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Luxury fashion in flux as designer labels rip up the rulebook

Brands are boycotting the traditional show schedule, creative directors are leaving their posts and the tills are not ringing like they used to – is something rotten in the luxury sector?

In February, four days before London Fashion Week, the British Fashion Council released glowing statistics about the booming health of the UK fashion industry. It was credited with bolstering the country’s economy to tune of £26bn and supporting 797,000 jobs. But these big numbers could not distract from the uncertainty hanging over proceedings.

Burberry announced that after autumn 16 future shows would be “see now, shop now”

Burberry

Burberry announced that after autumn 16 future shows would be “see now, shop now”

Two weeks earlier, Burberry announced its plans to shake-up the show schedule. From September, it will present a combined men’s and women’s wear show, and the clothes will be in stores immediately afterwards. A slew of other labels followed, including Vetements, Paul Smith, Tommy Hilfiger, Public School and Tom Ford.

The changes felt particularly disruptive because they came at a time of churn at the top of many international luxury fashion brands. Talk of a “broken system” has bubbled for months as creative directors have resigned at an alarming rate. Coupled with the show upheavals and topped off with a slowdown in China – once the promised land for luxury – the industry looks like a house of cards about to topple.

Frida Giannini (left) left Gucci after her spring 15 show (right)

Frida Giannini Gucci

Frida Giannini (left) left Gucci after her spring 15 show (right)

It started with Frida Giannini, the creative director who left Gucci in early 2015. Alexander Wang exited Balenciaga in October and, later that month, Raf Simons announced his intention to leave Dior after only three and a half years. Six days later, Alber Elbaz revealed he was to leave Lanvin after a 15-year tenure. 2016 arrived and with it, yet more musical chairs – in April, Hedi Slimane left Saint Laurent, and Francisco Costa and Italo Zucchelli announced their departure from Calvin Klein.

Simon Burstein, former chief executive of designer boutique Browns and founder of womenswear store and designer studio The Place, blames the pace of fashion today, whereby big houses now deliver up to six collections a year: “To continually be creative,you have to regenerate your batteries. The pace at which the big houses turn out collections can be overwhelming. Designers get burned out.”

The pace at which the big houses turn out collections can be overwhelming. Designers get burned out

Simon Burstein

But beneath the burn-out something else is at play. Compare Raf Simons’ three-year stay at Dior with his predecessor, John Galliano’s 15 years at the French fashion house. Slimane only stayed four years at Saint Laurent, while his predecessor Stefano Pilati managed eight. The relationship between designer and brand is becoming increasingly more about short-term contracts – bolstering a big house for a few years before moving on.

“Most of the brands that are in Kering, LVMH or Richemont, those kinds of stables, hold themselves out as either craftsmen or couturiers, but the reality is they are retail businesses first and foremost now,” explains Robin Knight, a partner at international business advisory firm AlixPartners. Elbaz touched on the problem in his acceptance speech for his Fashion Group International award in October, when he said designers were once dreamers – but then: “We became ‘creative directors’, so we have to create, but mostly direct. And now we have to become image makers, creating a buzz – making sure that it looks good in the pictures.”

Alber Elbaz (right) left Lanvin after his spring 16 show (left)

Alber Elbaz Lanvin

Alber Elbaz (right) left Lanvin after his spring 16 show (left)

Brands have traded on their heritage, formed across decades by their founders. But as designers seem increasingly disposable, the danger is that consumers’ commitment wavers too. The elite customer for whom it is the norm to shop on London’s Sloane Street and the middle class who form the bedrock of the luxury industry with their entry-level purchases are both feeling the effects of an unstable economy.

“What you have now is a pincer movement in that both of those demographics that have made up the growth in luxury retail – the ultra high net worths and the aspirationals – are both feeling the pinch at the same time,” says Knight. LVMH, Burberry and Hugo Boss have all seen a slowdown in demand for luxury goods, particularly in China.

The ultra-high net worths and the aspirationals – are both feeling the pinch at the same time

Robin Knight, AlixPartners

China’s GDP grew by 6.9% in 2015, the lowest rate for 25 years, and it has been hit by currency devaluation and a manufacturing decline. Its woes have spilt over into neighbouring countries and affected global markets, and several luxury and premium fashion businesses have blamed the country’s faltering economy for lower than expected sales and profits.

