The economics of the fashion collection and the runway

As I get ready for the trip to Men’s Fashion Week in Milan, I start to consider the purpose and economics of runways and collections.

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Giorgio Armani is relatively dismissive of the way some of his colleagues in the industry use the runway to attract attention through fads and gimmicks, rather than to display real product that real people will be able to buy and wear.

Armani rejects the fashion milieu, preferring to make and present wearable, stylish, and to some degree timeless clothing for people who see his prices as an investment. He has said that he is proud that 99% of his runway designs are available in his stores, compared to just 20% for other designers:-

I never sacrifice individuality for trend. I don’t ignore trends, but my point is to design clothes for people to buy in shops, not just for shows and photo shoots. Eighty percent of designer collections aren’t even produced.” — Giorgio Armani, quoted in Marie Claire

Those figures are interesting on a number of levels. I’ve noted once before that the vast majority of guests at a runway show are the buyers. What was not obvious to me before was that for a designer who relies on third-party distribution, those buyers in effect decide which pieces from a collection will make it into production and finally into the hands of the public, and which will not.

Giorgio Armani, who owns his own retail distribution channels, can sidestep the “editing” of his collection by retail buyers, and concentrate instead on producing and displaying what his customers have demonstrated they prefer, rather than the flights of fantasy some designers create to generate buzz.

Given the huge cost of a runway show – and based on my own experience with simple trade shows, I imagine $1-$2 million is a fairly easy amount to spend on developing a 10 minute production featuring dozens of prototype outfits, supported by numerous models, dressers, sets, lights, sound, photography, video, PR flacks, transport, hotels, and side events – this means Armani is not doing his shows for the same reasons, for the same benefits or with the same high risk as other, smaller producers.

Even if they do not spend those sums on each show, a small, pure-play fashion house, like say Vivienne Westwood (who has a runway at 3PM today in Milan), turning over $25-$50 million, is to some degree rolling the dice through these shows. Over a whole year of shows a company of that size is betting a fair chunk of the company’s annual profits that somebody will like 1/5th of what they show; but largely unsure – excluding the obviously deranged outfits designed to grab headlines – which 1/5th it will be.

For a small label, the bi-annual runway-fest is a huge expense, a high risk gamble on tastes and fashion, and they need to ensure the label gets some moments in the sun, usually through the outrageous or bizarre. For Giorgio Armani it is a relatively low-cost PR event that reminds his loyal customer base that he makes great clothes that sit above fashion, and that there is something new to buy in his stores.

Armani is sometimes derided by his peers as being uncreative or uninspiring because he does not produce those silly, shouty outfits that build a reputation for “artistry” or “creativity”. I disagree with that aesthetic assessment, and wonder if those commentators fully understand the fundamental difference between these business models.

I suspect they do not.

[Photo credit: Getty]

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