This week has seen London Fashion Week, where over a hundred talented designers have displayed their creative clothing and footwear designs for Autumn 2013. It is the celebration of a successful, creative industry and the opportunity for retailers to view and select their stock for the next season.
The Fashion Industry has a lot to celebrate in the UK. A British Fashion Council report entitled “The Value of Fashion” which was published in 2010 includes some incredible information about just how much.
As a headline, the fashion industry makes a direct contribution of almost £21 billion annually to the British economy. This is also 1.7% of the UK’s total GDP and over 20% of the total contribution to GDP from retail comes from the fashion sector.
London Fashion Week SS13 – under Creative Commons License 2.0; Available here
The contribution to the UK’s economy from fashion is more than twice that of the contribution from publishing, car manufacturing and chemical manufacturing and it isn’t far behind those of telecommunications and real-estate.
The fashion industry directly employs over three quarters of a million people in the UK and fashion week itself is responsible for nearly £100 million in tourist revenue each year.
These are the direct numbers. If you take into account the spending made possible and the supporting industries which are able to operate because of the scale of the fashion industry in the UK, then the GDP contribution is over £37 billion and over 1.3 million people are employed in fashion
So, for sure, London has every reason to be celebrating new British designers and designs this week!
Anyway, as we were faced with full size adverts on the tube platforms and listening to friends, colleagues and casual acquaintances talking about the event, the Figure It Out team decided to look at whether the recession has had any impact on the fashion industry.
There are sources saying that the fashion industry has been badly hit by the recession (because of an increased caution amongst consumers of luxury products), those which suggest that the industry is doing well and forecast significant growth over the next five years; and others which quite frankly don’t know. But which is it? The upbeat numbers from the BFC report certainly suggests that, recession or no, the fashion industry is a UK success story.
We started with data from the Office of National Statistics, which provides the retail quarterly sales for a variety of retail sectors going back to 1995. Specifically, we’re going to consider food sales, clothing/textiles sales, fuel sales and other household items. We first compared full year sales in 1995 with those in 2012, which shows that the only one of these sectors in which spending has reduced is automobile fuel.
However, these results do not take into account inflation and the impact of the change in value of money across nearly 20 years.
When the effect of inflation is included, actually, the clothing industry is the only sector where there has been noticeable growth across the period.
Looking more closely at the trend across the 18 years, adjusting for inflation and normalising the results so that the changes in spend for each sector are on a comparable scale, it’s possible to see that the spending in the clothing industry continued to climb into 2010, two years into the recession and long after the spending in all the other considered sectors had started to fall.
There are a many possible hypotheses to try and explain this trend: perhaps people continue to treat themselves to high-range fashion items; maybe concerns regarding underpaid clothing factory staff in 3rd world countries have encouraged people to switch from budget to more upmarket outlets (perhaps the scare of eating horsemeat may now have a similar effect in the food sector?); or maybe the growth has been fuelled by global demand for luxury British goods in emerging markets, built on the back of London emerging as one of the big fashion centres of the world. If you have your own hypothesis, please feel free to contact us and we could investigate it further in a future edition of Figure It Out.