Rapid Response: Why the fashion industry needs a makeover, with Imran Amed

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1:31And so when we look back to 2024, Bob, and like the Hoka sneakers and the athleisure and the streetwear looks that people are wearing, things are a reflection of what's happening in the world right now. And that's what makes fashion so powerful.

1:49That's Imran Ahmed, founder and editor-in-chief of The Business of Fashion, the world's preeminent authority on the fashion and luxury industry. Imran joins us in the wake of the latest Paris Fashion Week to explain a critical inflection point facing the industry, from high-end custom-fitted couture to ready-to-wear in handbags to fast fashion. He takes us inside exclusive Paris fashion shows, as well as the pressure on big corporate players like LVMH and the good and bad of upstarts Sheehan and Timu. There's so much to learn here, whether you're a fashion insider or not, so let's get to it. I'm Bob Safian, and this is Rapid Response.

2:42I'm Bob Safian, and I'm here with Imran Ahmed, the founder and editor-in-chief of The Business of Fashion. Imran, it's great to see you. Likewise. It's been a while. It has. You have been my guru, my guide to the fashion business for many years. I want to start by asking you about Paris Fashion Week, the couture show, which just concluded. Now, there are fashion weeks all across the calendar, all around the globe. For those of us who are not in the business as tightly as you are, this latest show in Paris, how does it fit into the fashion cycle? And what are the messages that we should be pulling from it?

3:21We're so inundated these days, Bob, with fashion imagery coming from all over the place. It's sometimes hard for the more casual observer to understand how it all fits together. Couture, the couture shows or the haute couture shows, they sit at the very top of the fashion pyramid. In order to be granted the appellation by the Fédération, the federation in Paris that oversees the Chambre syndicale de la haute couture, there's a whole bunch of rules you have to follow about how the clothes are made, who makes them, where they're made. And these clothes, traditionally, Bob, are made specifically for the individual.

4:05So a lot of these shows, unlike the ready-to-wear shows that happen in February and September, the haute couture shows happen in January. And usually in July this year, they were brought forward a week because of the Paris Olympics. And there are clients at those shows watching the looks come down the runway and actually thinking about what they want to buy. And sometimes these looks can sell for hundreds of thousands of dollars because they're all made by hand using specialist ateliers that are scattered all over Paris and other parts of France. Some of the garments are actually embellished by very, very talented artisans in India known as the Carrigers.

4:44So I would say that the haute couture represents the highest form of fashion in the kind of Western fashion tradition. From the purposes of a business, like you're creating these looks to actually sell them? Like you're hoping someone in that audience is going to spend that hundreds of thousands of dollars? Or is it sort of more promotion, marketing? It's both. The scale of the business is not huge. They say there's only about 200 women in the world that buy Haute Couture. But there are meaningful, sizable brands that focus on Haute Couture, trying to sell perfume products like a$50 lipstick all the way to, you know, a$2 ,000 handbag.

5:32It's kind of the dream factory for the fashion industry. So this couture show, were there takeaways from it? The fashion industry is in a pretty challenged place at the moment. After mid-pandemic and post-pandemic boom in the luxury industry, where brands were growing at high 20 % annual growth figures, the industry is at this kind of reckoning point right now. So it was quite interesting for me as a fashion and business analyst and observer to be in the mix this week, seeing how things were going. You saw a few things, you know, designers like Tom Brown, who is also the president of the CFDA in the US, and Daniel Roseberry, who's the creative director of Scapparelli, a couture brand that's being revived by the business mogul Diego Della Valle.

6:26They really, you know, they're seen unperturbed by what's going on in the industry. Like these shows were incredible. Like the creativity and effort that went into these shows was absolutely, you know, it creates this sense of wonder. Daniel took us all into the basement, or maybe it was the wine cellar or the kitchen of this old mansion in the heart of Paris, and we were plunged into darkness. And his normal venue is this space called the Petit Palais, which is bathed in light. But because of the Olympics, he had to move to a new venue because they've shut down so much of Paris. And we were all seated in this rectangular shape, probably no more than 200 of us at the most.

7:14And the models were, as they emerged from the back, you know, the first one came out sheathed in this gold, incredible gold feather look, made to look like feathers, not real feathers. Tom Brown, he staged a show that was inspired by the Olympics. And so, you know, he always does these like very, very immaculately, somewhat lengthy choreographed shows. You know, he created his show almost entirely from muslin. And muslin is the, when you're in the haute couture process, when they make the first version of the garment for you, they make it out of muslin. And Tom, he chose to make his entire show out of muslin.

