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.
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 and the fashion industry has responded by focusing more on catering to male clientele. For example, J. Crew Group and Hermès both opened men’s-only stores in New York City. 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.
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. Chinese citizens are becoming increasingly fixated on luxury goods–they are viewed as a status symbol. China, Russia and the Middle East present large, wealthy markets for luxury goods companies.