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December 16, 2017
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Heel heights: a reliable economic indicator? Source: venyve.com.

In 1926, economist George Taylor claimed that hemlines became shorter in a buoyant economy so that women could show off their expensive silk stockings, while skirts became longer during an economic downturn to hide bare legs. Not exactly Pythagoras' theorem, but a fascinating idea that has been absorbed into the collective unconscious of all but the most empirically-minded market forecaster.

Eighty-five years after Taylor proposed the theory, IBM picked up the baton and has undertaken a similar exercise using social media as the test tube for quasi-scientific evaluation. According to the New York Times, IBM spent two years (2009-2011) eavesdropping in on over a billion online conversations between influential fashion bloggers and their followers, in order to identify trends in heel heights preferred by women. The result of this experiment concluded that heel heights had fallen by two inches over the two-year period of research. IBM stated that this was surprising because heels usually get taller during periods of low economic performance. A fruitless exercise you may think, but it did make a convenient hook for IBM to promote its software and consulting services.

Changing hemlines with the times.
Source: 13gorgona.livejournal.com.

Michael Sincere, author of All About Market Indicators (McGraw-Hill, 2011) and financial commentator, gave his verdict of fashion as economic indicator directly to The Genteel. "The Index is really based on trends, which has little or nothing to do with the economy or the stock market," he said. Sincere continued, "Rather than follow trends such as the length of a woman's dress or colour scheme, it is more useful to analyse clothing prices, study shoppers and talk to designers for insights into how much money is being spent." He concluded by adding, "This will give you a much more valuable clue as to how the economy is doing, and hopefully, what might happen to the stock market."

So can we take the Hemline Index, fold it neatly and put it in the drawer marked "interesting but frivolous," or is there some truth to it? 

According to a recent article published by webzine Business Insider, the hemline index retains credibility within certain circles of traders, economists and pundits. The webzine quoted Ken Downing, Fashion Director at Neiman Marcus, after completing the first half of the Big Four fashion circuit for the A/W 2012 collections. "Like the stock markets, hemlines are going up and down daily and seasonally," said Mr Downing. Business Insider also conducted a full analysis of hemlines at New York fashion week, measuring some 2,092 images from 25 designers, comparing year-on-year changes in the length of skirts and dresses. It concluded from its investigations that hemlines were indeed getting shorter as the stock exchange remained "bullish."

Contrarily, a John Carney piece for CNBC.com reported the findings of the most complete recent study of hemlines and the economy by Marjolein van Baardwijk and Philip Hans Franses of the Econometric Institute Erasmus School of Economics. The pair examined monthly data on hemlines from 1921 to 2009 then evaluated them against the National Bureau of Economic Research chronology of the economic cycle. Carney explained that while Franses and Baardwijk couldn't find any evidence that hemlines predict economic performance, they did find that economics predicts hemlines with a three-year to four-year delay, a correlation which says that it takes about three years after the economy goes into a recession for hemlines to plunge toward the ankle.

Just like fashion, the economy is cyclical; but like the "chicken and the egg" scenario, which one comes first?

The economic downturn has engendered a more creative and selective approach in consumers who have less money to spend on looking good. Ostentation has been replaced by a fewer-thrills approach, a kind of reverse-chic movement that designers and retailers have had wrestle with and respond to.

Clever designers with a finger on the pulse understand this and have taken the opportunity to reflect the underlying mood in their designs. For S/S 2012, collections by Marc Jacobs, Proenza Schouler, Jil Sander, Rochas and Prada harkened back to the 1950s, with a heavy dose of Americana-inspired themes. Glossy leathers with a Cadillac sheen, demure pastel checks, tablecloth gingham, playful cartoon-car motifs combined with high-waist skirts topped off by cat eye sunglasses were de rigueur on the runway.

The retro look reminds us of more affluent times, as showcased by popular American TV series, Mad Men, while asking women to transcend the downbeat present and gaze towards the light at the end of the tunnel. Just like fashion, the economy is cyclical; but like the "chicken and the egg" scenario, which comes first?

Collaborations between designer brands and high street retailers have become an increasingly common occurrence recently. Viewed as a way to entice people into spending money and keep the economy ticking, big fashion hitters such as Karl Lagerfeld and Matthew Williamson have collaborated with H&M, while Stella McCartney has produced a children's clothing line with GAP Kids. While the arrangement suits all parties and allows luxury brands to dip into the mass market with experimental ranges with their costs offset by the retailer, there is an inherent long-term risk involved on pursuing such a policy. By their nature, luxury brands are exclusive and such collaborations can send a mixed message to the consumer. By being so widely available, brands risk diluting what they stand for and this can affect sales of their more expensive lines.

Prada S/S 2012 Cadillac-inspired shoes.
Source: frompariswithlovex.blogspot.ca.

One luxury brand that has not been tempted to jump into bed with high street "wheeler dealers" is Burberry. The British fashion house and retailer has chosen a different route to surviving the recession and maintained its exclusivity to a positive effect. According to the UK trade magazine, Retail Gazette, Burberry's retail revenues rose 23 per cent in the six months to March 31, 2012, and comparable stores sales increased 12 per cent year-on-year despite weak general consumer spending in some of its biggest markets. The report also outlined that the brand's stores have become increasingly central to its success, with retail now accounting for 72 per cent of its overall revenues, and a further 12-14 per cent increase in retail selling space is now planned for the coming year.

Fashion and business are intrinsically linked but like the examples outlined above, the connection has many faces, so it is not really surprising that the Hemline Index and its simple correlations have proved such an alluring and revisited theory. There is a saying that if you give a troop of chimps a few typewriters and enough time they will produce the entire works of Shakespeare. Similarly, give a multinational corporation access to private conversations and in two years they will identify a trend. Statistics can be manipulated to tell the story you want to hear, but fashion has its own laws and references which come in under the radar and resonate with an audience before anyone can call it a trend.

Maybe the Hemline Index is just a code for the nebulous power of fashion to set the tone for the wider society and, consequently, the economy as a whole.

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