08/23/2010 11:00 am ET | Updated May 25, 2011

The Next Big Thing Is Up and Coming: The Demand for Emerging Fashion

Part One

Looking around, it appears that there is a youth frenzy in every creative industry. From music to art to fashion, people are going crazy for everything indie. Retailers like Urban Outfitters are taking their cues from young designers, and the young populations of urban cities are looking to be outfitted by fresh and exciting brands. Yet, beyond the simple intuition of its presence, it is hard to determine the actual market size that exists to support emerging designers. After speaking to analysts, venture capitalists, and consultants about this demand, it quickly became evident that actual data and sales figures were nearly impossible to find.The luxury industry is notoriously hazy in presenting earnings. Even large public companies like LVMH show earnings in such a way that only exposes the revenue generated by the company as a whole rather than by its individual brands.

Another issue is that on the surface many designers appear to be doing well, with spreads in fashion magazines and constant coverage on blogs. But for a designer to break into a profit generating cycle and really "do well," the designer must expertly manage his or her brand's growth while juggling cash flow issues and a very pesky fashion calendar.

Since it is difficult to directly discern the success of emerging fashion labels, we decided to look to other factors in order to put evidence behind what we felt was a growing trend of consumers becoming comfortable with buying the work of new designers.

The first trend we noticed was brand exhaustion with regard to the majors in the fashion industry. Companies like Louis Vuitton, Gucci, and Prada are backed by eponymous corporate entities that provide distribution outlets, large advertising budgets, and a worldwide presence with flagships in the largest luxury-consuming countries.

The consumers that these brands rely on for the bulk of their revenue are aspirational shoppers who typically come from lower income brackets. AdWeek conducted a study in 2009 and found that as the economy worsened, about 77% of these customers came to realize that luxury brands were less important. The study also proved that, the rise of discount shopping for the masses through sites like Gilt Group and Haute Look has been disastrous to consumer's mentality on luxury goods.

As major luxury goods companies realize this change, sale sites will likely receive blowback from the brands. Already, Cartier is suing Haute Look for selling used Cartier products. Luxury houses may have begun to realize that the once innocuous practice of holding sample sales and flash sales can now be harmful to their brand. In the past, sample sales were held in empty spaces downtown and the customers were those who worked in fashion and could not afford full retail prices. As a result, these sales did not affect the brand's target customers. This is no longer the case as most of the shoppers on the most famous sale site, Gilt Groupe, are high-income females.

But how do emerging designers benefit from this? For the new designers who choose to sell through sites like Gilt, many receive their largest production orders from these sites even before the clothes are produced. Depending on the site, the designer will receive placement among top designers (Gilt) or lower level designers (Haute Look, Rue La La). This choice drastically affects their brand identity and is a factor in defining which boutiques will carry their clothes in the future.

Designers who choose not to sell on these sites also benefit from the under-exposure of their collection. A growing number of fashion conscious consumers actively choose not to buy from sample sale sites because everyone knows what is being sold. A typical refrain at parties is "I love that shirt. I saw it on Gilt." This is not usually taken as a compliment.

In a conversation with Lisa Weiss, owner of the New York boutique Début, she acknowledged this growing base of more educated consumers, "They know who's new, who's fresh. They read fashion blogs and learn about designers. They want something different." Weiss is tapping into the growing demand for "the different" with her boutique, a gallery-like space featuring a select group of hard to find up and coming designers from all over the world.

Department stores are experiencing this trend as well. A director at Harrod's recently told WWD, "The whole trend we are seeing - from fashion through to beauty - is anti-mass, anti-faux, anti-bling. What customers are looking for is heritage, provenance - and embellishment." Since consumers are increasingly aware of luxury goods companies' mass production methods and deceiving advertising campaigns, they are turning to emerging designers for products that are produced on a smaller scale - products that tell a story.

The Cultivate is a team of entrepreneurs, designers, and artists working towards the dissemination of emerging fashion.

Heba el Habashy and Charles LaCalle will be writing a series for the Huffington Post that will track their journey as they aim to capture the difficulties and rewards of building a business within the fashion industry. They are preparing to launch their company in 2011.