The Recession in the Fashion Industry - Case Study Example

The Recession in the Fashion Industry Introduction Fashion is a vulnerable industry when recession evolves in the economy because consumers can easily cut down the purchase of luxury products to manage their budgets instead of compromising on basic requirements like housing and food (Recession Woes Effect Fashion 2009). Recession has hit all the industries in the economy. The business environment has become unpredictable with a slow economy and consumers have turned to be extensively diverse, demanding, informed and technologically strong. The global meltdown has not spared the fashion industry also in any way. The fashion industry together with other textile products industry has undergone a downturn due to the financial adversity (Global Recession Impacts on Fashion Industry 2009). Objective The objective of the research is to find out methods to survive the slump in the fashion industry to keep the business going even when consumers are watchful of their luxury spending. Literature review Fashion is a complicated business with no standard to define the companies in the industry. Fashion companies belong to a broad of range of firms that produces apparel, footwear, textile accessories and home furnishings. The industry is formed of diverse professionals and firms that include fashion designing, modeling, marketing, retailing, planning and distribution. Fashion includes brands and local sellers to whom the recession has brought in a struggle to sell the products for survival. The impact is felt among the various members of the fashion industry in a different manner and the similarity among the members is their poor financial status. The lavish spending attitude of consumers is now replaced by a cautious closefisted consumer behavior due to the global trend of increasing unemployment, plunging home budgets and the credit squeeze. Some of the few items consumers cut back during financial crisis is fashion accessories and apparels. This has led several fashion companies to contact credit problems. Various companies around the world have already filed for bankruptcy. Even big labels in the fashion industry are faced with financial problem and have declared their negative financial trend. Some companies have gone to the extent of expecting a take over or are negotiating a partnership deal with consenting investors for financial support. Many innovative plans and events are being cancelled and the plans to cut down jobs in regional offices are more of regular news. Fashion labels in fashion cities in the Italy have held discussions with the government to appeal for support and reduce the burden of the financial downturn. Fashion houses are hesitating to show the collection for various seasons in 2009 since the shows are expensive without any guarantee of returns. The impact of recession has forced many designers to set up a new trend with reserved or small shows. Recession has also hit the designs since various shows have being featuring minimalist lines and quiet colours. There are predictions that there will be a trend to wear pieces from previous seasons. When the financial situation recovers, major players are expected to produce extravagant fashion products. Consumers are having second thought before they spend for designer fabrics and textile and still there seems to be opportunities for fashion companies irrespective of recession. The key words for survival of firms are innovation and individuality to secure the future of any label. Consumers should be given what they exactly expect and in the manner they desire. The decline in consumer spending has resulted in a strain on retailers margins. Fashion business therefore is forced to centre on the protection of gross margin by preventing loss, effective inventory management process and price optimization (Global Recession Impacts on Fashion Industry 2009). The recession in fashion industry is also seen in the designs and colors that speak the collections of a season. It is sure that the top designers are not confused with regard to season but they are concerned about the slow economy and are trying to woo customers with summer friendly design to encourage shoppers to be lavish with their wallets to shop for the approaching season as well. Designers use less costly fabric tailored with pleats, ruffles, bead and lace work instead of gemstones and crystals in evening wear category. The fall collection was filled with plenty of cashmere and velvet in varying prices and quality. Observers view that designers are budget conscious themselves and are using less expensive materials and fabric to cut costs to offer better price to consumers (Jones, L. 2008). The long term changes caused by the deepening recession are evident from consumer behaviour with regard to their disinterred in buying retail jewellery. The jewellery industry is more hit by the conservative buyers who reduce their spending on luxury products and jewellery is one of first items that people willingly live without. Fashion or costume jewellery has a better chance of survival that comes with a lower price tag (Recession Takes a Toll on Retail Jewelry Industry 2008). The fashion elite has dealt with recession with some colourful reactions. Even when customers