The festival could not come at a better time. Earlier this month, the Herald revealed retail sales had collapsed in NSW in a year in which the rest of Australia had inched forward. While Australian sales rose just 2.6 per cent during 2010-11, Australian Bureau of Statistics figures obtained by the Herald showed the volume of food bought in NSW over the year fell about 1 per cent, patronage of cafes and restaurants dropped 8 per cent and the volume of clothes and shoes bought fell 6 per cent.

For dwindling apparel sales, the general manager of IMG Fashion Australia, Daniel Hill, says the festival is part of the answer.

''The whole purpose of the Mercedes-Benz Fashion Festival Sydney is to bring fashion retail to the forefront of people's minds at a time when the spring-summer collections are going in store,'' Hill says. ''They are fully priced and they are new season clothes.''

Unlike Australian Fashion Week, which is industry-only, the festival is a consumer event to which any member of the public can buy a ticket. Runway shows featuring some of the best collections from fashion week by designers such as Dion Lee, Alex Perry, Josh Goot and Therese Rawsthorne are the lynchpin of the event at the Town Hall, as IMG owns both fashion week and the festival.

''We are trying to give the public an experience of Australian Fashion Week, which they can't ordinarily attend,'' Hill says. ''We like to reproduce a little bit of that magic and give it back to the public but we do it in a such a way that the clothes are styled to be more wearable, rather than the creative spikes that you see during AFW.''

Camilla, Speedo and Peter Morrissey will also stage shows, along with Myer, which will present its new plus-size labels Big is Beautiful and Leona+ by Leona Edmiston. Jennifer Hawkins and Kris Smith will also take the runway for Myer to showcase collections from its labels including Sass & Bide, Ellery, Aurelio Costarella and Fleur Wood. After the show, ticket holders will be invited back to Myer's city store for a VIP shopping event with Hawkins, Smith and some of the featured designers.

''It's only 200 metres from the Town Hall to our store, so shoppers will be able to see the clothes … and then go back to the store and immediately purchase them,'' Myer's general manager of marketing and brand development, Megan Foster, says.

It will doubtless all be sweetness and light on the runway but behind the scenes, much like the rest of Australian retail, this year's fashion festival is at a critical juncture.

The inaugural event was launched with much fanfare and three years of funding from Events NSW in 2008 but this time around Events NSW committed just one year of financial support, pending a review of its ongoing support.

''We are investing this year and will review the arrangement after that, pending results,'' an Events NSW spokeswoman says. ''The media impact is very strong for this event, given the calibre of celebrities that appear, but we don't measure the local retail impact. We are looking at how we can better link retail into major events.''

Hill welcomes the review and says he is in discussions with the NSW government about a longer term strategy. ''The timing is right because retail is down and we have the opportunity to do something about it,'' he says. ''We have a one-year deal now and our ambition is to grow that because, ultimately, fashion is about more than selling summer dresses. It helps the economy and it helps drive tourism … it is about lifestyle and how people view themselves.''

Almost every capital city in Australia now has a retail fashion festival to promote itself as a shopping and lifestyle destination. Founded in 1996, the Melbourne Fashion Festival is by far the oldest and most pre-eminent and has been the template for the introduction of similar events around the country. It now has a new creative director - former IMG Fashion marketing and communications director Graeme Lewsey - but Hill insists it and his event are not in competition.

''We are absolutely complementary,'' Hill says, singling out two key differences. ''With IMG we are in a unique position because we help Australian designers from creation to consumption. First, we show their new ranges at AFW, then we go right through to helping them sell their clothes at retail - and that product cycle is pretty unique.''

Another selling point of Fashion Festival Sydney is its central location, while Melbourne's festival takes place in the suburb of Docklands.

''Our showroom is in the middle of the city's retail precinct,'' Hill says. ''You buy a ticket to our event, you walk into a show and then you walk out and can buy the clothes.''

This is why City of Sydney council is sponsoring this year's FFS to the tune of $50,000.

''Supporting retail and local businesses is important to the city and the festival helps our fashion industry reach new customers and attract people from all over Sydney to the CBD to shop,'' Sydney's Lord Mayor, Clover Moore, says.

Her sentiments are shared by Don Grover, chairman of the Sydney Retail Advisory Panel, which promotes retail activity in the CBD.

''The Sydney retail environment has had an enormous amount of capital injected into it recently, not just with the Westfield development but also by all the retailers moving into it,'' Grover says. ''What the fashion festival offers is a chance for all those groups to benefit from a coordinated approach to marketing and promotion.''

This year's event has a new production team in the form of Jack Bedwani's Something company and Tony Assness as its new creative director, who came on board ''to really take a good look over the event and provide input on what we can do to increase the entertainment value for the consumer''.

The results include more theatrical shows, ticket packages, drinks and gift bags as part of the event that designer Camilla Franks this year opted to show at instead of Australian Fashion Week. ''AFW is all about the industry but … it's really important for me to throw it on a catwalk and let it shine for the people who buy the clothes,'' Franks says.