MODECollective

MODECollective was created as a resource for young designers, students and fashion enthusiasts entering the professional fashion world.

The goal of this blog is to create an environment where questions, concerns, advice and fashion news and history can be shared in order to educate, mentor and showcase the talent that will lead the next generation of the fashion industry.



Sunday, April 17, 2011

Week in Review: Part 2


Wheeling & Dealing: Mergers and Acquisitions Are on the Rise in European Fashion Companies.

For the past five months there have been many headlines broadcasting the selling and purchasing of many fashion and beauty companies with LVMH being a part of several of the headlines.  The most recent extravagant purchase of Bulgari for $6 billion continues to capture the attention of fashion followers around the world.  As the economy and retail environment continues to change and revive, banks and companies are now ready to re-invest in new growth opportunities. Many of the recent deals completed by LVMH have been viewed as positive actions by the acquired companies as it brings the opportunity to build their business in ways that only a large conglomerate with a strong financial backing can.

Currently companies are looking to acquire and invest in both luxury and lifestyle brands that have the potential to grow globally. It is through potential global growth that investors and buyers are focused on. In addition to the LVMH centered headlines, other headlines and rumors continue within the industry such as the rumors surrounding several takeover speculations for Tiffany & Co. as well as the rumors surrounding Burberry and the recent news regarding Jimmy Choo and AllSaints and the several companies looking to go public. And what types of companies are looking to make these purchases and continue to wheel and deal? The types of companies that are most active in this merger and acquisition trend of cash rich private equity firms who are currently in the market both buying and selling.

Not only is this trend happening in Europe but there have been 53 retail buyouts in the U.S. this year totaling $9.31 billion which is a huge increase to the $1.6 billion in deals seen just a year ago. Analysts are saying there hasn’t been a better time for mergers and acquisitions. Companies have been piling up cash and now they are finding a use for it. An additional cause for this trend stems for the oversaturation in the marketplace and the overabundance of production. Organic growth is increasingly more difficult to achieve leaving much of the growth potential in acquisitions. This strategy of acquisitions and global growth seems to be one reason for the record sales and earnings LVMH is experiencing and remains confident about.

This is only the beginning as many companies are either in expansion mode or are finding the need to consolidate which will continue to support this trend.

Below is a list of some of the other companies who have been active participants in this trend:

  • J. Crew and it’s $3 billion acquisition by TPG Capital and Leonard Green Partners
  • The acquisition of Gymboree Corp.
  • Walgreens to buy Drugstore.com
  • Revlon Inc. bought out Sinful Colors brand
  • Nordstrom Inc. acquired HauteLook Inc. for $270 million
  • LVMH huge purchase of Bulgari and its controversial stake in Hermes
  • Kellwood Co. bought Rebecca Taylor in January
  • Perry Ellis International Inc. acquired Rafaella Apparel Group from Cerberus Capital


Rising Raw Material Costs Impact Fast Fashion: H&M Profits Challenged.
H&M (Hennes & Mauritz AB) is the world’s third largest fashion retailer but it posted a huge profit drop of 30% this first quarter as a result of soaring cotton prices and negative currency effects in the market place which impacted the company’s gross margin. Higher transportation costs, the negative U.S. dollar and accelerated inflation costs in sourcing markets are the main factors effecting H&M’s profit.

Rather than passing on retail increases to their customer, H&M decided to strengthen its price positioning to maintain its competitive edge which in turn cut into their margin or profit hoping this strategy would pay off in the long term. The company’s goal is to increase sales volume in order to counter the increase costs.

H&M is not the only retailer feeling the pinch though many retailers are approaching this most recent challenge in different ways. One this is for many price sensitive retailers like other fast fashion brands, Target, Wal-Mart and the like, this is one challenge that they will be dealing with for the remainder of the year.


China Continues to Be Impacted By Rising Material and Labor Costs.
Costs are rising for the Chinese apparel and textile production industry as a result of higher labor and material costs and a maturing Chinese economy. These cost increases have led to the closing of several factories and cost control measures with higher prices to come for customers.

Not only are raw materials such as cotton, wool and silk experiencing increases but the labor force has demanded higher salaries which are now needed to attract workers. Therefore, big changes are necessary for the world’s largest maker and exporter of apparel.

