HERMES LAB FASHION AND THE WEALTH OF NATIONS 3rd Lecture of LEARNING FROM MILANOThe Business Model of the Italian Design Industry Intersection course by Giannino Malossi and Marco Ricchetti
FASHION AND THE WEALTH OF NATIONS A few basic questions about the Fashion Economy • What has to do fashion with the wealth of a nation ? • How fashion generates value for the industry? • How strong (and far reaching) are the linkages between manufacturing and fashion design? • Does an optimum management model exists for a fashion company?
The engine of fashion: Italy as an example Over 800.000 employees in Italy Over 3.000.000 employees in Europe (just in manufacturing of fashion goods!!!)
In the knowledge economy, strategy must focus on expanding existing markets or creating new ones - not beating the competition on costs.
Fashion is, by definition, change. Success in fashion industry comes with the ability to grasp and recreate in clothes and accessories the ethereal spirit of the time and voluble desires of customers. Fashion adds an important design dimension to textiles or leather artifacts, which is capable of providing a continual and varied flow of new products
The variability, unpredictability and the multiplicity of factors behind the success or the failure of a particular garment that becomes the best seller (or the worst-seller) of the season generates at every season a risk far greater than those involved in the launch of new products in other industries
Risk management in the fashion business Consumer tastes less predictable than in the past: department store markdowns, a key indicator of how well what is supplied by department stores matches what customers want to buy, have grown from 8% of sales in 1971 to 33% in 1995
The textile-clothing-fashion-home cluster FIBRES FILAMENT TRAINING FINISHING TECHNICIANS AND DESIGNERS MACHINERY COTTON WOOL YARNS YARNS BUREAU DE STYLE - TRENDS FORECASTS DYERS - TEXTILE PRINTERS TRADE MACHINERY FINISHERS FAIRS COTTON WOOL SILK-LIKE TEXTILES TEXTILES TEXTILES ACCESSORY - DESIGN - STYLISTS MACHINERY ACCESSORIES P.R. - COMMUNICATION TEXTILE APPLIED RESEARCH I CULTURE INDUSTRY - SPECTACULA EVENTS HOME TEXTILES TECHINCAL TEXTILES CLOTHING KNITWEAR PRESS - MEDIA MASS-SCALE INDEPENDENT PRODUCERS’ OTHER INDUSTRIES DISTRIBUTON VISUAL RETAILERS P.O.S MERCHANDISING - In Italy the textile plays a pivotal role within a complex cluster of industries and services
The textile-clothing-fashion-home cluster The textile-clothing-fashion-home cluster is more than a mere summation of products, sectors, or statistical categories It is first and foremost a system of relationships that strengthens competitiveness.
3 capabilities for the Management of risk
1) The manufacturing pipeline works orders in hand. The main risk is born by the retailers. 2) Trade fairs, prototyping and sampling contribute to the streamlining the pipeline 3) The communication overload reduces the risk of large mismatching between the supply pipeline and consumer behaviour Risk management in the fashion business and the role of information flows through the pipeline.
Mismatching risk Mismatching risk
RISK very high Increasing uncertainty and risk high Medium to high
The selection process: the case of fabrics N. OF SAMPLES DEIGNED BY WEAVERS ( EXCEED 60.000 SHOWED AT Première Vision) N. OF FABRICS ACTUALLY USED IN GARMENT COLLECTIONS N. OF DIFFERENT FABRICS IN GARMENTS SOLD TO RETAILERS Fonte: Hermes Lab Risk management in the fashion business
How strong (and far reaching) are the linkages between manufacturing and fashion design?
THE SPECIALIZATION IN WOMENS’WEAR VS. MEN’SWEAR AS A PROXY OF SPECIALIZATION IN FASHION GOODS SPECIALIZATION IN WOMENS’WEAR OF LARGEST WORLD EXPORTING COUNTRIES 0.40 0.30 0.20 0.10 0.00 -0.10 -0.20 -0.30 TURKEY FRANCE GERMANY UNTD ITALY KOREA REP. CHINA THAILAND INDONESIA USA,PR,USVI KINGDOM
Services are a major vehicle in adding value to manufactured goods
A tentative 3 circles map of the services sector selling to the fashion busines COMMUNICATION/ PUBLISHING DESIGN GENERAL AGENZIE DI PUBBLICITA' • Core tier: Specialized services for the fashion business. • Second tier: General services but oriented to the fashion business moda, • External circle: General services RICERCA DI BASE SPAZI SECON TIER NUOVI MATERIALI URBANI RIVISTE TV - RETI DI FEMMINILI TELECOMUNIC. FOTOGRAFI CORE P.R. STILISTI PERIODICI LOCATION DESIGN SPEC. DEI NEGOZI TECNICI DI SHOW PRODUZIONE ROOM VISUAL FIERE DESIGNER CONSULENZE SISTEMA DIREZIONALI, ALBERGHIERO E LOGISTICA TARSPORTI MARKETING ECC. CONSULTING/TECHNICAL TRADE
TRADE SERVICES: the case of Milano FASHION FAIRS IN ITALY: 41 Turnover generated by Fairs in Milano 1,5 bln Euros Fashion week in Milano: Runaway shows/designers presentations 300 Buyers registered 30.000 Show rooms in Milano 633
DESIGN SERVICES: There are more than 8.100 employed in design companies in Italy
DESIGN and TRADE SERVICES In Italy the yearly turnover in store fittings and design is estimated at around 5 billion Euros greater than that of machine tools or motorcycles, similar to hat of household appliances, more than double of pasta the italian national symbol, not much lower than wine, beer and beverages, and over half of that of computers.
DESIGN and TRADE SERVICES The cost of setting up a new shop
The fashion business in the ‘80s Communication Design Culture Society Consumption Retailing Manufacturing
Culture Society Consumption Communication Design Multi-competence company Manufacturing Retailing The fashion business in the ‘90s
What has to do fashion with the wealth of a nation ? Fashion relies on industry as an economic engine The industry relies on fashion as as a competitive weapon The cultural and volatile nature of fashion produces serious challenges to the management of fashion business The result is an interesting interdependence between insubstantial frivolity and conreteli practical economic behavior
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