exclusive or "special," which turned off many of its wealthy customers. Today, in an effort to regain its exclusive status, Burberry has greatly reduced the presence of its trademark plaid.<ref>[http://www.businessweek.com/lifestyle/business_luxury/archives/2008/02/the_return_of_e.html "The Business of Luxury: The Return to Exclusivity. February 2007.]</ref> As a result, Burberry has reported record sales (over $1.5 billion for fiscal year 2007, over three times more than its sales ten years ago)<ref>[http://www.businessweek.com/globalbiz/content/apr2007/gb20070416_550825.htm "Burberry, Plaid in Check, is Hot Again." BusinessWeek April 16, 2007.]</ref> and its stock price increased by 51% from 2006 to 2007.<ref>[http://www.businessweek.com/globalbiz/content/apr2007/gb20070416_550825.htm "Burberry, Plaid in Check, is Hot Again." BusinessWeek April 16, 2007.]</ref> Many luxury companies walk a fine line between increasing market share and maintaining the elite image that is so important to rich consumers with a lot of money to spend. Some examples of luxury retailers are: [[Saks (SKS)]], [[LVMH Moet Hennessy L.V. (LVMUY)]], and Bloomingdale's (owned by [[Macy's Inc. (M)]]).
-==== Affordable luxury ====
+si c'e9tait la religion qui cre9aient ce genre de eopmlexcs dont vous parlez chez les gens dans les pays "laefques" tout irait bien alors ! j'habite en france , j'ai e9tudie9 dans le syste8me frane7ais on ne m'a jamais parle9 de l'he9ritage en islam ni en chre9tiente9 ni dans le judaefsme et pourtant je peux vous dire que s'il existe dans ce monde un syste8me d'he9ritage qui soit le plus e9quitable et sfbr c'est bien le syste8me en islam ! par ailleurs on ne vas pas corriger une erreur par une autre erreur monsieur , e0 ce que je sache un enfant issu d'une relation ille9gale ce n'est pas une action qui soit admirable ...je m'attaquerais plfbtf4t aux parents qui ont mis cet enfant au monde , qui l'ont abandonne9 qui n'ont pas su prendre leurs responsabilite9s pluf4t qu'e0 l'islam qui sanctionne cette erreur par une punition justifie9e ! je trouve qu'il est inutile de cre9er de faux proble8mes le0 of9 il n'y en a pas monsieur ! j'ai e9galement fait une partie de mes e9tudes au maroc et jamais dans mon entourage je n'ai entendu quelqu'un se plaindre d'apprendre des cours sur l'islam d'autant plus que le nombre d'heures est vraiment minimal par rapport aux autres matie8res ...c'est incense9 ! si vous e7a vous de9range , c'est votre avis e9videmment mais je pense qu'en tant que la religion est une science comme une autre et le9tudier ne signifie pas toujours y croire prenez les choses comme e7a et vous verrez que c'est bien mieux que de vouloir priver les reste des gens d'e9tudier une religion en laquelle ils croient et une religion qu'ils aiment ! la laicite9 c'est laisser le choix e0 chacun de croire en ce qu'il veut et pratiquer ce qu'il veut et non ce que vous cherchez e0 faire ...cordialement
-Affordable luxury is an industry segment that is focused on providing high-end merchandise at a lower price in order to attract middle-class consumers.
-* [[Coach (COH)]] takes advantage of the idea of affordable luxury, selling bags that cost $138 and $1,900 side-by-side.<ref>[http://www.businessweek.com/bwdaily/dnflash/nov2005/nf20051129_4460_db016.htm "Selling Luxury to the Masses." BusinessWeek November 29, 2005.]</ref>
-* [[Tiffany (TIF)]] has entered the affordable luxury market by offering a relatively inexpensive collection featuring $200 silver earrings alongside $50,000 brooches.<ref>[http://www.businessweek.com/bwdaily/dnflash/nov2005/nf20051129_4460_db016.htm "Selling Luxury to the Masses." BusinessWeek November 29, 2005.]</ref>
-* [[Nordstrom (JWN)]]
-* [[Hugo Boss AG (HUGSF)]]
-* Chanel (lower-priced items such as sunglasses and cosmetics)
-These inexpensive items allow access to a brand and a lifestyle that lower-income consumers aspire to but cannot afford. However, fears of [[recession]], in addition to rising credit card debt and gas prices, have hit middle-class consumers hard. While the wealthy continue shopping as much as ever, these "aspirational" shoppers, people who form the backbone of the affordable luxury market have begun to cut back on non-essential goods such as clothing and accessories, leading to decreased sales..anyone can write on this web so be sure to confirm this info is correct before putting it in your research paper!.<ref>[http://retailtrafficmag.com/news/holiday_luxury_sales_mild_slowdown_0134/ "Holiday Forecast Calls for Mild Slowdown in Luxury Sales." RetailTraffic. July 24, 2008.]</ref>
 ==== Mainstream ====