The increasing prices in raw materials have already led to a 10% increase in production costs over last year for many companies and the migrant work force that these companies once relied on has changed. China has relied on migrant workers for a long time now which has brought a steady stream of cheap labor to wealthier cities and regions but as wealth begins to trickle into the countryside, many of these workers are finding other employment options closer to home.

China is now partnering more closely with the overseas apparel companies it does business with in order to find ways of controlling production costs. What was once a one-sided relationship for these Chinese companies is now becoming a two-way partnership.  With the closure of so many factories and the increase in costs and labor there is more of a balance between the supply and demand in China’s manufacturing sector.


The Economy Continues to Impact the Retail Landscape: L.A. Faces Continued Vacancies as a Result.

Throughout the U.S. retailers have closed their doors and new ones have appeared in their place. The landscape is changing everywhere from New York’s Fifth Avenue to L.A. The past 3 years have brought an incredible amount of change with companies going into bankruptcy and closing their doors, consolidating stores and new companies looking to expand in key areas of the U.S. market.

New York’s Fifth Avenue was a shopping district of little change but in 2008 that ended. In 2009 more stores closed and opened on the avenue than ever before. Despite some occupancy remaining open the avenue continues to have new stores that never existed there before. Even smaller shopping districts like Chicago’s Oak Street have retail space that remains open today after several store closings only few retailers have moved in to take over some of the occupancy. L.A.’s retail landscape continues to make the news as they continue to feel the biting effects on the national and state economy. The landscape in L.A. is unrecognizable to some as it has been completely overhauled in recent years with rampant store closings, moves and new store openings. Many have exited the market and continue to exit. Unfortunately, the southern California market has been slammed with a multitude of economic crisis from housing to the stock market and the state budget crisis. Retailers who remain are focusing on making their businesses more efficient so that they can survive and see if and when the market returns.

The Bridal Trend Continues as Isaac Mizrahi Joins the Bridal Market

Isaac Mizrahi launched his wedding gown collection for the member-only ecommerce site The Aisle New York collection the beginning of this month. The designer returns to bridal but this time offering price points between $2200 and $4500.











Monday, April 11, 2011

Week in Review: Part 1


We have a lot to catch up on this week. It has been a while since we last posted and we do apologize for the lapse. This is the first part of this Week in Review with a second part more focused on China’s labor challenges, the European mergers and acquisitions trend, the continued effects of fiber cost increases on textile shows and the ever-changing retail landscape as a result of the struggling economy.

Beijing Bans Luxe Billboards

China has celebrated luxury and opulent products and lifestyles over the last decade but now Beijing is banning outdoor advertising that uses certain terms which celebrate living the high life.

Taking effect this month on April 15th, the Beijing Administration for Industry and Commerce are taking new steps that will “target advertisements that ‘promote hedonism’ or the ‘worship of foreign-made products.’” The actual changes pertain to the banning of certain words in outdoor billboards and advertising. Banned words will include “supreme,” “royal,” “luxury” and ”high class.”

Possible causes of these changes are speculated to come from the political leaderships desire to tackle one of the country’s most challenging problems: the fast growing wealth gap. China is one of the world’s fastest growing luxury goods consumers, surpassing the US 2 years ago with a $10 billion a year luxury goods market, second only to Japan. The Chinese consumers, with or without wealth, tend to be obsessed with brands and marketing has only played into this obsession.

The wealthy are growing exponentially wealthier while the middle class and poorer blue collar workers continue to face stagnant wages and record inflation. It is yet to be seen how this will be enforced and how significant a role this step will be in the fight against the wealth gap.



Another challenge for China has been converting its population to society of savers to a society of consumers. To read more about this please visit the link below.



Hispanics Becoming a Growing Force as Consumers

This Hispanic population has been growing over the past several years and is currently the largest and fastest growing group in the U.S and is projected to reach 132.8 million by 2050. The projected buying power is expected to rise from $1 trillion this year to $1.5 trillion in 2015. This buying power is larger than the entire economies of all but 14 countries in the world, pretty impressive. So who is listening to this growing consumer?

Retailers like Macy’s, Wal-Mart, Dillard’s, J.C. Penny, Kohl’s, Kmart and Sears have been playing close attention and have been aggressively focused on the Hispanic customer through product, marketing & advertising campaigns and bilingual direct mailers, credit card applications and in-store signage. One example is Kohl’s recent partnership with Jennifer Lopez and Marc Anthony to do a lifestyle fashion venture. Kmart is also launching Sofia Vergara a young contemporary lifestyle collection this fall.

