Crises and the Industry

As industries develop and change over time, competitors constantly change too. Therefore, the nature and structure of an industry will also change. As it matures, its markets are redefined. Ultimately this influences the nature of competition and profitability amongst competitors in the industry.

When the industry is young, output remains low, while product awareness is still developing. Most purchasers are first time buyers, risk tolerant and innovative. However, as the industry grows and higher production takes place, the market will soon meet saturation. The amount of first time buyers diminishes, and purchasers are upgrades or replacements.

In the fashion industry, every designer is trying to outdo their competitors. This healthy competition usually leads to profit for the manufactures. However, when sales reach a decline, due to influences like the current economy, a trend occurs when consumers run to more convenient, safer or high-quality offerings from firms in substitute industries. Therefore, some companies will try to divest their business units or “reinvent” themselves. Others become weaker and more prone to crises.

The current economic crisis has hit Americans check books hard and forced them to be more sales conscious. When it comes to designer names only the rich can afford to keep up. Therefore, when Kitson decided to team up with Camila Alves and her new line of Brazilian handbags, they were taking a huge leap of faith.

With the economy plummeting, consumers are going to shop for convenience, whether that means settling for non-designer bags or hitting up TJ Maxx for the next best thing. While the wealthy will stick to the safest bet, Chanel and Louis Vuitton bags, to get more quality for their buck.

Therefore it is no surprise that Camila’s handbags were a flop. Kitson claims to have spent $50,000 on Camila Alves Muxo handbags and ended up with a $25,000 deficit. Kitson also believes that Camila is pricing her bags too high. Although she may be the mother of Matthew McConnaughey’s children, she isn’t famous enough yet to not have to promote her line. Although I did see her on Chelsea Lately about a week or so ago, that was the first time I have ever heard about Muxo handbags.

Kitson may soon be facing a cat fight with Ms. Alves. I say avoid the crisis and get out while you still can!! Stick to the labels you know are selling like House of Harlow. For more juicy gossip about this topic, check out this article at celebrityclothingline.com!

Peace, love & handbags.... lol