Yes it is all about business, strategy and investment of fashion. Nothing much about haute couture or pret-a-porter. Not even a single clue about garment or material. One needs to understand the areas of fashion design and the market segmentation of fashion first so hence you could deductively indulge in more details about investment in fashion.
Often we treat the business of fashion as closely related to retailing and supply chain. But the truth is, retailing or marketing comes later after the production or manufacturing stage. Fashion or style is merely the value proposition to the customers about the acceptable appearance given that period of time. You would notice the segmentation is divided to women, men, kids, girls, boys, sportswear, jeans, knitwear, bridal and accessories. Then, to serve specific market segmentation, you would have a line of evening dresses, lingerie, shoes, bags and perfume.
In general, across socio-economic spectrum, fashion is very influential in defining status. Unconsciously, fashion is adopted for various purposes including seasonal and special occasions as well segregating social groups. The social elite and the upper classes are more in favor to adopt new fashion trend in attempt to be the trendsetters and increased the distinction of disposable income. Hence, you would notice the mass market is also disintegrate to several classes such as fast fashion, no frill, luxury or even bundle. More importantly, the fashion trend is being observed by general consumers via the ways of wealthy, certain group of public figures like celebrities and elite people present themselves. Fashion and lifestyle magazines like +Vogue, +Cosmopolitan Magazine , +ELLE, +Harper's BAZAAR , +Marie Claire and +NYLON Mag have cemented the correlation of fashion and status.
Coping with the fast changing trend in fashion is not a straight forward proposition. That's why in most cases investors or private equity firms prefer to put their money in more established fashion label that have a substantial growth potential. Risk is intolerably subjective. Investors are more likely to target successful companies that own fashion labels such as Inditex's Zara, +Rocket Internet's Zalora, Stefan Persson's +H&M, +Louis Vuitton and PVH's +Calvin Klein and +Tommy Hilfiger.
Back then, private equity firms are used to unearth fashion lines that are not very good in term of distribution and market reach. Building up start ups were such a noble cause. However, as the industry is getting tougher and globally competitive, they tend to focus on managing the growth, acquisition and the exit or re-structuring strategies. The hot topic now is the merger of PVH Corp and Warnaco Group. Well, it is quite normal to see the selling of brands nowadays like back in 2008 I had a chance to witness the acquisition +Yves Saint Laurent Beaute by +L'Oreal.
In the same time, I could not agree more on the notion that the old business model of fashion is under threat. Typically, too much focus on designing dresses without additional complementary accessories hurt the cash line. The cycle of selling a dress, for instance, is very long and potentially may take than a year to realization. The prices for design-rich dresses are also hindering the quicker turnover on the line. Brands like Republic, Jaeger, +Christian Lacroix, Charming Shoppes, British's Viyella and Adams Kids as well as Escada had a tough time to stay alive.
Nevertheless, fashion is still a business and investors treat fashion as another investment in their portfolio. The business cycle is also applicable and certainly fashion does have its own fashion cycle since the trend changing is a lot quicker than before. The legal and intellectual property issues have been accelerated as the demand, style and trend are becoming global. So, what's next?
Often we treat the business of fashion as closely related to retailing and supply chain. But the truth is, retailing or marketing comes later after the production or manufacturing stage. Fashion or style is merely the value proposition to the customers about the acceptable appearance given that period of time. You would notice the segmentation is divided to women, men, kids, girls, boys, sportswear, jeans, knitwear, bridal and accessories. Then, to serve specific market segmentation, you would have a line of evening dresses, lingerie, shoes, bags and perfume.
In general, across socio-economic spectrum, fashion is very influential in defining status. Unconsciously, fashion is adopted for various purposes including seasonal and special occasions as well segregating social groups. The social elite and the upper classes are more in favor to adopt new fashion trend in attempt to be the trendsetters and increased the distinction of disposable income. Hence, you would notice the mass market is also disintegrate to several classes such as fast fashion, no frill, luxury or even bundle. More importantly, the fashion trend is being observed by general consumers via the ways of wealthy, certain group of public figures like celebrities and elite people present themselves. Fashion and lifestyle magazines like +Vogue, +Cosmopolitan Magazine , +ELLE, +Harper's BAZAAR , +Marie Claire and +NYLON Mag have cemented the correlation of fashion and status.
Coping with the fast changing trend in fashion is not a straight forward proposition. That's why in most cases investors or private equity firms prefer to put their money in more established fashion label that have a substantial growth potential. Risk is intolerably subjective. Investors are more likely to target successful companies that own fashion labels such as Inditex's Zara, +Rocket Internet's Zalora, Stefan Persson's +H&M, +Louis Vuitton and PVH's +Calvin Klein and +Tommy Hilfiger.
Back then, private equity firms are used to unearth fashion lines that are not very good in term of distribution and market reach. Building up start ups were such a noble cause. However, as the industry is getting tougher and globally competitive, they tend to focus on managing the growth, acquisition and the exit or re-structuring strategies. The hot topic now is the merger of PVH Corp and Warnaco Group. Well, it is quite normal to see the selling of brands nowadays like back in 2008 I had a chance to witness the acquisition +Yves Saint Laurent Beaute by +L'Oreal.
In the same time, I could not agree more on the notion that the old business model of fashion is under threat. Typically, too much focus on designing dresses without additional complementary accessories hurt the cash line. The cycle of selling a dress, for instance, is very long and potentially may take than a year to realization. The prices for design-rich dresses are also hindering the quicker turnover on the line. Brands like Republic, Jaeger, +Christian Lacroix, Charming Shoppes, British's Viyella and Adams Kids as well as Escada had a tough time to stay alive.
Nevertheless, fashion is still a business and investors treat fashion as another investment in their portfolio. The business cycle is also applicable and certainly fashion does have its own fashion cycle since the trend changing is a lot quicker than before. The legal and intellectual property issues have been accelerated as the demand, style and trend are becoming global. So, what's next?
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