Last night was the launch of a new display at
Prada's Old Bond St store by leading stylist and Editor of Love magazine, Katie Grand.
Prada have
commissioned four editors in four cities (London, New York, Paris and Milan) to restyle a store for the new season collections. The party was fun, though the meaning of the
redesign was completely lost on me. There is a skate ramp in the middle of the main shop floor but, as usual with fashion events, no explanation for this. Celeb turn-out included Alexandra Burke, Tess
Daly and, err, Tim Vincent - not exactly a pap-sensation. And while the usual crowd of fashion editors and
scenesters turned out in force, there was something in the air that nagged at me all night. You could sum it up as...
The End of an Era.
Fashion and the world economy.The world economy is collapsing as never seen before, but humans, by our nature, enjoy denial. And the fashion industry still appears in total denial about what is already
happening to it. For the last decade or more, brands such as
Prada, Armani and Louis
Vuitton have taken advantage of a global boom, providing stylish clothes to millions of new consumers across the world. For many of these upwardly mobile new consumers, this was their first taste of consumption as we have known it in the West for so long. China may be the most famous example of this growth, where the middle class has increased by 300 million people during the last decade, however the net is wide,
encompassing every major city in every corner of the globe. For high fashion, the most lucrative market has been Russia where a new breed of
uber-wealthy oligarchs and their wives have turned Moscow and St
Petersburg into shopping meccas for the super-rich. For the brands which specialise in more
affordable designer clothes, such as
Prada and Armani, China, the Middle East and South East Asia have been the big growth markets. For new-rich in these countries, the designer lure of a
Prada shirt or shoe has been irresistible, while still attainable compared to the high-end couture sold in Moscow. Now, for all brands, things are going to change dramatically.
When people don't have cash, they don't buy Cartier.What is surprising and frightening about the current recession is the speed of it and the global nature. Here's some statistics I have found out this week:
Louis Vuitton. Japan is the largest market for
LVMH - the group that owns Louis
Vuitton, Cartier, Dior,
Moet&
Chandon champagne and a host of other luxury brands. Already, sales had fallen 7% at the beginning of 2008 but the outlook now is terrible. Japan's economy shrank 3.3% in the last quarter of 2008. If that continues for 12 months, it will result in a collapse of over
12% and many well-known Japanese companies are now laying off staff including Nissan, Sony and Panasonic. Toyota has posted its first loss...ever! For a company that is over 70 years old and which survived the destruction of the Second World War, this is shocking. It's not difficult economics to understand that when people lose their jobs, they stop spending on designer bags.
Russia. The Russian oil boom has had a
bizarre,
distortionary effect on fashion. As the money swept through Moscow, the new rich wanted their favourite designer boutiques on their doorstep, instead of having to fly to Paris and London. Vogue and
Tatler opened Russian editions to cater to the fast-growing market and even now, Dazed & Confused is planning to launch a new title there. But the Russian boom is over. Some facts: The Moscow stock market has collapsed to a
third of its value this time last year; The currency, the Rouble, has dropped in value by a third; The price of oil - which Russia's boom was built on - has dropped from
$147 per barrel this time last year to around $40 per barrel now. The Russian rich are no longer so rich.
Ermenegildo Zegna. An upright, solid Italian clothing label, still family-owned, has reported that in the last quarter of 2008, sales in the US and Spain (their biggest markets) fell 60%. Can you imagine? That's enough to shut a factory immediately, with all the knock-on effects that has.
Zegna is a cash rich, low-debt company and so should survive. Any companies with high debt will fold.
So, the picture is not rosy and eventually, the fashion industry as a whole will realise that things will have to change. How each label reacts to the downturn will determine its future survival. Not since the 1930s have we seen the potential for so many companies to go out of business. Some will never return but the changes will bring important modernisation to an industry that sometimes still feels like it's living in the Thirties. The end of catwalk shows perhaps? Why bother with all that expense when the whole thing can be done live online for next to nothing.
The Long Tail theory encourages this but it may be a way off. See the above article for my predictions for this year.