8:00And actually, the invitation that they sent to us were muslin coats, like the couture coats that all of the artisans and craftspeople in these ateliers use. So, you know, it was a very experiential, very creative, incredible experience to have. Meanwhile, the big mega brands, Dior and Chanel. Dior is part of the LVMH group, which is the world's largest luxury goods group, dominant in the sector of fashion, but also increasingly in the beauty space and watches and jewelry and hospitality. Dior and LVMH have been showing slowing sales in recent seasons. And so there's this kind of crisis of like, well, what's going to happen now?

8:46Chanel actually doesn't even have a creative director at the moment because three weeks ago, Virginie Villar, who took over from the truly legendary Karl Lagerfeld after he passed away, suddenly stepped away from the brand. And so that show went on without a creative director at the helm, which is highly unusual for a house like Chanel, and really spoke to the fact that we're in really a transitional moment, both for Dior and for Chanel, the two kind of pinnacles of haute couture in Paris. You wrote an article on business of fashion recently that argued that the fashion system is struggling under what you call a corporatized approach.

9:26Can you explain that? The big brands in this industry have become so big, so dominant, that it makes it really, really hard for the younger independent designers. We had for a time this like really healthy ecosystem where you'd have these designers come out of fashion schools. Some of them would go work for a big fashion house. Some of them would kind of create their own brands. And they would sow the seeds for the future creative directors who would eventually take over at the helm of these big houses. But lately, I've just had this feeling that that early stage part of our industry is not very healthy.

10:06You know, there's been a lot of things happening in the industry that have just made it really, really hard. In the United States, you know, the department store channel is extremely challenged at the moment. And this is where designers at the early stages of their business would first sell their collections. And they put on these very onerous, sometimes impossible sales terms on these designers in terms of sell through. And then more recently, Bob, we've seen a crisis happening in the online luxury e-commerce part of the business. So you have three or four of the most important luxury e-commerce players facing their own issues.

10:45issues. You had Farfetch, which was saved at the last minute out of bankruptcy by a big e-commerce player in Korea in December. And again, Farfetch was one of the channels that a lot of designers used to kind of reach the market before they could open their own stores and operate their own e-commerce shops. Matches Fashion, which grew out of a beautifully curated set of stores in London and then was valued at something like$1 billion by Apex, who invested in it and kind of tried to turn it into like a big e-commerce player. That didn't work. Matches is in administration right now, which is the UK version of Chapter 11.

11:28And also Net-A-Porter, which was like really the pioneer in the luxury e-commerce space, which is owned by Richemont. Net-A-Porter was supposed to be sold to Farfetch. But when Farfetch had those problems, the deal fell apart. So Net-A-Porte is kind of languishing at the moment as Richemont is trying to find a buyer. And so, you know, all of these things have conspired to make our industry just feel dominated by a lot of business topics and big corporate players that have made it really, really hard for us to focus on the creativity, which is really the lifeblood of fashion. And the industry growth rates are down to like two or 3%.

12:07Some companies aren't growing at all anymore. And there's kind of a reality check saying, you know, where does the industry go from here? As you're talking, I'm struck by how the interaction between the way the corporate structures and incentives work impact the creativity of the industry as a whole. Like when I first saw your article, I thought he was gonna say, oh, these big companies, it's hard to be creative inside big companies. And yeah, we know that. But it sounds like there's a lack of creativity, not just in the products, but in sort of the structure of the industry and the way it works.

12:48That's exactly right. And so one of the reasons, after Matches was acquired by Apex and after Farfetch kind of did its IPO and was beholden to the public markets And after Ux Net-A-Porte was acquired by Richemont, another big, major luxury goods group, they all were pushed to grow really, really fast. And they were focused on this, what they call GMV, gross merchandise value. They were really focused on communicating growth in GMV. And in focusing on growth for growth's sake, they lost the curation. Like all of, you know, these companies all had different points of view, different buys before.

13:31They all started to look the same and feel the same. So the only way that they could compete was based on price. And when they were competing based on price, that's the worst thing to compete on if you're a luxury, you know, e-commerce player. and the margins began to sink, the math just didn't work anymore. And all of a sudden, as the growth in the market began to fall, these companies were all put into a crisis. So the lack of creativity in the buy and in the way of engaging with customers ultimately was brought on by the corporatization of these assets, which had been acquired by companies that didn't respect or cultivate the creativity that all of us are looking for as customers.

