Fashion industry being hit hard by economy

FASHION/POLITICS - The recession in the United States is affecting the fashion industry and results are dire for some of the big fashion brands and for new designers alike.

In Canada retailers and consumers are pondering one big question: Will Canadian fashion designers survive today's tough economy? And if some fail, who will survive?

Arthur Mendonça, one of Canada's most promising designers, is closing business. A casualty of today's uncertain economy and "big brand" era, Mendonça's luxurious clothes once made him a stylish find at Holt Renfrew and other select Canadian boutiques. His sexy designs were often worn by Canadian singer Nelly Furtado.

"What happened with Arthur is not uncommon for young start-up designers," says Barbara Atkin, Holt Renfrew's Vice President of Fashion Direction. "Arthur's announcement came out, unfortunately, at the same time that the economy started to make a downturn. But the problems started long before that."

Those difficulties, says Atkin, mimic the age-old David and Goliath story. Huge monopolies now run the world's major design houses. Smaller designers simply cannot compete with the resources, marketing campaigns and brand awareness these giants generate around the world.

Carried in Holt Renfrew's World Design Lab, which is devoted to small, innovative collections that lack "big brand" financial backing, Mendonça earned a strong Toronto following after he launched his label in the fall of 2003.

Outside of the Toronto market, however, Mendonça's success was modest.

"You need a big company and a marketing machine behind you that can tell the world who you are," says Atkin.

Inevitably every designer's career will be tested. When that happens, "you go away and refine who you are and what you're doing," says Atkin.

"Look at Marc Jacobs. He opened and closed his business several times before he became the Marc Jacobs we know today. The same can be said of Izaac Mizrahi," she says.

"I'd like to say that talent always wins out. But that's not so today," says Atkin. "Until we get out of this grand brand era the problems will continue for small designers with little financing."

Start-up designers battle big challenges around the world.

Whether other Canadian designers follow Mendonça remains to be seen. It's something that Sandra Pupatello, Ontario's Minister of International Trade and Investment, hopes won't happen.

"Half a billion dollars of Ontario's GDP comes from the fashion industry," says Pupatello.

"That may not compare to manufacturing but it is significant in terms of what it represents," says Pupatello. "Ontario is known for the level of innovation it brings to design in all areas. Fashion design plays a huge role in how people think of Ontario."

Attending the L'Oréal Fashion Week - the third largest show in North America - for the first time last week, Pupatello 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."

Those challenges are impossible to avoid even for industry giants, says Dana Thomas, author of "Deluxe: How Luxury Lost Its Luster."

"The bankers running today's luxury design houses want a fast return on their investments. That mentality is having devastating long-term effects," Thomas said from her home in Paris, France. "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."

Some luxury brands continue to do well, however, by selling middle-market goods to the emerging rich in China, India and Russia. "These virgin markets are filled with people who want all the trappings of luxury. It's helping to make up for losses companies are experiencing in the United States and Europe," says Thomas.

Yet as plunging markets continue to evaporate retirement accounts around the world, funds, not fashion, will concern people more, says Thomas.

"Clothes are necessary. Fashion is not," says Thomas, who predicts that consumers will dial back on unnecessary spending for the foreseeable future.

Real solutions for today's fashion industry?

For Calgary-based designer Paul Hardy, one of Canada's success stories, tough times mean greater opportunities.

"It is possible to be creative within challenging financial times. But you need to think outside the box and turn obstacles into possibilities," says Hardy.

Coming from four generations of bankers, Hardy and his advisers foresaw the economic depression on the horizon. They implemented strategic plans to withstand it, beginning with restructuring Hardy's knitwear, a collection staple.

"In lean times consumers tend to purchase more 'investment upgrades' versus 'fashion updates' says Hardy, who operates in the heart of Canada's gas and oil industry - a plus, he says, for sustaining his business.

"The reality is that Canada is not widely known for fashion," says Hardy, who would like to see government-subsidized agencies support a collective of Canadian fashion designers showing in Paris and New York rather than in separate shows in various provinces.

"It would be good for the country...It might expand the designers' brands internationally and make them more financially feasible," he says.

Any measures that help recapture the strength of Canada's fashion industry from the 1950s through the 1970s would be welcome.

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FRUGAL FASHION TIPS

1) Don't limit yourself to second hand stores and garage sales only. You can find sales and good deals anywhere and everywhere. The trick is having a budget and knowing what you need. You still want quality after all.

2) Stay away from private labels at department stores. It may be brand name, but its not necessarily discount or a fair price.

3) Keep abreast of things at least 1 season ahead. That way when you spot something on sale that you'll need for next winter or summer you'll be ready to snap it up.

4) Take your Tween and Teen Fashionistas with you when you shop. Buying something they won't wear because their "mom bought it for them" isn't kewl. Take them with you and buy what they will wear.

5) Know when to buy. Pick a good time to buy, like during Back to School or Boxing Day Sales.

6) Know when to stop. Don't go overboard when you know you can't afford it.

7) Do It Yourself. Do your own manicure and pedicure. Color your own hair. Cut your childrens' hair. Maybe even make your own clothes. You'd be amazed at how much savings you can pocket.