- October 11, 2019
Even the biggest fashion brands don’t make money from clothing. Surprised?
You shouldn’t be.
The reality is that all the large fashion houses make all of their profit from accessories such as sunglasses, perfume and handbags. Clothing and accessories have reversed their relationship roles: apparel is something you “have” to have, but it’s not most brand’s bread and butter anymore.
Of course, clothing remains important. Clothing is what sets a brand apart from its competitors and lets them make a definitive statement about who they are in the market. But due to high development costs, it’s very difficult to make money from clothing unless you’re a luxury brand like Burberry — and even then, their margins are much larger on their scarves than their famous trenches. After all, accessories are less expensive to develop and manufacture — and their lower price points mean more accessibility to consumers, resulting in more volume of sales.
So if large fashion houses can’t make much money off of apparel, smaller brands shouldn’t try to build their business model around it. Especially in light of the massive opportunity presented by accessories: so few brands are servicing their audience’s growing desire for on-trend, cool accessories, and there’s a lot of market share waiting for brands who truly accessorize first. In reality, every brand should be thinking of accessories as:
- Low-price gateways into your brand. A customer may have just met your brand — you don’t want them to leave because of the higher price points of your apparel. A well-accessorized store or website gives them accessible price points that allow a new customer to start a relationship with your brand and eventually upgrade to higher-priced items
- Brand statement pieces. For instance, if your brand is focused around empowerment, then yoga mats, crystals, and natural oil fragrances can naturally reinforce your message in ways that are difficult for you to do with apparel
- Augmentations to apparel offerings. Nobody should walk out of your store or leave your website without a branded belt, bag or at least a pin — if they’ve bought in to a high-priced piece of clothing, they already love your brand. Not letting them express it is leaving money on the table.
The bottom line is this: with a strong accessories strategy, your brand will drive more top line revenue and be more profitable. Of course, there’s no better manufacturing partner to do that with than The/Studio.
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As a seasoned expert in the fashion industry, I can attest to the nuanced dynamics that govern the profitability of fashion brands, a reality often overlooked by casual observers. The article dated October 11, 2019, delves into a fundamental truth: even the most prominent fashion brands don't derive their primary revenue from clothing. Instead, accessories such as sunglasses, perfume, and handbags have become the financial backbone of major fashion houses.
Clothing and accessories have undergone a role reversal in their relationship dynamics. While apparel remains crucial for setting a brand apart and making a definitive statement in the market, the profit margins associated with clothing are significantly lower, particularly due to high development costs. Luxury brands, such as Burberry, often find their margins more lucrative on accessories like scarves than on their iconic trench coats.
This shift in dynamics is rooted in the economic advantage of accessories—they are less expensive to develop and manufacture. Additionally, the lower price points of accessories make them more accessible to a broader consumer base, leading to increased sales volume. For large fashion houses, this economic reality poses a challenge in deriving substantial profits from clothing, and it advises smaller brands against building their business models around apparel.
The article suggests that brands, regardless of size, should recognize the massive opportunity presented by accessories. Few brands adequately service the growing consumer desire for trendy and cool accessories, leaving a significant market share waiting for those who prioritize accessorization. It proposes three key concepts related to the strategic importance of accessories for fashion brands:
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Low-Price Gateways into Your Brand: Accessories serve as affordable entry points for customers to establish a relationship with a brand. This initial connection through accessible price points can potentially lead to customers upgrading to higher-priced items in the future.
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Brand Statement Pieces: Accessories can be powerful tools for reinforcing a brand's message. For instance, if a brand emphasizes empowerment, accessories like yoga mats, crystals, and natural oil fragrances can naturally align with and amplify the brand's message in ways that apparel might struggle to achieve.
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Augmentations to Apparel Offerings: Once a customer has invested in a high-priced clothing item, offering branded accessories becomes a means of allowing them to express their affinity for the brand further. This not only enhances the customer experience but also unlocks additional revenue streams for the brand.
In conclusion, a strong accessories strategy is positioned as a driver of top-line revenue and overall brand profitability. Brands are encouraged to prioritize accessories as a key component of their business model, leveraging their economic advantages and potential for deeper brand engagement.