14:15We're not looking for identikit retailers on the internet. We're looking for, you know, retail experiences that inspire us. And yes, part of it is that there's a lack of creativity inside these big companies that have become, you know, it's almost like luxury merchandise now. You know, one brand's$1 ,000 luxury logo hoodie is indistinguishable from another brand's luxury logo hoodie. You know, everyone's putting out bags that are exactly the same shape with the same kind of gold logo hardware. It just feels like merch now. And we're missing that creativity that I think customers are really looking for, especially now that they're scrutinizing their spend so much more.

14:57I mean, the relationship between creativity and business is a struggle in every industry. But you'd think in fashion and retail, like fashion and luxury, the balance of power would be a little different. That's such an interesting observation. And I think, you know, Bob, I first tried to start breaking into this industry 17 years ago. And I think the sway and power that creatives held in the industry at that time was much higher. I think the big bosses of these luxury groups were in a way somewhat beholden to these creative talents, which in a way was not healthy either because I think they would indulge some of the top creatives in behaviors and in habits and in ways of working that were not healthy and sometimes were toxic, both for the individual and the people they worked with.

15:55I think now the pendulum has switched the other way. And we have another unhealthy balance, which is, you know, the creatives are being put into boxes and forced to work in ways that are all about meeting the demands of, you know, these large, now publicly traded companies that are, you know, analyzed by all the same investment banks and investment analysts as Procter & Gamble and Apple, you know. And so when you're in these big public companies and every quarter you have to show growth, it really puts a drain on creativity. And so what I hope is that pendulum, that we find a better balance. I love how Imran melds an analytical view of business realities with an appreciation for the artistic side.

16:45When those areas are at odds, any industry struggles. Balancing and integrating them unlocks opportunity. After the break, we'll talk about the interplay between celebrity and fashion and the good and bad of the fast fashion market. Stay with us.

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18:41So if you're scaling, make it simple with Deal. Go to deel.com slash mos and get up to three months free. Before the break, Business of Fashion's Imran Ahmed shared lessons from Paris Fashion Week and explained why some big brands are struggling. Now we talk about the latest twists in fast fashion, the controversy over Louis Vuitton tapping musician Pharrell Williams as creative director, and three business trends to keep your eye on. Let's jump back in. I'm curious about Pharrell Williams and his tenure at Louis Vuitton. Great musician, entertainer, entrepreneur. It's a different kind of role and job for him.

19:27How do you interpret and assess how he's doing so far? What someone like that does to the industry overall? What the big bosses at Louis Vuitton and LVMH would say is that they weren't looking for a traditional designer. You know, Pharrell had the almost impossible task of stepping into the shoes of Virgil Abloh, who, by the way, was also not a fashion designer. He was trained as an architect. And what Virgil managed to do was take a brand that seemed really inaccessible and really out of touch in a way with so much of what's happening in culture and the world. And he just kind of broke it open.

20:12And he broke the rules. And as a black designer, he was able to channel different kinds of creativity that came from the culture and communities that Virgil comes from. And that was a pretty bold move for LVMH to take at the time. And I think it's pretty inarguable that that was a really successful decision. So when they were thinking about, well, who could possibly step into Virgil's shoes, I think they were looking for more of a cultural curator and communicator, someone who could speak to that same community that Virgil had drawn towards Vuitton. To be fair, there was a pretty large industry backlash to that announcement for a lot of people who work in the industry who said, you know, you should be taking that opportunity and you should be giving that to a talented designer.

21:10Right, giving it to someone who paid their dues, who's done all this before. Yes, exactly. And so when I had the opportunity to sit down with Pharrell, these were some of the topics that he and I addressed. I think what's really important also to note, Bob, as you think about this decision, is the Louis Vuitton business, lives and dies on the sale of handbags and leather goods. Yes, they have this ready-to-wear business. The lion's share of the profit at Louis Vuitton is driven by handbags and leather goods. After that pretty monumental show that Pharrell staged almost exactly one year ago now on the Neuf in Paris, my eye was on the bags.

21:56What are the bags going to be? Because that's really what that business is built upon. And what he did was he took almost the most mundane or ubiquitous Louis Vuitton bag shape, the Speedy, and he blew up the original Louis Vuitton print, which is the Damier checkerboard print. And he kind of infused that with very vibrant color. And according to the reports that I'm hearing, those bags are selling extremely well. So my honest assessment after a year of Pharrell at Vuitton is I think he's done a very good job of stepping into Virgil's shoes and trying to pick up where Virgil left off. But I think LVMH and Louis Vuitton are increasingly thinking of themselves as cultural brands, not fashion brands.

