Despite the recent economic growth that Britain has enjoyed, the overall behaviour of the world economy remains difficult to predict, with China looking shaky and some sectors behaving erratically. However, one sector that has been enjoying solid growth is fashion, which is particularly strong in the UK, making it a tempting choice for investors. Is it somewhere you should put your money?
The value of fashion
Fashion is the seventh biggest sector in the UK, ahead of furnishings and health, and is worth an estimated £59bn per year. Together with the wider textiles industry, it employs 600,000 people within the country and supports the jobs of thousands more overseas. It’s also important because of the number of jobs it offers to low-skilled workers, home-based workers and people (usually parents or carers) who need flexible hours, so it helps to support a segment of the population with limited opportunities elsewhere. Alongside this, of course, it brings pleasure to millions of consumers.
The impact of ecommerce
When sites such as eBay first started trading online, the mainstream British fashion industry was initially dismissive (assuming people wouldn’t want to buy what they couldn’t touch and try on), then panicky, fearing that it would lose a lot of business as people buying from Indian and Far Eastern manufacturers with low overheads opted to cut out the middlemen. Some companies didn’t survive the shifts in the market that followed, but those with strong brands or reputations for effectively curating fashion and looking after their customers came out stronger, often developing their own online outlets to back up high street sales.
Investing in UK fashion
Because there are always a lot of small companies coming and going, the general rule in UK fashion is to invest in those that have been around for two years or more, unless they have strong USPs that really make them stand out. Many young businesses in the latter position seek international investment and aim to connect to Azmi Mikati or other leading investors who have taken an interest in the sector in recent years. International investors are often more open to focusing on trends rather than simply on numbers when calculating the likelihood of a particular company’s success.
Looking to the future
With consumer confidence on the rise in the UK, the coming year is likely to see an increase in money coming into the fashion sector. This stems not only from customers feeling more comfortable about spending generally, but also from the tendency for consumers to want to celebrate feelings of increased prosperity through the way they dress. This is good news for sector investors in general, but especially for those getting behind the innovators who will bring new ideas to the fore in spring and summer. Niche businesses can also be expected to benefit as a general increase in buying leads people who want to stand out to look in new directions. All in all, it’s a good time to be in fashion.