How to Invest in High Fashion

By James Longman, CNBC.com

Balance sheets and profit margins are not the first things that come to mind in the glamorous world of high fashion. In an industry where many of the great fashion houses sacrifice profits for prestige, it can be difficult for anyone interested in investing in fashion to make the right decisions.

But vintage fashion investment is an increasingly lucrative area, and with substantial public demand for luxury clothes, fashion retail businesses have also seen impressive returns-so is there still room to get money for old rope?

William Banks-Blaney, owner of William Vintage in London, shared his tips with CNBC on where to begin in the world of classic couture: "If I was going to start investing in fashion, the key things I would start with would be works by the great masters.
"Ossie Clark for British design, Dior for French design, Norman Hartnell again for British design. These are pieces by iconic designers that have a worldwide appeal and audience."

"Most pieces appreciate quite substantially," he said. "We are finding there is between a 10 and 20 percent year-on-year uplift in good pieces of vintage."

Kerry Taylor, founder of Kerry Taylor Auctions, stressed unprecedented demand: "There aren't huge supplies for these things any more-they are running out.

"Every time I get something special now there is a battle royale between the private collectors, the very rich women who wish to buy to wear, and the museums, and when you get these three different parties all vying for the same lot, the prices escalate."

Having the right eye for a collectible item is clearly important, and at a fashion auction, the prospective investor could find some real winners.

Taylor told CNBC the three things to look for: "You should look for things with designer labels, you should look for things that are in good condition that don't need repairs. And you should make sure that they have not been altered."
A garment with a history is an added bonus. "If it has been owned by someone like Audrey Hepburn or the Duchess of Windsor or Daphne Guinness, that adds a lovely little cachet too and makes it even more desirable and collectible in the future," said Taylor.

An Audrey Hepburn gown from the film "Roman Holiday" sold for over $130,000, and Princess Diana's engagement dress went in 2010 for a massive $300,000.

Steven Philip, co-owner of vintage clothes shop Rellik, also shared his tips: "Look for a garment that kind of associates with the designer and look for labels. "If you were going in for Chanel and there was an acid green jacket (just) because the acid green is in vogue, avoid buying it. Go for a more classic piece. It will be more of an investment."

If it's not vintage fashion investment you're after, business ventures in the retail industry are increasingly taking advantage of the massive boom in e-commerce and sustained public demand for great clothes.
Sarah Curran, founder and CEO of My-Wardrobe.com, the online luxury fashion retailer, told CNBC what is takes to make online retailing pay.

"I started originally as a boutique in 2003 when I launched the business, so I understood the bricks-and-mortar model and the online and … they are very different. The logistics behind them are very different. It is impossible to compare," she said.

Since the launch of the website in 2006, Curran says the online model has gone from strength to strength, and that there are still opportunities for budding online retailers.

"Naturally because of the sector that we sell which is designers such as Burberry, Mulberry and Vivienne Westwood, they are very protective about their distribution, so it makes obstacles and barriers to entry quite tough … but there is still opportunity."

Online retailing can see huge returns, but Curran warned that it takes a sharp attention to detail to make it work. "It is quite a complex model. A lot of people tend to think that e-commerce is the easy option and the easy route to market, but actually it takes a lot of investment.

"That investment comes in the ease and navigation and performance of the site, but also in terms of the photography of the site. Equally, it's about a strong customer experience and customer service, from entry to the site to delivery to also handling of returns."

Curran agreed that prospective investors should be looking to the big fashion houses like Chanel, Dolce and Gabbana and Versace for those pieces that keep their value. And above all, she said, you shouldn't wear them.

"It's like if you're going to invest in wine, don't drink it. If you are going to invest in clothing, don't wear it."


Watch the Video: Investing in High Fashion
Watch the Video: The Rise of Luxury Fashion


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