Chanel's catwalk show, held in Paris last month, was a lesson in outlandish opulence. For not only did design supremo Karl Lagerfeld build a huge replica of the Eiffel Tower inside Paris's Grand Palais (though, admittedly, the top was swathed in 'clouds' of cotton wool before the point where it hit the roof), but the models were dressed in gobstopper-sized pearls and laden with expensive feathers and lace.

It was the same at Dior, where life-size wooden replicas of lions and elephants were dotted alongside the catwalk and models were draped in jewel-coloured silk and furs.

Meanwhile, Louis Vuitton flew out the fashion editors to Tokyo and showed its collection on a hundred-metre-long catwalk suspended in the sky.

Yet, despite these great shows of affluence, walk into just about any designer fashion store today and you will notice something rather contradictory.

Luxury fashion brands are struggling to sell their costly clothes and moving into other products instead. Pictured above, Amal Clooney wears a £2,600 Dolce & Gabbana skirt and carries a £599 Aigner bag

Discreet red dots — stickers denoting a discount to those in the know — have appeared on tags.

Icy shop assistants will now greet you with a lukewarm smile and then whisper, quietly into your ear, that everything you see on the racks, Madam, has been discounted by 50 per cent. Or more.

There may not be any shrieking discount banners on the doors of these glittering palaces of luxury fashion, but it's an open secret in the industry that they are all in a manic rush to get rid of this summer's fashion stock.

It's the same story online: Net-a-porter is currently running a 70 per cent sale on its designer wares, slashing the price of an Iro dress from £145 to just £44, Alexander McQueen trousers from £210 to £63 and a Diane von Furstenberg dress from £310 to £93.

That's because the past year has not been a good one for the fashion industry.

A new report by the Business Of Fashion group and management consultants McKinsey found that 2016 revenue growth was just 2-2.5 per cent (well below the rate of inflation), and the industry generated its worst operating profit since the financial crisis in 2009.

Of course, this is great news for the average shopper, who might now be able to afford that designer handbag after all.

But there's more to the latest sales than just a wobbly year for the industry.

A new report by French bank BNP Paribas and the fashion consultancy VR Fashion Luxury Expertise claims that, rather than being at the centre of a fashion brand, ready-to-wear clothing is now 'hardly profitable'.

Chanel has started selling a £1,100 boomerang for its outdoor-savvy customers. It also offers a set of beach racquets and balls for £2,800

Twice a year, the big fashion houses, such as Prada, Gucci and Louis Vuitton, spend hundreds of thousands of pounds on epic catwalk shows. One of Prada's new accessories is a calf hair belt selling for £515

In fact, most brands lose money on their collections — in other words, the fashion you see hanging on the rails in their stores.

Now some of the biggest fashion houses have scaled down their ready-to-wear collections so dramatically, it makes up just 10 per cent of their overall business, according to the report.

So, why on earth were this year's shows just so lavish?

The answer is in the changing way in which the design houses make money — and the rise of social media.

There was a time when the great designers single-handedly controlled the way we dressed.

Wealthy, glamorous women would swan about in head-to-toe Chanel and Dior, and the High Street would scramble about, stitching together knock-offs.

And, to a degree, that is still the way fashion works.

Twice a year, the big fashion houses, such as Prada, Gucci and Louis Vuitton, spend hundreds of thousands of pounds on epic catwalk shows, which are more like Broadway productions.

Movie and pop stars, magazine and fashion editors from around the world and buyers from luxury department stores cram themselves on to the front rows and create a huge buzz around the event.

Casual attire: Also in Prada's fashion line are a pair of black and white trainers, selling for a cool £440

Prada is offering a colourful robot-themed keyring for £320, while Louis Vuitton is selling a teddy bear for £420

But the shows are now almost all also streamed live online across social media to thousands of fashion fans around the world. Across a crowded fashion week, having the most outlandish show means attention, a buzz across social media and more women likely to tune in or to visit the brand's website.

Yet it is not the £2,500 tweed jackets featured in the show that will be driving Chanel's profits this year. Nor will it be the £3,500 silk evening dress at Valentino, or even the £825 Hydrangea-print silk blouse at Prada that will be ringing through the tills.

It is an open secret that some of the big fashion houses are no longer in the game of selling clothes. But they are in the game of selling anything that carries their brand name, from perfume, to make-up, shoes to sunglasses, purses and even hotel rooms. At the Armani hotels in Dubai and Milan, every detail is overseen by fashion designer Giorgio Armani himself — right down to the flower arrangements.

Diane von Furstenberg has designed a suite for Claridge's in Central London, and Christian Lacroix's Hotel Le Bellechasse in Paris shows off the designer's love of sumptuous fabrics.

Elsewhere, Chanel offers a tennis racket bearing its logo for £1,300, a set of four tennis balls for £330, a set of beach racquets and balls for £2,800 — and even a boomerang for around £1,100.

