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Th 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.

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[1] and the fashion industry has responded by focusing more on catering to male clientele. For example, J. Crew Group (JCG)[2] and Hermès both opened men’s-only stores in New York City.[3] 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. :)


Image:Affluent_chart1.gif‎[4]

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.[5] 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.[6] Chinese citizens are becoming increasingly fixated on luxury goods--they are viewed as a status symbol.[7] China, Russia and the Middle East present large, wealthy markets for luxury goods companies.

Notes

  1. "Death of the Metrosexual: Mens Fashion Goes Large."
  2. "J. Crew to Open First Men’s Store in Tribeca." DNR.com. March 11, 2008.
  3. "Hermes to Open Men's Store." DNR.com. March 28, 2008.
  4. "A Wealth Market in a Downturn Economy: Capturing a lucrative target."
  5. Holiday Forecast Calls for Mild Slowdown in Luxury Sales." RetailTraffic. July 24, 2008.
  6. "Chinese Nouveau Riche Go Gaga Over Haute Couture." The Star. June 1, 2008.
  7. "Chinese Nouveau Riche Go Gaga Over Haute Couture." The Star. June 1, 2008.

Companies in the Fashion Industry (121)

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