Rag trade suffers as consumers look elsewhere for satisfaction

There are very few walks of life that conform to their popular image. By and large, advertising people aren’t flakes in bow ties and designer spectacles, any more than the police force is full of low-foreheaded, dysfunctional, racist thugs. Even accountants, elevated to corporate financier status by global deals such as the Price Waterhouse/Coopers & Lybrand deal, aren’t that dull anymore.

But the marketing people attached to the fashion industry are every bit as stereotypical as we would wish to suggest. If anything, the Ab Fab pastiche somewhat underplays the neurotic, self-obsessed, shallow and vulgar nature of the hype-artists which inhabit this industry.

I managed to avoid the largest-ever London Fashion Week of the past few days, but I imagine that the air actually solidified to the sound of “mwah!” and that not a few spin-nurses approached spontaneous combustion at the excitement of discussing frocks with slashes in them from people with Italian names. I went to Milan at the weekend instead.

There, people view the excitements in London with a certain bemusement. The twice-yearly London event feeds off its own propaganda. Last year’s attendance increased dramatically and this year there was talk of even greater demand for space at the 48 shows. Yet the fashion industry is on its uppers, if current corporate manoeuvres are anything to go by.

While last week’s papers were dutifully producing photos of the models sulking their stuff, I was reading elsewhere in the same papers that the Asian entrepreneur owner of something called Joe Bloggs was stepping in to save Elizabeth Emanuel, creator of what must now be the century’s most famous wedding dress, from financial ruin; that Gucci’s shares are in freefall in New York and, moving a little downmarket, that Laura Ashley had announced losses and issued a warning that worse is to come.

The first of these stories is a lesson in how the mass market can be more resilient than the luxury fringe. Shami Ahmed of Joe Bloggs is compared with Richard Branson and that’s fair. He has considerably more in common with the relentless marketer of the Virgin brand than he does with those in the fashion industry who knock around with pop stars and consider themselves artists. What he can do with Emanuel remains to be seen.

Gucci’s shares dived more than $11 last week to about $46. Gucci has ridden the luxury-brand wave for longer than most – indeed, it was a prime mover in creating it – and it had to beach at some stage.

The question is not so much what has happened to Gucci’s brand appeal, or what is wrong with its trading fundamentals, as what the effect will be of so powerful a brand’s mark-down on the branded fashion companies that have coat-tailed Gucci.

Ralph Lauren and Donna Karan are recent flotations in New York, and Italian rivals Gianni Versace and Gianfranco Ferre are likely to follow the publicly-quoted path. This bullish trend led the likes of LVMH and Hermes in France to invest heavily in brand development in recent years. Which, in turn, has squeezed out smaller players in the luxury couture market, who cannot afford the advertising budgets of the giant puff-balls (Ralph Lauren, for example, spent over 80m on advertising last year). What this means is that, at the top end of the market, Planet Couture has been created – it lives entirely in its own world and doesn’t recognise anything so proletarian and primitive as market trends or economic shifts. That’s why they were all terribly, terribly excited at London Fashion Week, even though what we might call the top, fell out of the market.

Laura Ashley is, of course, as much about furnishings as clothes. Nevertheless, it is interesting to note that, as the shares fell 6.5p to 59p on the back of news last week that the company will make a loss for the full year, clothing sales are up only because Laura Ashley is trying to get rid of its spring/summer stock at discounted prices.

So what are we to make of these disturbing fashion symptoms? At the haute couture end of the market, much is being made of the weak yen discouraging the Japanese, the biggest spenders on high fashion. That’s true – but it doesn’t explain the chill winds that the likes of Laura Ashley are also feeling.

I contend that there is something bigger, something socio-economic going on here. And it’s not just the absence of our old friend, the feelgood factor, though that has something to do with it as well.

Bulimics eat when they’re unhappy and consumers don’t always consume because they’re at ease with themselves. The Eighties, when companies such as

Gucci really began to emerge as an economic force, was a period of conspicuous consumption. But were consumers happy? I rather doubt it.

We really may be talking about a new age as we approach the millennium – a mould-breaking age like the Sixties. If something profound is happening to society, then many a shallow presumption will be blown away. Buying expensive clothes may not have made people happy and society has started to look elsewhere for its satisfaction.

This view doesn’t make much sense in Milan or at London Fashion Week. Which is all the more reason to take it seriously.