tighten their belt, the brand is alligator or ostrich. Though fashion people have found a lighter side to the issue, high end retailers are also hit by the recession because luxury and fashion is closely dependent on the performance of the economy (Blume L.M.M. 2008). The hard times during recession is being used by many as an inspiration. For example, the cocktail dresses that found its place in an Art Deco style nightspot called Rainbow Room that opened during the time of the Great Depression in 1934 was reincarnated by Catherine Malandrino to bright up the fashion event with some glamour, romance, music and champagne. Fashion companies are breaking convention long term marketing process and seek to attract immediately to customers. This kind of promotion is taking place due to a values correction trend seen among affluent customers. Some customers opine that they used to care the designer brands they wore but no longer does so (Fashion battles recession 2009). Looking good for less has become the situation among fashion consumer which is definitely a bad sign for the fashion industry (Effects of Recession In Fashion 2010). Findings and Analysis Fashion studios are re-strategising their infrastructure and editing their product line to decrease the number of styles displayed, variety of fabrics utilised in design and are giving attention to delivery schedules. Designers, sales staff, merchandisers and production staff that constitute the fashion team are collaborating to arrive at the best possible methods to minimise profit loss and find sustainability for their business. The objective is to survive the economic challenges and retain loyal customers and obtain new customers (Serrette, A.L. 2009). The recession in the economy has given women an opportunity to get their dresses tailored. Women are cautious about spending money on smock dresses and are going back to the past to get well fitted dresses. Alluring work clothes from fashion brands are now replaced by tailor made dresses where women can avail the same attention and quality to detail in dresses with a wide range of fabric to choose from (Armstrong, L. 2008). Recession has not spared even popular names like Luella Bartley who won the Designer of the Year awards in 2008 at the British Fashion Awards. The label of Bartley that brought rejuvenation to British fashion was forced out when one its major supplier closed its business. Bartley pointed out that the economic climate has forced the closure and was unable to protect the jobs. The closure of the clothing and accessories line of Bartley later faced with a withdrawal of its associated in Singapore that resulted in more job cuts in the distribution and design studio departments. Bartley had to close due to the knock on outcomes of credit crunch and not due to lack of vision or mismanagement (Walker, H. 2009). Models have also felt the pinch of recession in the economy with slashed salaries. Desingers are cutting costs of shows by limiting the number of guests (Pais, D. 2009). Designers have found methods to survive the recession by putting up their designs for cut-price which has become a hit at unprecedented levels with sales happening before the product is displayed. However, big names like the Prada Group that does not offer discount have a drop in sales. The collaboration with chain stores has resulted in cut price designer sale through online shopping even before the products reach the store. A chic-economic price that ensures quality, design and durability with a designer equivalent look has become the mantra for shoppers. Thus collaboration is the key strategy for high street retailers as well as luxury designers during difficult times (Fisher, A. 2009). In certain circumstances, the efforts of designers to encourage buyers through affordable price tags have not inspired shoppers leaving the designers to face months of decline in sales. There are has also been instances when customers return to stores and walk out due to drab and similar styles. It is very challenging for the fashion industry to continue to be positive when the circumstances are negative and there is a persistent pressure to bring out fabulous clothes (Glam or glum? 2009). Fashion merchants also have to face bane caused by private dealer who obtain products from designer friends, artisans and dealers in exotic locations and trade shows. Established retailers are forced to compete with these pop up shops and at the same time maintain inventories and the high expenses of operating their fashion businesses. Big fashion buyers are also overcoming their temptation to buy luxury products and spendthrigt ways by just staying well connected through parties. The recession has brought in a stigma that holds back people to shop openly that gives a feeling that they are disregarding the negative outcomes of the economy. But they wish to shop and find a way (La Ferla, R. 2008). The global economic crisis has taught style maven to look great for less and spur the season of budget shopping. There are also chances that people begin realise that sense of self and identity should be given up to overcome the addiction for overpriced and fashionable brand names (Potratz, T. 2008). Recommendations The recession in the economy has given rise to new norms