Not every brand operates on these terms. Like Vetements, independent designers Rick Owens and Dries Van Noten are known for making their money by actually selling clothes. That’s no easy feat. Unlike large luxury houses where designers have the freedom to design mainly for show, they have to produce collections that people will actually wear, at prices they’re willing to pay. Small designer labels go out of business all the time because they fail to hit this sweet spot.
The major European luxury groups smartly limit their exposure to the vagaries of the apparel industry. At Kering, Prada, and Hermès, clothes are only about 10% of the business. Instead, most sales come from bags and other items. “High-end fashion was once a ‘real’ business,” the report says. “The goal was to produce beautiful garments that real people would wear. This is rarely the case today.”
So why do most luxury brands continue making expensive clothes? Fashion executives don’t often address the point openly, but Tom Murry, the former CEO of Calvin Klein, offered an explanation in a 2011 interview. For a company that makes its money off underwear, jeans, and perfume, he told Business of Fashion, there’s still a real value to a runway line like CK’s Calvin Klein Collection:
Well it’s not a business that contributes to the bottom line and it probably never will be. For us, it’s a marketing expense and we generate an incredible amount of editorial that is based on being in that business. The PR department creates over $400 million a year in equivalent editorial, which is massive and which we believe has a very significant impact on our brand image globally.
We have reached out to Calvin Klein for comment, since Murry retired from his longtime role in 2014, and Calvin Klein is now working to reinvigorate its runway lines under creative director Raf Simons. We will update this post with any reply.
But Murry’s point was echoed in the new report. “The value of maintaining a RTW business is in the aura it creates for the brand,” it explained, emphasizing that the goal of all those expensive clothes, in most cases, is just “not to lose too much money.”