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Now is a great time to invest in fashion. Up-and-coming and established fashion designers make beautiful things – that could yield you a small fortune as ‘vintage’ items in ten or more years. You’ll need to have your wits about you, though. Here are a few things you need to know about investing in fashion, and what you should look for in the fashion designers you’re putting your money behind.
Fashion is one of the world’s biggest industries, estimated to be worth $1.5 trillion globally by the end of 2020. The UK fashion industry alone is worth £26 million, and is growing all the time. Start-ups within the fashion space abound, and opportunities to innovate are presenting themselves constantly. Brands that didn’t exist just a few years ago have the ability to dominate the market, finding their audiences through social media, intuitive ecommerce platforms, and strong brand identity.
With both the numbers and the wider fashion landscape in mind, it’s not surprising that fashion is pretty lucrative for investors. As always, investing isn’t just about stocks and shares. Diversifying your investments into both digital currencies and physical assets helps protect your future returns. Unlike a stock, that could crash, physical items always hold some value. Much like investing in gold and other assets, you’ll always have something to sell for a profit if you invest wisely in recognised fashion designers and their iconic items.
So, you can invest in both digital AND physical assets when it comes to the fashion landscape – giving you the opportunity to protect and diversify your portfolio even more.
Where should you get started if you want a slice of the ever-evolving fashion pie, though? Fast fashion, or boutique fashion designers? Large-scale operations, or exclusive collections?
Here, we’ll go through your options for when it comes to your fashion investments.
There is no doubt that the best opportunities for investment are with companies that have the ability to adapt to a quickly changing landscape. Here are some of the things that you should look for if you’re looking for a fashion designer or company to invest in.
You can profit from the fashion industry without owning any items! Buying stocks and shares in up-and-coming fashion designers companies is the best way to do this.
Digital awareness and the ability to adapt quickly to online shoppers’ needs, and to understand selling platforms, are absolutely essential. You want to look for fashion designers that have a strong idea of who their audience is, and are clear about their own brand. The ability to communicate it visually online is key. The best produced products are going to find very few new customers in the next few years if they’re difficult to buy online, have no social media presence, and rely solely on high street shops or outdated advertising methods.
One of the biggest buzz-words when it comes to fashion designers in recent years is sustainability. This is having an affect on those investing in fashion, too. For fashion to coexist with the planet, without stripping it of its natural resources, means between $20 million and $30 million needs to be invested in sustainable fashion every year. This would bring the industry in line with the UN’s Sustainable Development Goals.
The potential return for investors might not yet be clear. However, there are positive predictions. Asset management company Robeco, for example, believes that “it will be the most sustainable companies that are likely to prosper the most.”
If you want to go the physical asset route, look for timeless classics or boutique items that hold their value because they’re scarce.
Jimmy Choo, Balenciaga, Louis Vuitton, Chanel: these are all timeless fashion houses that retain value. That means it’s more expensive to buy their fashion and accessories right now – but they’re more likely to increase in value in future. Handbags, for example, can be stored and re-sold within a few years for a tidy profit. The trick is to look for either a classic (like the Chanel Classic Flap bag or – if you’ve a lot to invest – the Hermes Birkin Bag) or short-run unique handbags that have a rarity value.
If you’re new to fashion investment, here are a few tips to get yourself started…
The nature of investments are always changing, so we can only point out the fashion designers whose stocks have been doing well in recent times.
According to Ig, the largest stocks are the ones that investors should be watching out for. In the UK, that includes household names such as Burberry, Next, ASOS, M&S and JD Sports. You’ll note that these brands don’t all abide by the sustainability standards that we’ve discussed… suggesting that further down the line the investment market might shift from favouring them so strongly.
If you’re looking to invest outside the big names, you’ll need to dig deeper into the industry to find the as yet under the radar names that are likely to be big in a few years. For this, we recommend keeping a very close eye on the fashion press for under the radar brands and fashion designers that might be about to hit the public consciousness.
Recommendations already out there? Of course there are. Who What Wear “almost didn’t want to share” its top under the radar designers last year, flagging Spanish bag brand Gabriel For Sach, whimsical New York designer Collina Strada and jewellery designer Sophie Monet amongst its top up and comers. Fashionista recommends watching designer Maria Bernad’s brand Les Fleurs, as well as Rotate Birger Christensen, Loulou Studio and La Veste closely. British fashion designers and brands recommended by Harper’s include Molly Goddard, Poster Girl, Isa Arfen, Hunza G and Hardware LDN.
Of course, that’s just the start. Let us know what other fashion gems you find as you start your investment journey…
Learn more about making money from investing on both the stock market and in physical assets with these articles:
*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.