Strutting the runway in fashion: technology behind the glamour
Lights, Camera, Action! With New York Fashion Week in full bloom, London Fashion Week in headlines, Milan Fashion Week and Paris Fashion Week lining up the runway, the spotlight over the coming month is well and truly centred on luxury goods. What better time than now to delve into the likes of Vogue’s luxury goods insights for 2017, adding a dash of financial lingo, as we explore the strategic growth of fashion and luxury goods in Asia, as well as the show-stopping link between tech and fashion.
Luxury Goods Outlook for 2017
Luxury goods (including high-end fashion), not being essential for consumers, tend to be more prone to fluctuations in the economic cycle. Luckily for the US, this is not so much an issue with positive economic indications following Trump’s election. Unfortunately, though, the situation is not as uniform within Europe. While luxury goods benefitted from the depreciation of the pound, which drove touristic shopping growth in the UK, a series of terrorist attacks around Germany and France negatively impacted sales of luxury goods.
So what is next? The US will have to be wary of the rapidly strengthening USD, which would be sure to restrict high-end tourist spending in the area. However, this concern might be mitigated with the growing expectation of an interest rate hike in the US.
The outlook looks duller in Europe. On the whole, European economies are struggling. This is partly because of the difficulty associated with recovering from the sovereign debt crisis, and the uncertainty that comes with more imminent events: Trump’s administration, Brexit negotiations, and the potential election of leaders with very protectionist agendas which could threaten the Eurozone.
Moving to Asia, the emerging middle class should continue to boost luxury spending, though once again tense political relations following Trump’s election might dampen the expected growth from this area.
On the whole, then, high-end spending has openings for growth (particularly outside Europe), though reverse pressures might be seen from strengthening local currencies and political uncertainty.
Strategic Growth in Asia
How does fashion intend to grow in Asia? On one hand, it doesn’t have to do much. Asian households are increasingly moving into higher income brackets, leading them towards an increased level of discretionary purchases (and thus endowing fashion with a larger customer base). On the other hand, prospective growth in the industry may be more enhanced for certain strategic avenues over others.
Firstly, online shopping is set to skyrocket, even further than it already has in recent years. Clothing is the #1 item purchased by Asian shoppers online, and online retail revenue in the Asia-Pacific is set to double from $733 billion in 2015 to $1.4 trillion by 2020. In particular, targeting China is likely to reap benefits for fashion brands aspiring to expand within Asia, with the country accounting for 80% of online retail in the Asia-Pacific. Forrester, in its report ‘Asia Pacific Online Retail Forecast, 2015 to 2020‘, points out that China surpassed the US to become the largest e-commerce market in the world despite an economic slowdown in 2015. For fashion brands, China is likely to be seen as a more reliable source of Asian retail growth.
Secondly, it seems that Western brands are a more prosperous source of expansion in the Asia-Pacific region. Chinese fashionistas, with a broad international brand awareness from travel and the media, are often willing to pay extra for Western brands, which are less commonly locatable in the Asian regions. Many foreign companies have successfully taken advantage of the growth potential in Asia – H&M, for example, has for a long time had more than 50 stores in China alone. Zara began a similar expansion into Asia around 6 years ago. It is not long before the remainder of foreign retail brands realise the success that such companies have experienced and jump on the bandwagon.
(Fin)Tech and Fashion
Lastly, the fashion industry is prone to changes in the technological sector.
While fashion sometimes uses technology to merely create new styles (Karl Lagerfeld dedicated his October 2016’s Chanel fashion show in Paris to wires and data boxes), some firms have focused on using technological innovations and FinTech to provide customers with new digital experiences. Babyghost, for example, enables pieces of collections to be digitally linked to an app so that they can share “stories”, such as where and by whom they were worn.
Others have adopted new tech tools to design more fashionable products. London start-up Search Style Ltd utilises real social content for unbiased, real-time analysis to provide insights into current global fashion trends. The stored data can then be used as a source of inspiration for designers and customers. Fyodor Golan intends to fully digitalise the design and specification of garments pre-sampling, removing the need to toile, which would speed up the design process and enable designers to focus on creativity.
Engaging new developments in technology inevitably finds a way to link back to aspects of our everyday lives, and fashion is no exception. The growth of fashion and high-end goods, particularly in the Asian regions, is undoubtedly an exciting space to watch.
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