CASH & FUNDING: 6 ideas to improve your luxury fashion business

Carlos Campos - Runway - New York Fashion Week Men's Fall/Winter 2016

Source: GettyImages – Getty Images Entertainment – Slaven Vlasic

Hi all,

Clients often call me to help them get a business plan done, expecting FXF to deliver financial projections and charts that will magically win investors over. And yet, when we do the preliminary review of their brand identity, their collection and their strategy, which are the elements to be defined in order to draft a business plan, a few lacks can be observed. Sometimes, there is no cohesion between the brand identity, the collection and the strategy, making a weak brand impact. And in that case, it is no use going through financial estimates since the chances to raise funding are low.
Profits are the result of a whole upstream process. So to help solve that issue, I looked for another kind of resource that provides more insights on  the strategic part of business planning. Today’s CASH & FUNDING topic by Business of fashion is for luxury fashion designers and pinpoints a few ideas to help you work on your business model.
Here are a few take-outs :

  • Manage seasonality by offering inter-seasonal collections (pre-collections, cruise and pre-Fall collections) providing more commercial pieces with more accessible price points
  • Harness the creative talent and edit down the creative output to what will work. In the article, Business of Fashion mentions the example of Gianfranco Ferré, involving several teams dealing with marketing, sales and merchandising. However the point remains valid for smaller brands. You may need to have a critical eye on your collection, streamline the styles produced and go for the prints that will generate profit.
  • Create a bestseller but know when to let go. Identify your cash cow product. Offer some variations from a season to another and find a balanced way to difersify the collection.
  • Invest in retail but focus on the detail. In order to better monitor your brand identity and be able to offer your customers a more cohesive brand experience, having your own store is the ideal situation. Key criteria to look at when choosing a store are location and size. This enables you to keep a high gross margin for your business. However you should properly measure the revenue and risks implied owning your own store
  • A dynamic supply chain can drive profitable growth. Again in this example, Business of Fashion took the example of a larger brand Burberry, that invested in a new IT system to improve its supply chain. For smaller brand, the idea would be to optimize your production planning so that you save costs with your garment maker who won’t have to rush to make your pieces and choose a cheaper shipment company (sea freight instead of air freight).
  • A future dominated by men and computers. Whereas womenswear is saturated, menswear have a strong potential as well as selling on internet. Watch out though, on the internet, return levels are high (around 40%).

I recommend you to read the full article here.
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