Proenza Schouler presented her fall/winter 2008 collection of clothes at the Mercedes Benz New York Fashion week, Monday Feb. 4, 2008.

With high-end American department store chain Saks Inc reporting that they will be cutting 9 percent of its workforce, a considerable 1,100 jobs, by January 30th, it joins a long line of major retail chains crippled by banking giants Lehman Brothers, Washington Mutual and Bears Stern folding under the global economic downturn.

This radical reformatting of the company’s structure comes after a substantial sales drop of 5.9 percent, echoed by rival Nordstrom who suffered an even bigger slide at 7.9 percent. International counterparts haven’t remained unscathed however with the British Retail Consortium pronouncing a 3.3 percent sales nose dive during December compared to the same time last year, whilst overall sales, this includes newly opened stores, fell by 1.4 percent — a far cry from British junior Business Minister Lady Vadera’s claims that she could see “some green shoots” of economic recovery.

If fashion and luxury are so inextricably linked, how does fashion survive when people start turning their back on expensive luxuries? New York Fashion Week, at the historic Bryant Park tents, is home to some of the greatest established designers who share their home with emerging talent. As of September 2008 there were 71 official calendar shows and many more located outside the official Fashion Week schedule, bringing the number to well over 100. However, the future of New York Fashion Week has been put in doubt over the last few months as swathes of designers have bowed out in response to the financial restrictions they now face. With venues at Bryant Park typically costing within the region of $25,000 to $50,000, coupled with the exorbitant cost of set production, make-up, hair, models and even food back stage, most shows rest perilously within the $300,000 to $600,000 mark.

This price is, of course, far too high to pay twice a year every year, and unimaginable to those designers fresh from design school. For these rising stars, there is a way to save money. “Maybe you have friends walking the runway or you’re paying with clothes, but they are getting their show up and they’re getting their name out there,” says Fern Mallis, Senior Vice President of IMG fashion. This tactic is indeed admirable and resourceful, but it can only go so far. This is where the advertisers play their key role. With New York Fashion Week itself being sponsored by Mercedes Benz and many designers being sponsored by champagne companies and electronic industries, many designers could face crushing financial burdens if they were to lose their cash cow. Only Vera Wang admits the financial aspect of avoiding Bryant Park. “We feel that the intimacy of a smaller venue will be the perfect backdrop for the collection and is an appropriate statement for the times,” she said in a statement. Instead Ms. Wang’s show will take place at 9 a.m. February 19 at her own 2,500 square-foot retail store with a much revised guest list of just 100 to 150, down from the usual 900 she invites. This is bound to include only her most profitable buyers and members of the media.

Other designers such as Monique Lhuillier and Naeem Khan decided to pull out of NYFW this February; Ms. Lhuillier, who has staged shows for 500-600 in the past, has decided to show in a more intimate setting. “We just wanted to do something different, shake things up a little bit – it’ll sell the clothes differently,” says Paul Wilmot, whose firm represents Ms. Lhuillier. But the list goes on and on. DKNY, Victor and Rolf, Betsey Johnson, Carmen Marc Valco and Temperly London are also steering well clear of Fashion Week hoping to curve their costs.

DKNY, who have like Ms. Wang chosen to show in their own flagship store, are one of the best known and well established companies to choose this radical option. Spokeswoman Patti Cohen said, “Cost is always a consideration, this is a much more cost effective way – it’s our space, we already have the seats, runway and lighting”. However, with the cost undoubtedly being cut, what repercussions does this have on their exposure and sales; with restricted guest lists shutting out potential buyers and fashion editors, will this be one of the worst performing seasons in their 20 year history? Only time will tell.

***

In Ontario, Canada, the threat is real too. Being one of the most up-and-coming fashion destinations in the world, Canada sees $500,000,000 of its annual GDP come direct from the fashion industry, from talented designers such as homegrown Arthur Mendonca. In these uncertain times many people point their fingers upwards, to the big brands and the big business. “I’d like to say that talent always wins out. But that’s not so today,” says Barbara Atkin, vice-president of fashion direction at top Canadian boutique Holt Renfew. “Until we get out of this grand brand era the problems will continue for small designers with little financing.”

However, designers are pupils from the school of hard knocks and are professionals in resourcefulness, at least according to Creative Director of trends forecaster “The Doneger Group”. It’s David. A. Wolfe believes, “When times get tough, fashion gets more conservative, more tailored”. However, Sandra Pupatello, Ontario’s minister of international trade and investment, says, “The fashion industry faces the same challenges all over the world in this economic climate. I don’t think Ontario is any different than what designers are facing elsewhere.” Dana Thomas, author of Deluxe: How Luxury Lost Its Luster, agrees with Pupatello. “Look at Bill Blass in the United States. He went under. Halston is barely hanging on. Valentino will likely take a hit. These are big companies we’re talking about. Even they’re feeling the impact of today’s economy.”

This at least is certain. American designer Carmen Marc Valvo, a resident designer for over ten years at NYFW, has needed to make tactical changes to this coming season’s plans and this includes pulling out of fashion week. However, it’s not all bad news in this designers books. What with the dollar so weak against the euro, now is the time to buy premium American products at bottomed out prices. ‘Thank God for the Europeans. At least someone’s buying,” he says of this newly dominant consumer. Perhaps then the weak dollar may be just the weapon with which to ride out this economic storm. If American designers could tap into the highly lucrative European market, they could dominate designer clothing sales and perhaps take over from Europe as the shopping capital of the world.

Other ways of braving the downturn are being explored by well established designers such as Betsey Johnson, who like many others has cancelled her scheduled show. Betsey Johnson’s CEO Chantal Bacon revealed a small snippet of her plans for a likely-rewarding diffusion line: “Ms. Johnson is planning a limited-edition design collaboration with a retailer that will likely launch in the fall,” she said. Having declined to offer any other specifics on the deal it’s not hard to see a H&M or Target line in the works which have proved highly worthwhile for designers like Victor and Rolf, Comme des Garçons and Stella McCartney. To secure a living in these tough times, designers are sure to flee to the relative safety of the high street where prices are low, production and volume are high and a living is more easily secured.

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With most of the fashion industry unable to escape the fatal clutches of the sinking economy it is unsurprising that print, already known to be a dying media in the face of the ever more widely available internet, looks to be dying a slow and painful death. Conde Nast, one of the largest magazine companies in the world, was made famous with its unbeatable coverage of the latest trends and social issues. However, one of their most popular titles, Vanity Fair, carried far fewer pages due to the cancellation of their popular supplement Movie Rocks (a fatality of the writer’s strike leaving few to write about up-and-coming movie releases) resulting in a loss of 84 pages and over the entire year there was a dramatic loss of 15.3 percent in advertising pages compared to 2007, down to 1,917.

Other leading magazines such as Glamour, down 12.4 percent, W, down 12.7 percent, Lucky, down 11.3 percent, Teen Vogue, down 10.2 percent and GQ, down 11.5 percent, performed worse than ever before. Yet it was Vogue that most surprised executives, the 10 percent drop it suffered being a major u-turn after the record high it enjoyed in 2007 under the new publishing leadership of Tom Florio. Despite this, Elle magazine and Men’s Journal have both shown 3 percent increase in ad pages. Perhaps then it is more a question of survival of the fittest.

It may not be all bad news for the fashion industry, but the indications point towards further financial troubles for at least the next two years. With all sections of the fashion industry facing continued pressure to adapt and evolve, it will take shrewd businessmen and one heck of a well-cut suit to survive in this, a most hostile environment.

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