Or, should you prefer, there's a Versace bath towel priced at £405, an ashtray for £314 and a porcelain dog bowl for £569. While only a tiny percentage of ridiculously wealthy individuals would ever fork out thousands for a single item of everyday clothing, millions of us will gladly part with £65 for a 50ml bottle of designer eau de parfum or, at a push, £250 for a pair of sunglasses or a leather purse.

As long as the designer logo is loudly displayed — the bigger and blingier the better — it's a small price to pay for an unmissable status symbol.

Chanel offers a tennis racket bearing its logo for £1,300 and a set of four tennis balls for £330

It's why one of the few growing sectors of the luxury market is outerwear, in particular padded puffa coats, which carry an unmistakable brand badge on their sleeves. They also offer better cost-per-wear value. In other words, you might only wear a designer evening dress once or twice a year — and no one will know where it's from.

But you will likely wear a designer puffa coat every day in winter and, with that two-inch-wide brand patch, you can be sure that everyone will know where you bought it from.

So, what is behind this radical loss of interest in designer fashion?

For a start, the economics of ready-to-wear just don't add up. Production costs are high and retail space in the world's most exclusive shopping strips wildly expensive.

Add to that a recession which hit the spending power of major western countries and, more importantly, China and Russia — home to the vast majority of big spending fashion clients — and you have a car crash waiting to happen.

Fashion purchases are often emotional ones, so the shock to the global economy from serial terrorist attacks and political upheaval certainly hasn't helped.

Nor has the overwhelming global trend away from smart, tailored clothes to casual, athletic clothes — in the past ten years, sales of leggings have more than quadrupled.

Perhaps fashion's great fallout is even due to an element of greed. Over the past ten years, the price of luxury goods has, frankly, gone bananas.

While designers blame these price hikes on soaring production costs, you can't ignore the fact that many of them were blindly chasing new wealth in China, Russia and the Gulf States.

Gucci's candle line offers colourful products for around £150, while Louis Vuitton has moved into umbrellas, selling the items for £380 each

A pair of designer shoes that once would have set you back between £250 and £300 now hit the £600 to £700 mark. Unless you belong to the richest 0.01 per cent of the world's elite, how on earth do you begin to justify parting with that sort of cash?

But while many luxury fashion brands have been battling to shore up falling sales, another sector of the fashion market has been basking in success. Take one look inside a Zara store and you will see why.

Every possible catwalk trend you could want is piled high — and at a tenth to a fifteenth of the price you'd expect to pay in a designer store.

Want to get your hands on a richly embroidered peasant blouse? At Zara, you can pick one up for £29.99.

Or how about a pink, embellished handbag that looks rather like one you'll find in Gucci — except it's £49.99, rather than £1,040.

Certainly, the quality is a long way off the designer version — on close inspection, the fabrics, cut and detailing are inferior — but Zara's ability to offer a relentless conveyor belt of clever designs at bargain basement prices has offered real women the chance to look resolutely fashionable for the price of a pizza and a cup of coffee.

Sometimes, these pieces can even fool the experts. A plush midnight-blue velvet jacket with floral embroidery on the back cost me £29.99 at Zara, yet it's been worth tenfold that in compliments. Someone who works in fashion even asked me, tentatively, if it was from Dolce & Gabbana, making that jacket the best £30 investment I've ever made.

Italian luxury fashion company Versace, known for its red carpet dresses, is now selling dog bowls for £569

It's why Zara is now an £11.3 billion company and its similarly innovative High Street rival, H&M, is worth £14.2 billion — a value that is double that of Chanel.

Luxury fashion consultant Frances Card explains that there has been a welcome sea change in the way we dress. 'We are now allowed to wear pretty much what we like in terms of brand — as long as we have the right look — to be fashionable,' she says.

'When was the last time you saw anyone in head-to-toe Chanel? I adore Chanel, and have a Chanel jacket, but will team it with a pair of jeans.

'So, we have all sorts of different levels of price points, but I still believe we need the big brands and their catwalk shows to influence us.

'They still set the trends and everyone else follows.

'They are responsible for helping to drive sales of sunglasses, perfume, leather goods and jewellery, which now make up the bulk of a brand's profits.'

She adds: 'Even if ready-to-wear fashion may now be nothing more than marketing, we still very much want the cachet of that brand, and these accessories are our entry point to that wonderful designer world.'

As the rather depressing figures from luxury fashion houses show, we may have lost our appetite for spending hundreds — even thousands — of pounds on ready-to-wear fashion.

But we certainly haven't lost our lust for those Gucci Gs or the intertwined Cs of Chanel.

I challenge any woman of any age not to get just a little bit excited when she is handed a crisp, white box, filled with black tissue paper in which nestles a bottle of Chanel No 5 — still the world's bestselling fragrance.

That pulse-racing excitement is something the Zaras of this world will never be able to replicate.