There are several differences in spending habits in the Hispanic population such as shopping more as a family than as individuals, shopping for different silhouettes, colors, styles and even different fabrications. Some other distinguishing characteristics in shopping behaviors include being fairly conscious of status, loyal to department stores, loyal to brands that fit well and a love for value and newness. Many retailers have addressed some of their stores as more Hispanic in product assortment etc especially in certain areas of the U.S. such as Miami, Texas and New York. It remains important to not lump Hispanics together in a general fashion, there are differences retailers must recognize according to the original country of origin such as Mexico, Cuba or the Dominican Republic.

As a result of this growing population of consumers, several retailers have also re-allocated how they are spending their marketing dollars. In 2009 J.C. Penny’s devoted $50 million of its media spend to the Hispanic market while Wal-Mart allocated $66.1 million and Macy’s used $38.8 million to the Hispanic market.


Barney’s Mark Lee Continues to Make Changes

Change continues to remain constant this first quarter of the year for Barney's with the addition of Carine Roitfeld, the former French Vogue editor in chief, joining the team as a guest editor and stylist as well as muse and inspiration for the fall. She will be collaborating with photographer Mario Sorrenti and Barney’s new creative director Dennis Freedman.

Roitfeld will style and edit Barney’s advertising campaign, shot by Sorrenti, as well as edit the catalogues, fall mailers and put her styling into the windows in the Madison Avenue location which will be unveiled in September.

Roitfeld was drawn to the concept of crossing over from the editorial side, more open where the envelope can be pushed, to the retail side where the focus is on commerce. Mark Lee continues to shake things up at Barney’s and it is exciting to see how his vision will play out as the year progresses.


PPR Makes Strides to Become More ECO-Friendly

PPR, the French retail firm that owns Gucci Group is unveiling a new sustainability plan as the fashion world and consumer continue to embrace eco-friendly and sustainable fashion. The plan includes the following:
  •   The launch of the Creative Sustainability Lab, a partnership with Cradle to Cradle, that will focus on developing products the integrate and apply environmental objectives and social concerns for PPR’s luxury labels such as Gucci, YSL and Balenciaga.
  •    The offset of carbon dioxide emissions generated in 2010 by PPR’s luxury group, PUMA and PPR’s headquarters through the purchase of carbon credits from San Francisco company Wildlife Works Reduced Emissions from Deforestation and Degradation (REDD) offsetting project in Kenya.
  •   Puma plans on publishing its first environmental profit and loss statement as a first step towards measuring the full environmental impact of its activities and its suppliers.

GAP Focuses on Bringing Modernity to its Fall Collections

The Gap has struggled in recent years especially when it comes to its product. As competition has increased the product piece has remained somewhat stagnate. The company announced several changes earlier this year and the latest is the evolution of the “seven-day-a-week brand,” according to the retail brand’s executive vice president of global design, Patrick Robinson. The non-denim part of the collection was previewed the end of March and has created a buzz for what is to come.

The women's designs are taking a more elevated, modern approach with dressed up options that still remain true to the GAP philosophy.  They designs will reduce layering but emphasize texture and will still give women the option to transition their clothing from day to night. In addition there will also be an enhanced and more detailed accessory collection to coincide with the accessory push happening across the marketplace.

The men’s designs are focused on updated classics updating to skinny silhouettes and suit separates. Knit shirts will also make a strong statement in addition to leather such as leather bombers and motorcycle jackets. Textured and chunky sweaters will also make an appearance in this fall’s collection.




Style Rookie’s Tavi Gevinson Teams up With Jane Pratt

Tavi Gevinson, the 14-year-old blogger of Style Rookie has captured the attention of many in the fashion industry and is now teaming up with Jane Pratt to launch a web site and magazine. Tavi’s blog has become a must follow for the likes of Anna Wintour and designers around the world, receiving more than 50,000 visitors in one month.

Jane Pratt has launched 2 magazine and 2 TV shows which she lost. Since 2005 Jane has kept a low profile but in the next two months Pratt will launch JanePratt.com. This summer Jane will team up with Tavi to introduce a magazine and website for teenage girls. The site will be styled like a magazine instead of a blog and will feature commentary, photography, poetry, fiction and interviews by teenagers.

To visit Tavi’s blog Style Rookie please click on the below link:


To read more about this collaboration please explore the below: