Art by Madeline Duvall
When the phrase “luxury fashion” is brought up, brands like “Gucci” and “Burberry” come to mind. Brands such as these are at a status that seems unattainable to someone trying to start their own fashion company. Lucky for those looking to enter the fashion market there’s another style of clothing that’s changing what the word luxury means. It’s called streetwear, and it’s managed to create a business model that’s attainable for those looking to break into the fashion industry. Starting a streetwear company is the best and most profitable way to sell luxury clothing.
Streetwear is a term used to describe a certain style of clothing popularized by skate and hip-hop culture. It’s an extremely broad term, to say the least. “Streetwear boils down to baseball caps, sneakers, hoodies, and most of all, tees” according to an article published by Complex. Clearly, the clothes themselves are not breaking the mold of the fashion industry, it’s the way they’re being sold that makes them special.
The typical business model for fashion companies focuses on creating as much revenue as possible by having their supply equal their demand. “Traditional fashion deliveries are structured around far fewer, bigger shipments,” according to the website Business of Fashion.
These fashion businesses also function as horizontally integrated businesses, meaning that multiple firms operate separately on several parts of the production, distribution, and marketing processes, making it difficult to control supply and demand. Streetwear brands, on the other hand, are vertically integrated businesses, thus they control almost all parts of their supply chain. These brands are then able to manage their supply and demand more easily.
Streetwear brands use their leverage of supply and demand to successfully create consistent “drops,” sometimes weekly. The brand Supreme, for example, is famous for having enormous drops every week in which an extremely limited supply of new clothing is released. Other brands like Palace and A Bathing Ape operate similarly. By releasing such a limited quantity of clothing, while simultaneously selling new clothes consistently, streetwear brands are able to hike up prices significantly, selling T-shirts for over forty dollars and hoodies for almost two hundred dollars, prices that are not attainable for traditional fashion brands. Yet streetwear still maintains a continuous influx of revenue.
One of the most interesting results of the streetwear business model is that it has generated a secondary market for its clothing. Many refer to it as the resell market. Here, items will be marked up several times their original price. The resell market has generated large profits for many streetwear enthusiasts, something unseen in the traditional fashion market. Essentially anyone willing to buy streetwear can turn around and immediately make money off of it. It has allowed the consumers to become a more integrated part of the market they are participating in.
Streetwear brands are constantly staying sold out, which creates an enormous amount of hype surrounding their clothing. Traditional fashion brands aren’t able to sell their clothes for nearly as much because of their inability keep their demand higher than supply.
The numbers don’t lie either. Supreme, the most popular streetwear brand, is now worth a billion dollars according to an article published by GQ. That’s a lot of money for a company that sells T-shirts and hoodies made from average material at best.
The materials used by streetwear companies are not any better in quality than what traditional fashion brands use. In fact, many streetwear brands simply print their logos on Gildan or American Apparel T-shirts according to an article on the website The Hundreds. Yet brands like Supreme and A Bathing Ape are still able to sell their clothes at enormous prices because of their business model, something normal brands cannot do.
It seems like almost anyone can start a streetwear company, and that’s because they can. All they have to do is follow the streetwear business model. It’s simple clothing being sold in such a way that maximizes profits and has created a revolutionary way of selling clothes.
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