Profit
During the pandemic the fashion industry reported a global decline of 20% in its revenues, many factors contributed to this fall in revenue such as the disrupted supply chain and a lowered demand from a public struggling financially (Mckinsey, 2021). This lowered revenue massively damaged the profits of the industry. Profit for a business is the end goal of all their actions. One of the companies hit the hardest during the pandemic was Arcadia owned Topshop and their male aimed counterpart Topman which closed their store doors in late 2020 after months of struggling with lowered sales and falls in the company’s overall profits, resulting a loss of the 2500 jobs within their stores as ASOS for £330 Million (BBC, 2020).
Despite the fall in the high-street fashion industry the incomes the Mckinsey report found that both the Luxury and Discount sectors of the industries experiencing spikes in revenue and profits during the pandemic, it was observed that this rise was mainly found in countries with better health care and a stronger economy (Mckinsey, 2021). This could be a direct result of societies’ responses to the pandemic, with the economy coming to a standstill across the globe people chose to save their money. Only spending on large expensive purchases, as can be seen with the increases experienced by the luxury brands of the industry, this can be seen in brands such as Hermes and LVMH which included Tiffany (Mckinsey, 2021).
Alternatively, the increase in revenues of discount brands such as SHEIN can also be attributed to the pandemic. With people out of work and on lowered incomes, a lot of the population chose to cut back on their spending costs, this meant more people were using cheaper companies for their clothing purchases. This led to SHEINS’ profits increasing by 250%, raising their worth up to the estimated amount of $100 billion (Lamare, A 2022).
One of the reasons the forementioned specific sectors of the fashion industry performed so well during the current economic times could be attributed to the increased use of social media during the time, as more people were put into isolation more time was spent on social media apps such as TikTok and Twitter with figures for TikTok increasing by 680 million up to 1.1 billion users in early 2021 (Head, A. 2021). This increase of social media usage allowed brands to look directly at their target markets and see exactly what they liked and disliked about trends and styles. However, this came with a cost, as luxury brands saw viral success such as the “strawberry dress” by Lirika Matoshi which comes in at a cost of $490, discount brands like SHEIN were repeatedly accused of copying other designers’ styles to sell for a much cheaper price. This method allowed both luxury brands to succeed as well as discount brands, despite hoe unethically the discount brands created their revenues.
BBC (2020). Topshop owner Arcadia faces collapse within hours. BBC News. [online] 30 Nov. Available at: https://www.bbc.co.uk/news/business-55125802.
Head, N. (2021). The Rise of TikTok During Covid-19 | Tug Agency. [online] tug. Available at: https://www.tugagency.com/blog/2021/07/27/the-rise-of-tiktok-during-covid-19/.
Lamare, A. (2022). Shein’s messy rise into a $100 billion fast fashion juggernaut. [online] www.businessofbusiness.com. Available at: https://www.businessofbusiness.com/articles/rise-shein-100-billion-fast-fashion-scandals/.
McKinsey & Company (2021). The State of Fashion 2022: In search of promise in perilous times | McKinsey. [online] McKinsey. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion.