Making a Loss Is the Height of Fashion

In this topsy-turvy world, selling a dress at an enormous discount turns out to be very good business indeed, says William Langley.

Given that a good year in the haute couture business is one in which you lose even more money than usual, the prevailing mood in Paris last week was one of buoyancy. The big-name designers were falling over themselves to boast about how many outfits they had sold at below-cost prices and how this proved that the fashion business was healthier than ever.

Jean-Paul Gaultier reported record sales, "but we don’t make any money out of it," the designer assured journalists backstage. "No matter how successful you are, you can’t make a profit from couture," explained Jean-Jacques Picart, a veteran fashion PR man and co-founder of the now-bankrupt Lacroix house.

Almost 20 years have passed since the bizarre economics of the couture business were first exposed. Outraged that he was losing money on evening dresses costing tens of thousands of pounds, the couturier Jean-Louis Scherrer -- to howls of "treason" from his colleagues -- published a detailed summary of his costs.

One outfit he described contained over half a mile of gold thread and 18,000 sequins, and had required hundreds of hours of hand-stitching in an atelier. A fair price would have been £50,000, but the couturier could obtain only £35,000 for it. Rather than riding high on the follies of the super-rich, he and his team could barely feed their hungry families.

The result was an outcry and the first of a series of government- and industry-sponsored inquiries into the surreal world of ultimate fashion. The trade continues to insist that, relatively speaking, couture offers customers more than they pay for, but it is not as simple as that.

When such a temple of old wealth starts talking about value for money, it is not trying to convince anyone that dresses costing as much as houses are a bargain. Rather, it is attempting to preserve the peculiar mystique, lucrative associations and threatened interests that couture represents.

Essentially, the arguments could not be simpler. On one side are those who say that the business will die if it does not change. On the other are those who say it will die if it does. What is not in doubt is that haute couture -- the term translates as "high sewing" -- is a spectacular anachronism.

Colossal in its costs, tiny in its clientele and questionable in its influence, it remains one of the great themes of Parisian life. In his book The Fashion Conspiracy, Nicholas Coleridge estimates that the entire couture industry rests on the whims of fewer than 30 immensely wealthy women. Although the number may have grown in recent years with the new prosperity of Asia, the number of couture customers worldwide is no more than 4,000.

To qualify as couture, a garment must be entirely handmade by one of the 11 Paris couture houses registered with the Chambre Syndicale de la Haute Couture. Each house must employ at least 20 people and show a minimum of 75 new designs a year. So far, so traditional, but the Big Four operators -- Chanel, Dior, Givenchy and Gaultier -- increasingly use couture as a marketing device for their far more profitable ready-to-wear, fragrance and accessory lines.

It is not difficult to see how this works in practice. "Haute couture is what gives our business its essential essence of luxury," says Bernard Arnault, the head of LVMH, which owns both Dior and Givenchy. "The cash it soaks up is largely irrelevant. Set against the money we lose has to be the value of the image couture gives us. Look at the attention the collections attract. It is where you get noticed. You have to be there. It is where we set our ideas in motion."

The big idea is the one known in the trade as "name association". Couture outfits may be unaffordable, even unwearable, but the aura of glamour and exclusivity is difficult to resist. The time-starved modern woman who does not earn enough in a year to afford a single piece of couture can still buy a share of the dream for the price of a Chanel lipstick or a Givenchy scarf.

For all this, couture has been in decline -- or, as the optimists would say, readjusting to changing conditions -- for years. The number of houses registered with the Syndicale has halved in the last two decades. Pierre Cardin once had almost 500 people working full-time on couture. By the 1980s, however, the number had fallen to 50, and today the house is no longer registered.

Modern life tells the story. Younger women, even extremely wealthy ones, find ready-to-wear clothes invariably more practical and usually more enjoyable. Couture’s market has dwindled.

"Haute couture is a joke," scoffs Pierre Bergé, the former head of Yves Saint Laurent -- another house that no longer creates it. "Anyone who tells you it still matters is fantasising. You can see it dropping dead all around you. Nobody buys it anymore. The prices are ridiculous. The rules for making it are nonsensical. It belongs to another age. Where are today’s couturiers? A real couturier is someone who establishes and runs their own house. No one does that anymore."

Why, then, are the surviving couture houses smiling? Because they trade in fantasy, and in these times, more people want to fantasise.

"We’ve received so many orders that we may not be able to deliver them all," says Sidney Toledano, head of Dior.

So, the clothes are rolled out, the couture losses roll in, and everyone agrees that it is good business.