Thursday, 22 January 2009

The Roll Down Effect on Suppliers to Luxury Fashion - 20/01/09

We are afraid there will be more of these stories to come... A reduction of staff from the many suppliers of raw materials to the luxury industry. One doesn't need to be Einstein to know that when finished goods do not achieve the right sell through percent, the open-to-buy for the next season is reduced. Which has an impact on number of units produced and the associated raw materials that go with this.

Naturally, a reduction in production units leads to higher item per unit costs, so gross margins are being eroded on many fronts.

An article today in talks about one such niche industry located in Northern France, "Caudry is home to 10 lacemakers, including two of the world’s biggest weavers for haute couture. Together with nearby Calais, the town has 80 percent of the 100 million-euro ($139 million) global market for luxury lace..."
They have already seen a divestment of 13% of the 800 lace making jobs in 2008 and speculation is that there are more to go. The roll down effect will continue to take its toll on manufacturers and suppliers as the year plays out and retail consumption is pared down.

Lace is generally considered a luxury treatment to a garment so overall design ideas and embellishments are being reconsidered to ensure overall costs per garment are also reduced. The minimalist, non embellished fashion will return by default.

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Who's behind the MO DOWN

Melinda O’Rourke is the founder and Director of MO Luxury, a dynamic, Sydney-based management firm specialising in luxury brands and services. Melinda and her associates at MO work with local and international brands across prestige retail, fashion, fine jewellery, timepieces and specialised services. Melinda is well-connected, well-read, and well-versed in the demands of the luxury market and its client base. Her advice is firmly based in objectivity and ultimately, accountability. Melinda offers constructive counsel and both strategic and creative thinking and is able to draw upon a strong network of specialised talent to compliment the MO Luxury team as needed. Melinda enjoys excellent industry relationships and is regularly quoted in the business and fashion media. Read more about MO Luxury,