The Economics of the Affair by Aesthetics + Economics. Has The Industry Been McFried? Second City Style Fashion Blog

September 20, 2006 • Fashion


By Aesthetics +  Economics

Cathy Horyn of the New York Times recently wrote a rather sobering article titled "The End of the Affair"
about the state of the fashion industry. Specifically, she discussed
the seemingly stark outlook for talented designers which she attributes
to a general decrease in appreciation for creativity in favor of the
big, bad bottom line.

She raises many good points, and given her knowledge of the business, this negative take may be warranted. Plus, the recent closure of Rochas
was a highly visible case of a talented designer losing his job and
probably has much of the fashion world thinking pessimistically.
However, from an economic standpoint, the situation does not seem quite
so dire.

It seems that the fashion business (and by "fashion business" I mean
the business of designer or high fashion) is becoming more competitive.
As Horyn notes, thanks to forces like reality television and the
internet, "fashion has never touched more lives than it does at the
moment, and by so many different means." Additionally, it seems the
barriers to entry into the fashion business have lessened, and smaller
designers and houses abound. (Just look at the number of shows at this
New York Fashion Week!) Designers must also work faster now that
precollections are a vital part of sales. Finally, as a result of the
explosion of diffusion lines and massclusivity-type
ventures, there is an abundance of moderately priced clothing on the
market which is on trend and of decent quality–which many consumers
will gladly take over more expensive offerings.

To survive in this environment, a house or designer must combine talent with business savvy; fashion houses must all
accept certain basic economic truths. As a firm in any industry, a
fashion house must acknowledge that there are tradeoffs. Exclusivity,
prestige, perfection in design, loyalty to one’s vision, or innovation
can be increased only at the expense of revenue, high salaries, or
investment in the future of the brand. Greater competition does not
necessarily mean that "a tide [has] turned against designers and even
perhaps against talent." It simply means that talented designers should
try to partner with equally talented businessmen and women. Let’s
consider some specific cases, shall we?

Jacobs has been able to successfully balance creativity with smart
business. His is one of LVMH’s "star brands" it is so profitable. It’s
not hard to see why when one considers all of the revenue generating
activities Marc Jacobs is involved in–accessories, his diffusion line,
and fragrances. And yet his collections are still very creative and
thus very well received by the critics.

Many designers have participated in massclusivity deals, launched
diffusion lines or gotten into accessories (through licensing, for
example) or fragrance to ensure that their business remains profitable
or even viable. Thakoon Panichgul is a smaller designer with some
talent who seems to be managing well. He designed shoes for the Nine
West Front Row Project in large part because it meant "money [injected]
into his company outside the biannual market frame."

If the case of Rochas is convincing people that talented designers
have no place in the fashion industry at this moment in time, this is
somewhat misleading. No one can deny that Olivier Theyskens is
immensely talented. (What a shame that we won’t see a Spring 2007 show
after that beautiful resort collection!) And perhaps the Rochas fashion
brand may have survived had P&G been willing to part with both the
fashion brand and the fragrance (so that the two could operate as a
single company, with the profits from the fragrance feeding the fashion
brand). However, it is true that he refused to allow the Rochas fashion
brand to purchase advertising in magazines, and he did not release an
"it" bag because he did not want to "rush" one out. Moreover, Theyskens
was a perfectionist, and the marginal cost of perfection is very high
(for instance, a member of his team would spend an extraordinary amount
of time researching fabrics).

So what is my point? Talented designers have a place in fashion, and
they always will. Designers can be creative and innovative and still be
successful. There is no need to worry that the collections in Paris
will begin to resemble some of the very commercial shows in New York
such as Tuleh or Baby Phat.

The photos at the top of this post are stunning but perhaps not so
salable looks from the Marchesa and Rodarte Spring 2007 collections. I
hope that the designers of these lines will make sure to plan for the
possibility that some of the more creative items they send down the
runway may not sell extremely well!

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