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Is investment changing high street fashion?

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Today, consumers from China to Australia and India to Finland are ready to hit their local high street stores expecting to find off-the-peg versions of the new season’s designs from the world’s most famous fashion houses.

In the past, high street fashion stores tended to be made up of a mix of independently owned shops operating in one or just a small number of towns and cities, or national chains with outlets across a specific country. In more recent times, however, multinationals, stocking a combination of regional as well as global fashions, began to appear on high streets and in shopping malls.

More recently still, entrepreneurial investors have come to recognise the opportunities offered by the fashion industry, which is worth some £6bn in the UK alone and around US$1.5tn globally. As a result, some of the most iconic brands and fashion houses are no longer independent but are owned and controlled by wealthy capital investment companies. It is frequently the case that both established fashion houses and individual designers concentrate on the creative aspects of their business whilst neglecting financial and administrative tasks. As a result, despite being lauded for the clothes they produce, their business tends to be inefficient and less profitable than it could be. There is, therefore, an opportunity for astute investors, especially those with a knowledge of the industry, to step in and work alongside these highly creative individuals to improve profitability, maximise market share and grow their business.

For any partnership between investor and designer to work as effectively as possible, it is essential to develop an in-depth understanding of how to get the best out of a team of designers and how to provide an environment in which they will become as creative as possible. By minimising distractions and pressures, such as giving them unrealistic deadlines or asking them to design items using sub-standard materials in order to cut costs, and bringing in new ideas from outside the industry, everyone benefits. The designers are provided with a set of broad guidelines within which to operate; the brand has a unique range of styles that customers come to recognise and appreciate, and it will have a target age group.

A good example of how an investor can improve the efficiency of a high street fashion brand by implementing best business practices is provided by M1 Group, which, in partnership with L Capital Asia, recently completed the purchase of Pepe Jeans (a brand originally founded in 1973 by three brothers on a market stall in London’s Portobello Road) for a reported €900m. M1 Group, which is based in Beirut, already owns a number of fashion-related companies, including Hackett, the British menswear brand, and Façonnable, the high-end French tailors. Taha Mikati and his brother Najib, former Prime Minister of Lebanon, established M1 Group in 2007; Azmi Miktai, a Columbia graduate is now CEO and continues to successfully run M1 Group.

Investors from the Middle East have been quick to recognise the potential for growth in the high street fashion sector as the global economy finally begins to recover from the recession. As the emerging middle classes in countries such as China and India, along with fast-developing nations in Africa and South America, find their disposable incomes growing, demand for the latest fashions is sure to increase.

Lady Rebecca

Lady Rebecca is a lover of fashion and beauty. She doesn't claim to be the most fashionable girl in the world and sometimes wears odd looking clothes. I wear my sunglasses at the slightest hint of sun and enjoy cocktails with friends!

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