The Impact of Economic Recession on Fashion Industry
Essay Preview: The Impact of Economic Recession on Fashion Industry
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Key words: Fashion industry, economicrecession, consumer, impacts, strategies
Generally speaking, fashion industry has had a market depression since the whole world suffered from a dramatic economic recession. It is hardly to estimate the massive loss of the companies and brands. In a recession all companies seek ways to survive.Although different strategies are taken to reduce poor performance, what they have in common are reduced profits. In this essay, the likely impacts of a recession on the fashion industry and how it affects consumer behavior will be discussed. Several strategies for survival will also be examined.
The trends all over the world in financial crisis are rising unemployment, credit squeeze and cuts of family budgets. “Many fashion companies have also started to fall into credit problems. In the last few months, various companies worldwide have filed for bankruptcy” (TE Online, 2009). There are several problems that are likely to occur during an economic crisis. Firstly, well-known brands in the industry, may hope for a takeover. Numerous enterprises may reduce jobs in regional offices. After the significant loss of profit, some companies may lay off a percentage of their work force in order to cut operating costs.For example, Louis Vuitton cancelled a flagship store in central Tokyo because of the global economic crisis for luxury goods at the end of 2008.Sergio Rossi looked to sublease retail stores. Secondly,for designers, they are likely to lessen the trend scale and have more reserved shows. In addition, sales are brought forward. As retailers were asked to buy on consignment and already have marked down Spring 09.Markdown schedules increased and became more competitive.Finally, it may be required to reduce the cost on fashion promotion part. Since fashion shows have cost them thousands of dollars with no guarantees of returns, many fashion houses were not showing their collections in the seasons of Winter/Fall 2009.
In order to avoid massive losses brought about by economic crisis, companies could look for quick survival methods. This is directly related to the needs of target consumers. One of the main solutions in recovering from the economic crisis is to change market strategies to readapt the needs of consumers. Moving earlier dates on sales is one competitive method of attracting consumers. “Value-added services such as buy online, return at stores can help establish brand loyalty among customers which is the success mantra for survival.” (TE Online,2009) In addition, social media channels could be increasingly used, which provides lots of advertisements through social network. This can be a very effective means of reaching consumers for promotion and brand loyalty.Retailers and the fashion media may provide a variety of lower price options for women looking to spend less, but also maintaining a particular luxury aesthetic. For example,KarlLagerfeld for H&M,Stella McCartney for Puma, Issac Mizrahi for Target. These fast fashion brands all followed each other in showcasingahigh-low mix.”Ten years ago, fashion was about luxury conglomerations. Now its democratic.” says ELLEs fashion news director, Anne Slowey. “( Lesley M. 2008) Therefore, fashion business are trying to recover profit and