How fashion houses make money

Have you ever looked at all those kooky clothes on the runway and wondered, how on earth do designers make money out of that?

And, off the runway stuff is darn expensive.

When fashion insiders talk about someone wearing or buying an outfit off the runway, it really is impressive. It indicates that not only do they have a finger on the fashion pulse, they trust the instincts of said designer. But, truth be told, this is not how designers make money.

That secret lies in the so-called diffusion lines/second lines/bridge lines. This is, in a nutshell, a distillation of the fashion they put on the runway. It is the sellable interpretation of the imaginative stuff.

MIDDLE MARKET

This means a high-end fashion house or fashion designer creates  a secondary line of clothes which  retail at lower prices.

So the diffusion lines are a dilution of the concentrated fashion exhibited on runways. Fashion lovers have learnt that just like phones, sometimes the idea is not to get it first, but to simply get it, and if you wait long enough, the prices will come down.

That, however, is not the true motive behind diffusion lines. They are a result of the economic crisis. The high fashion consumer was someone willing to spend thousands of dollars on a single item. Then came the credit crunch.

Strategic designers turned it around when they realised there was a middle market. These are the consumers who can afford high end products, but not at a couture cost. They have money to spend, but will not be bowled over by the insanity of exclusive luxury prices.

They became a bridge, making it possible for designers to stay in business. Diffusion lines are sometimes done by designers themselves or their protégés. The business model of diffusion lines is pretty simple – adapt or die. It is not without its risks though.

Some lines are too creative, though mercifully that is rare, and sometimes they can be a little too “meh”. There is a danger a line will not translate well or won’t be priced right. If it is too high, it defeats the entire purpose of its existence. If too low, it dilutes the aspect of luxury.

And a second line is only as successful as the original. It makes financial sense if the parent brand has traction, equity and recognition. There is of course the concern that a diffusion line will dumb the product down.

Diffusion lines also serve a higher purpose. They introduce the concept of massclusivity, also referred to as the democratisation of fashion, making fashion available to anyone who has the means as opposed to a lucky few.

GENUINE TOO

Fashion houses have found a way around the diffusion lines by separating the parent brand from the second line and working under a different name. It can be rather confusing for the consumers who may think these are fakes. They are not.

Dolce & Gabbana had D&G, Calvin Klein has CK, Prada created an entirely separate identity now being fronted by among others Lupita Nyong’o as Miu Miu, McQ for Alexander McQueen, DKNY for Donna Karan, Versus for Versace. Ironically, while the emphasis is on money, diffusion lines can actually be too successful. Dolce and Gabbana’s D&G was shut down in 2011 because the owners felt it overexposed the parent brand and started to water down the exclusivity of the parent company.

Some brands stay exclusive and never bother with diffusion lines. These are the exclusive luxury brands such as Louis Vuitton.

Diffusion lines can injure brands in other ways. Reports of inconsistency in quality are rife. While the idea is to make solid, functional day-to-day wear, it does not necessarily mean this line is affordable. 

Sometimes designers will do capsule wardrobes with about 10 investment pieces, except, remember the prices are in comparison to the parent brand, not your average retailer.

Diffusion lines can also be offshoots such as jeans, accessories like eye wear, bags and shoes to add to the offering of a fashion house.