and principles of marketing and retaining consumers through consistent brand servicing by installing multiple touch point outlets, social commerce and online sites, mobiles, blogs, etc. Brand loyalty is being promoted and established through value added service lie buy online, return at outlets. Social media networks are increasingly utilised and are effective systems to reach consumer to promote products and brand loyalty. Private labelling is an option that offers increased flexibility, higher margins and the capability to respond to fast changes in trends. Strong brand have an established direct retail channel and have more opportunities sustain their growth and are likely to compete with retailers gradually who were earlier their customers. The option to own a retail channels offers the brand more control over brand identity. However, weaker brands should search for opportunities to transform into private label distributors to retailers. Western European markets are also faced financial crisis. Strong brand identity is crucial for the global success since stronger brands has more chances to take advantage of their established brand strength for worldwide expansion through franchise and alliance arrangement. The current trend is the demand of consumers to avail customised fashion tailor to suit personal lifestyle requirements. Companies that offer online template to customize bags, shoes, t-shirts etc are a step ahead in registering a quick recovery after the recession. The recession in the fashion industry can be overcome with competitive intelligence capability which is important to understand the pricing or sales promotion strategies of competitors to make quick reactionary changes in the marketplace. Traditional techniques to assess consumer behaviour and satisfaction level must be replaced with the monitoring of conversations in blogs and social websites. Fashion companies can react quickly to the perceived trends of customers, their complaints and unmet requirements. A fashion professional or company must strive to grow and survive by establishing an instinctual relationship with consumers (Global Recession Impacts on Fashion Industry 2009). It may be concluded that the recession in the fashion industry can be dealt with in an innovative manner to retain loyal customers and save labels by creating customer friendly designs at friendly prices to tide over the situation. This will encourage customers to shop according to their wallets and keep the loyalty and when the economy recovers when fashion houses can showcase expensive products to regain their old business form. Reference Armstrong, L. 2008 How to get dressed: recession chic Available: http://women.timesonline.co.uk/tol/life_and_style/women/fashion/article3304394.ece. Retrieved on April 20, 2010 Blume, L.M.M. May 14, 2008 High Styles for Low Times How fashion and luxury firms will ride out a recession. Available: http://www.slate.com/id/2191398/. Retrieved on April 20, 2010 Effects of Recession In Fashion 2010 Available: http://www.fashion-style.becomegorgeous.com/new_trends/effects_of_recession_in_fashion-833.html. Retrieved on April 20, 2010 Fashion battles recession 2009 Available: http://www.straitstimes.com/Breaking%2BNews/Lifestyle/Story/STIStory_337374.html. Retrieved on April 20, 2010 Fisher, A. 2009 Top fashion designers make the recession chic Available: http://www.guardian.co.uk/lifeandstyle/2009/may/03/recession-chic-fashion-high-street. Retrieved on April 20, 2010. Retrieved on April 20, 2010 Glam or glum? Fashion’s recession collections 2009 Available: http://today.msnbc.msn.com/id/29143934. Retrieved on April 20, 2010 Global Recession Impacts on Fashion Industry: Strategies for Survival 2009 Available: http://www.teonline.com/articles/2009/03/global-recession-impacts-on-fashion-industry-strategies-for-survival.html. Retrieved on April 20, 2010 Jones, L. 2008 Fashion designs reflect recession worries Available: http://www.post-gazette.com/pg/08039/855796-85.stm. Retrieved on April 20, 2010 La Ferla, R. 2008 Even in Recession, Spend They Must: Luxury Shoppers Anonymous Available: http://www.nytimes.com/2008/12/11/fashion/11PRIVATE.html. Retrieved on April 20, 2010 Pais, D. 2009 Recession Continues Assault on Fashion Industry Available: http://www.blackbookmag.com/article/lowdown-fashion-eating-recession-chugging-along/6197. Retrieved on April 20, 2010 Potratz, T. 2008 Fashion on a Budget: The Art of Recession Dressing Available: http://www.nowpublic.com/style/fashion-budget-art-recession-dressing. Retrieved on April 20, 2010 Recession Takes a Toll on Retail Jewelry Industry 2008 Available: http://www.free-press-release.com/news/200806/1212750843.html. Retrieved on April 20, 2010 Recession Woes Effect Fashion 2009 Available: http://www.39thandbroadway.com/recession-woes-effect-on-fashion/. Retrieved on April 20, 2010 Serrette, A.L. 2009 How the Fashion Industry Responded to the Recession Available: http://www.sojones.com/news/1490-how-the-fashion-industry-responded-to-the-recession/. Retrieved on April 20, 2010 Walker, H. 2009 Luella Bartley is latest fashion victim of recession Available: http://www.independent.co.uk/life-style/fashion/news/luella-bartley-is-latest-fashion-victim-of-recession-1818218.html. Retrieved on April 20, 2010 Read More