Indeed, one could believe that the world of fashion is in turmoil. Having dozens of German fashion companies fighting for survival and almost weekly we read bad news in regards to existential hardships of Italian businesses, now we received an account from Paris, which the German paper “Die Welt” gave the following headline: France’s luxury companies are running out of money! The business Pierre Balmain is fighting for survival, three stores have already filed for bankruptcy. The designers Emanuel Ungaro and Givenchy are canceling their fashion shows. Charles Jordan, the formerly most renowned address for fine footwear is in a tight spot, as well as the House Lanvin and others. The list is reaching a respectable length.

The consumers are supposed to be the ones to blame, for who, (this is how industry, trade and the media see it) is not willing to purchase quite as eagerly as in the past. Is it really the consumer or are there other reasons for this thorough shake up in the world of fashion? The crisis which is being much discussed is not a crisis of the sales market, but one which is in most cases rooted in the financial world.

If we take a closer look at the most well-known businesses now fighting for survival, it becomes evident that they all changed owners once or several times in the last few years. Mostly they are owned now by finance houses, banks or investment firms. At prices which drove the set of values into the unreal. No price was too high to take over these fashion houses and their brands. It was obvious to see, that the purchase price could, under an orderly course of business and during manageable timeframes, never lead to an economically justifiable return-on-investment. Even if you take into account that nowadays large sums of money see the light of day and for many reasons it’s not even important to make a profit. When reality hits, they start calculating and saving. And when you look at the performance of financial people, where better could you start saving fast and effectively than on investments for brands. And exactly with that fallacy the problems of businesses start.

Investors foreign to trade are as a rule often simply overwhelmed when it comes to determination of realistic values of a business in the market. To determine the value of brands and market positions does not only require business management skills, but also profound and long-term knowledge of the markets and all market participants, including retail and consumers.

Nowadays, brand values are highly overrated. Supervalued. Overpaid. And this is how this all begins: The companies cannot earn the money they would need to pay the lender. The consequence: They are saving themselves off the market. The accountants take over the marketing and ultimately marketing will not take place any longer. The consequences are easy to recognize. The brands are being squeezed until they are ‘blue in the face’. Creativity is being stalled, the quality of the products lowered. Instead of entrepreneurial action we get mediocre management. And along with all that it’s being overlooked, that the enlightened, knowledgeable consumer does quickly draw the conclusion: He won’t buy; changes the brands. Of course, that is not anything anyone wants to realize or admit to. The market is being held responsible. And since the news from economy and politics currently are not the best, it is not hard to cover up the true problems.

The list of businesses doing well, being successful, generating earnings, is longer than the one of the companies complaining. And thus our conclusion: The world of fashion is not in turmoil. The branch as a whole is not doing poorly, only single companies. And whoever does have reason to complain should not hastily try to find the reason on the market, but look for the reasons in his/her own house.

Rarely before have chances been bigger to be successful with brands in the world of fashion, specifically in the Luxury and Premium Economy segments. It just depends on guiding brands correctly, meaning to nurture and invest in the 7-elements, origin, history, profile, positioning, image, awareness and protection.

We calculate brand values and we deal with brand value protection and return-on-investment, within the scope of business strategies and their implementation.

We are strategy consultants with new perceptions and ideas.