Raf Simons left Dior after his spring 16 show (right)

Raf Simons Dior

Raf Simons left Dior after his spring 16 show (right)

“Luxury brands need to re-evaluate the experience they are delivering for their customers,” says Laura Saunter, business and strategy editor at trend forecasting agency WGSN. ”Whether that’s creating a shareable, unforgettable experience in store, offering a seamless transaction across platforms or simply merchandising your product in a highly visual, ‘Instagrammable’ way, it’s all about appealing to this generation of always-on shoppers.

Ralph Lauren and Fendi, for example, are exploring new super-luxury VIP concepts, ranging from members-club stores to branded hotels and apartments. The aim is to make those high net worth individuals feel exclusive and special in today’s democratised luxury market.”

Instagram, Snapchat and other social media platforms have contributed to this democratisation. Thanks to the rise in use of smartphones, fashion shows are no longer a trade event, they are a direct feed to the consumer. And when the consumer sees a dress on the runway, street style blogs and red carpets months before it is available to buy, they become frustrated.

Meanwhile, fast fashion retailers can gauge what consumers are responding well to on the catwalk and produce their own versions. Their supply chains allow them to do this within weeks, not months – so the pressure is on luxury designers to become faster and more responsive.

Like Burberry, Vetements responded to this challenge by merging its men’s and women’s shows, and announcing plans to sell the clothes almost as soon as they appear on the catwalk. Both are pioneering the “see now, shop now” model and forcing change on the traditional calendar.

“You can wake up at midnight and think, ‘I want to buy a new whatever,’ and you press a button and go back to sleep and the following day it appears. That has become the norm in retail,” explains Knight. “To be able to create excitement and inject pace into it, so you can turn your catwalk into pound notes quicker is a smart thing to do in this current environment.”

But for emerging designers, the changing show schedule is not so welcome. Faustine Steinmetz, who was shortlisted by LVMH for its Young Fashion Designer Prize last year, says: “It’s good in theory, but quite impossible for smaller labels to adapt as we simply don’t have the means to produce stock in advance. It wouldn’t be wise to take such a risk. I would like to see a change to the schedule that would help the smaller labels: moving fashion week to an earlier time.”

Alexander Wang left Balenciaga in October 2015

Alexander Wang

Alexander Wang left Balenciaga in October 2015

London-based Phoebe English agrees, calling the changes “quite worrying”: “I understand how this might be attractive to some areas of the industry, but my label is founded on a strong focus on handmade surfaces, many of which take hours to complete.”

Saunter points out another possible drawback: “The quicker brands push out items, the less they’ll be able to justify the high price points — why would someone spend £3,000 on a bag when there’s a new one a month later?”

Among the various international fashion councils, opinion is divided. Towards the end of last year, the Council of Fashion Designers of America commissioned research into the ”see now, shop now” fashion week model. The report, published this March, stated: “The unanimous consensus among our interviewees [is that] the time is ripe for change in our market.”

The quicker brands push out items, the less they’ll be able to justify the high price points

Laura Saunter, WGSN

But the Fédération Française de la Couture du Prêt-à-Porter des Couturiers et des Créateurs de Mode rejected the idea: its president Ralph Toledero argues that waiting for an item increases its desirability. Italy’s National Chamber of Italian Fashion agreed.

The British Fashion Council is hoping to make room for all models, says its chief executive, Caroline Rush.

But she cautions: “We need to ensure those businesses that rely on platforms such as fashion weeks to reach new wholesale partners and media continue to have the opportunity to do so.”

Some industry insiders believe there should be a private showing for buyers and a later display for the public and press, such as the model Burberry, Vetements and others have chosen. Others, like Gucci, insist the show calendar should stay as it is, but are combining their men’s and women’s presentations. There may be more turmoil as designers continue to seek a solution.

These changes, along with the slowdown in China and a host of new faces at the top of many of the most famous design houses, have thrown the luxury fashion sector into a state of flux. Nonetheless, as fashion weeks become bigger public spectacles whose reach is multiplied by social media, product is unlikely to lose any of its desirability. Sales of women’s ready-to-wear in the UK reached £27bn in 2015 and research firm Mintel predicts this will rise by 23% to £32bn by 2020. While there is more change ahead, the sector is in a strong position to be able to adapt and grow, and may come out of this period of churn even stronger.

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