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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The Impact of Armani Clothing

In recent days I have begun to wear Armani almost all the time – to work, on the street, around the house. I now own around 35-40 pieces of Giorgio Armani or Prada, and as I commented to my wife just last week, it is getting harder to dress in anything but Armani. Today as I sit in my office at the computer I am wearing Giorgio Armani shirt, pants, belt and sweater, and Prada shoes.

So what has been the impact? Perhaps a good illustration is to recount one nice story from work just last week.

I went to my head office, where I am well known, and entered one of the other departments. The office was empty but several staff were gathered at the coffee area outside chatting. One of my colleagues came running into the office after me and said “Can I help you?”, as if talking to a stranger, and then did a slightly odd double take. I thought it was a little odd at the time, and just said I wanted to leave some papers, which I did and left.

I found out the next day that this lady then confessed to her colleagues that she had not recognized me, despite having worked with me for more than two years. The story was related to me by another colleague standing in the coffee group. Several other people have commented that I look thinner or different – one (Italian) even asked if I was being dressed by Armani nowadays.

On the street I have noticed that I get a lot of quick, almost furtive glances from both men and women. To be honest I am used to anonymity, but now that I have noticed this attention I watch out for it and mentally keep count as I walk along a street. In stores I have noticed that attendants are more attentive, willing to spend more time with me than before, somehow taking me more seriously. This is especially true in the high end stores.

Finally I think I feel better presented and more stylish than ever in my life. Wearing these clothes has become the norm, not the exception. The clothes feel comfortable, I know they look good, and that makes me more relaxed.

I talk a lot about price on this journal, but it is now never a factor if I decide I want to buy something; I am however quite selective about what I buy, perhaps more so than at the start of this project. Even within the Giorgio Armani line I have found a sub-niche that suites me: the classic lines that cling a little bit around the torso and flow off the body to a single break at the shoeline. One assistant in the Munich shop has said that now she knows “my style”, she will call me when new things arrive that work.

It’s an interesting new outlook.

How Giorgio Armani Collections Get Released

This is my first pass through a seasonal release, or at least my first pass knowing what is going on around me; during the initial pass in December/January I was Bambi-grade naive about the whole process.

Today I was browsing again in Giorgio Armani Munich, where the attendant ladies now recognize me, and I spotted immediately the new pieces that had not been there even a week ago. Naturally I selected some new garments, one of them a pair of trousers that remined me of the wonderful “gliding drape” shot earlier in the blog, the one of Bellucci, Bruni and Christensen striding gracefully toward the camera. Naturally the VIP discount kicks in, even on the brand new stuff, saving about $100.

This gradual release of a new collection got me thinking about the seasonal process at a Giorgio Armani boutique. Clearly these clever guys do not just drop all the new season’s clothes into the shops in one awe-inspiring delivery. Rather, they phase, stagger the release of clothes so that there is always a reason for regular customers – addicts – to check in again during the entire season. They tease you, letting you know something new is happening or coming soon, or that some event is planned for shortly in the future, giving you a reason to return and shop.

This is very intelligent strategy. By aligning product release with customer cashflow, Giorgio Armani can smooth their sales profile across the months, and I start to see the careful thinking that goes into running a brand like Giorgio Armani. I realize too that I am in a position to be able to chart the changes in Giorgio Armani marketing strategy week-by-week, plotting waves of seasonal releases, the discount policy ebb and flow, and the alignment with significant events like the big shows.

This is something I may well try to chart in a while. But already the broad strokes of how this business operates are becoming quite clear, and once you see the skeleton of their strategy it does have it’s own internal shape and elegance. It is a marketing machine, certainly, but there is a subtlety to it, and if you weren’t watching you would not notice what is happening.