NEW YORK & LOS ANGELES--(BUSINESS WIRE)--Los Angeles’ fashion industry continues to play a crucial role in the city’s economy, while adopting a vanguard position in social media, online sales and marketing, and design and manufacturing technology — trends that are changing the fashion industry. These and other insights are found in the 2016 “Los Angeles Area Fashion Industry Profile” (cit.com/lafashion). The report was commissioned by CIT Group Inc. (NYSE:CIT), cit.com, a leading provider of commercial lending and leasing services, and the California Fashion Association (CFA). In addition, the 2016 L.A. Area Fashion Profile features the inaugural L.A. apparel industry survey, which includes responses from more than 50 L.A. area apparel executives from a mix of manufacturers and licensors.
“Taken together, the savvy use of social media, a state-of-the-art manufacturing platform and a well-developed import and export infrastructure position the Los Angeles region as a leading global fashion epicenter,” said Marc Heller, President of CIT Commercial Services. “Both established and emerging retail and fashion companies would benefit from working with a financial institution that has deep experience in lending to this sector and that understands the challenges and opportunities it faces.”
Perhaps not surprisingly given L.A.’s celebrity-driven culture, social media is seen as the marketing innovation that will have the greatest impact on the L.A. fashion industry, according to the report. Related initiatives could involve blogger-sponsored e-commerce, new and evolving social media platforms, social media buzz, direct-to-market sales, Snapchat, selling on the Internet, fashion blogs and digital technology.
The study also found that Internet-only apparel retail is already common in L.A. Retailers that start with just an e-commerce presence can adopt a “Clicks-to-Bricks” strategy, in which retailers build a following through online sales and then open a brick-and-mortar location. Computer technology also helps L.A.’s designers and manufacturers stay competitive by shortening product cycles and reducing costs. 3D fitting, 3D printing and virtual reality are all in the mix in L.A.
Other key themes and highlights of the report include:
Digital Dominates L.A. Fashion Executives’ Outlook
- Social Media Is the Future: When asked what they saw as the most innovative technology for the future of the apparel industry, 54% of surveyed apparel executives said social media, nearly 1 in 4 (24%) said integrated systems between manufacturers and retailers, and 13% said either 3D fitting or 3D printing.
- Online Presence Is Critical: More than half of respondents said the Internet represents the biggest growth opportunity for L.A. apparel companies in 2016 and 2017. A “Clicks-to-Bricks” business model, which involves opening an online-only store and later adding brick-and-mortar locations, garnered 35% of responses. Online-only selling received 22%.
- Market L.A. Design on Social Media: Shifting to marketing, respondents were asked what “Designed in L.A.” marketing strategy would work best. Putting it in the lead by a large margin, social media received 55% of responses. Social media could include promoting L.A. fashion and lifestyles on various online platforms or having celebrities build the L.A. brand using their social media presences.
Fashion Industry Is Critical for L.A. Area Economy
- Fashion’s Impact by the Numbers: More than $43 billion in apparel imports were expected to enter L.A. ports in 2015. In May 2014, 4,130 fashion designers were employed in L.A., representing a 9% increase in fashion designer growth over two years. Total L.A. fashion back-end employment, such as manufacturing and wholesaling, adds up to 212,923 jobs.
- Why Los Angeles: When asked what keeps their fashion business in the L.A. area, 47% of surveyed executives said access to L.A. ports, 37% said access to fashion designers and 31% said fast fashion.
- Apparel Wholesale Is an Industry Driver: Over the last eight years in the five-county SoCal area, wholesalers added roughly 1,500 jobs each year. L.A.’s large local market is one reason why apparel wholesaling firms continue to prosper in this area.
Market Landscape Presents Opportunities and Challenges
- China Is Still First Sourcing Choice, but Lead Expected to Narrow: When asked what countries apparel and textile producers will source from in 2016 and 2017, China leads the field (37%), followed by Vietnam (15%) and India. Beyond 2017, China’s lead shrinks, but it’s still dominant, with 29 responses. Of course, L.A.’s West Coast location and strong port infrastructure facilitates the supply of imports from all of these markets.
- Costs and Consolidation Are Challenges: When asked which factors would negatively impact their businesses in 2016 and 2017, 47% of executives said the cost of doing business and 43% said retail consolidation.
- Tax Exemptions or Incentives Desired: When asked which proposed policy decisions would help operations the most, 47% cited creating tax incentives for job creation of “new hires,” while 27% would raise the small-business tax exemption from $500,000 to $1 million.
Individuals can download a free copy of the “Los Angeles Area Fashion Industry Profile” and related infographic at cit.com/lafashion.
CIT thought leadership content can be found at View from the Middle™ (cit.com/viewfromthemiddle) and our CIT Point of View blog (cit.com/pov). View our corporate video (cit.com/corporatevideo) and follow us on Twitter, LinkedIn, YouTube and Facebook. Register to receive press releases at cit.com/newsalerts.
About the L.A. Area Fashion Industry Profile
The Los Angeles Area Fashion Industry Profile was researched and authored by John J. Blank, PhD, the Chief Equity Strategist at Zacks. He was the author and lead economist for the 2011 and 2014 Los Angeles Area Fashion Industry Profiles. The first was done while serving as Deputy Chief Economist of the Los Angeles Economic Development Corp. This 2016 report is a two-year update of the 2014 report. Currently, Mr. Blank is the editor of The International Trader at Zacks.
About the California Fashion Association (CFA)
The California Fashion Association was organized in 1995, as a non-profit public benefit 501(c)(6) Corporation. 20 years ago, the CFA was established to provide information for the expansion and growth to the apparel and textile industry in California. The CFA is the forum organized to address the issues of concern to our industry. Manufacturers, suppliers, educational institutions, allied associations, and all apparel-related businesses benefit. calfashion.org
About CIT Commercial Services
CIT Commercial Services is one of the nation’s leading providers of factoring and financing to the apparel industry. CIT tailors financial solutions that help companies of all sizes increase sales, improve cash flow, reduce operating expenses, and eliminate customer credit losses. CIT serves apparel companies ranging in size from $2 million to $1 billion in annual sales that sell to a broad range of public and private retailers, wholesalers, and distributors across the nation and abroad. CIT’s Internet-based platform provides clients with real-time credit approvals and comprehensive accounts receivable information. cit.com/commercialservices
Founded in 1908, CIT (NYSE: CIT) is a financial holding company with more than $65 billion in assets. Its principal bank subsidiary, CIT Bank, N.A., (Member FDIC, Equal Housing Lender) has more than $30 billion of deposits and more than $40 billion of assets. It provides financing, leasing and advisory services principally to middle market companies across a wide variety of industries primarily in North America, and equipment financing and leasing solutions to the transportation sector. It also offers products and services to consumers through its Internet bank franchise and a network of retail branches in Southern California, operating as OneWest Bank, a division of CIT Bank, N.A. cit.com