22:51And so perhaps this is a sign of the times. I wanted to ask you, whenever I've been to fashion shows, and I haven't been to many, but I always feel like a fish out of water. I don't have the right wardrobe myself. I'm not cool enough. I don't know what to look for. And some of that's by design, by the industry. But But at the same time, as you mentioned, there's this strain of democratization. I just was curious for you, like, how do you operate in this environment? Because you're an insider and an outsider at the same time. How do you think about all of that when you're living in that world? I tried for a long time to break in this industry and nobody would let me in.

23:35You know, and it was, I knocked on so many doors. you know, I went through official recruitment channels coming out of business school. I, you know, networked my way to top CEOs and designers. And pretty much the message that everyone gave me was like, we don't need people like you. Like someone actually literally said that to me, like, we don't need people like you. And I was like, you know, a management consultant with an MBA. This wasn't seen as an industry that needed someone with my kind of experience. And so it has been fascinating as someone who was a complete outsider to now be able to not just be on the inside, but be welcomed into the industry and be appreciated by this industry and to be valued for these perspectives that I bring to the industry.

24:30And my perspective has always been informed by being an outsider. Because I wasn't schooled in the rules or conventions or norms of how the fashion industry should work or who it should be accessible to. You know, I think my perspective has had an impact in fashion because I come with that outsider's perspective. I left the couture shows that we were just talking about halfway through to come to the Aspen Ideas Festival. Because I want to be in spaces and places like these that open my mind and help me connect the dots about what's happening in fashion and how that is interconnected with and intertwined with all of the stuff that's happening in the wider world.

25:15The technological forces, the geopolitical forces, the cultural forces, the social forces that are shaping the world around us. Because at its best, the fashion industry is also a reflection of those forces. The most interesting thing you can do if you look at historical photos going back 50 or 100 years is to look at what people are wearing. It gives you a sense of what's happening in the world at that time. And so when we look back to 2024, Bob, and the hoka sneakers and the athleisure and the streetwear looks that people are wearing, And these are a reflection of what's happening in the world right now.

25:58And that's what makes fashion so powerful. I wanted to ask you about fast fashion. H &M just this week announced a surprise change in CEO. Like, how much of what's going on in fast fashion is about competitors? You know, Shein and Zara and Timo, which is spending big in the U.S. to get attention. How much is about that? How much is about the market for fast fashion overall? So fast fashion is obviously a topic we're obsessed with at BOF. Probably one of the biggest, if not the biggest issues when it comes to fast fashion is the issue of waste. So, you know, so much of what we produce in our industry is actually never bought or worn by anybody.

26:46So it's not the waste of me buying something and then throwing it away after using it. It's the process? It's never bought. It's never worn. And so all of the toxicity and chemicals and emissions that are part of creating clothing, and by the way, every garment we create has some kind of impact, all of that effort is actually for nothing because those clothes are never worn because so much of the industry is making things without knowing what people actually want to buy. And one of the things that Tamu and Shein have managed to do is create this very responsive manufacturing cycle. The way they work with manufacturers in really small runs, the way they're testing and gathering data from customers on what people want before investing and making more of it.

27:43There's actually part of that model that's quite intelligent. The challenge is the materials they're using, the conditions of the people who work in those supply chain. We don't really know much about it because they're not very transparent about it. And it causes me a lot of concern that we're training customers to buy things and wear them once or twice and then discard them. So there's a little element of what they do that I'm quite curious about. But a lot of what's happening in those models, that's actually really problematic. And the way Zara and H &M and some of these bigger players are responding to that is, you know, Zara, for example, is moving a bit more upmarket.

28:28They're trying to reduce waste. I had the opportunity to visit their headquarters in Spain and see like the, it's almost like if you were like managing the liftoff of a space shuttle, it was like this like room filled with computers and data and like everything that's going on in their supply chain all around the world. It was like fascinating. H &M historically has been one of the businesses that's been most focused on sustainability, but they've really lost their creative edge. I think the biggest thing we need to change is customers' relationships with clothes. And the industry has a big part to play in that.

29:03It's interesting. I never realized that sort of the volume of waste that was from clothing that's never worn, and that in some ways, the model that she and Intemo are using are reducing that aspect of it, even as what they're producing maybe is even more disposable than ever. Exactly. Yeah. If there are a handful of things that I should be following, focused on, or understand about the fashion business right now that I should take away from this conversation, what are they? What do I keep my eye on? I would keep my eye on artificial intelligence because just as it is likely to change and disrupt pretty much everything in business and creativity, it's going to be really interesting to see how leaders on both the creative and the business side of fashion begin to integrate AI tools and processes into the way they run the business, but also the way they run the creative process.