...Title: Case Study: H&M in Fast Fashion: Continued Success. Word count:2638 Abstract This report contains the analysis of value and culture of reputable apparel retailer H&M, as well as three analysis method, which is PETEL, Porter’s five forces, and VRIO framework, to analyse the external influence factors, competitors, and competitive advantages of H&M. Three new potential strategies are tested by using the model of Johnson and Scholes, and one proper strategy will be retained to carry out an Action Plan. 1. Introduction In 1947, the incredible apparel retailer was founded by Erling Persson in Sweden. Over half century, Persson’s 34 years old grandson, named Karl-Johan Persson, took over H&M in 2009(Regnér and Yildiz, 2014). As a pioneering ‘fast-fashion’ retailer, H&M spread in 43 countries, with 2,206 stores worldwide (Regnér and Yildiz, 2014). ‘Fast-fashion’ can be defined as a quick response to up-to-date luxury fashion trends in an affordable price, which meets the deeply held desires for young customers (Joy et.al, 2012). The store expansion has continued at several places, such as Denmark, the United States, Great Britain, also in several European Countries like Spain, Germany (Barman and Petersson, 2002). In order to sustain the growth rate of H&M, the CEO, in 2011, invested more stores and opened another 218 stores on the Champs-Élysées in Paris to strengthen their brand and ensure the future expansion. Following...
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...Zara: Staying Fast and Fresh Wance Tacconelli Donghua University Shanghai Contents • • • • Historical background Overview of the Inditex Group Zara’s business model The competitive landscape – The Gap, H&M, Fast Retailing (Uniqlo) • Zara’s global store and online expansion • Questions Zara Case Study 2 Corporate history (1 of 2) • 1963: establishment of clothing production company in A Coruῆa, Spain • 1975: first Zara store opens in A Coruῆa • 1985: Inditex Group is established • 1989: first international Zara store opens in Portugal Zara Case Study 3 Corporate history (2 of 2) • 1990s: acquisition of brands Massimo Dutti and Stradivarius • 2001: Inditex IPO • 2006: first Zara store opens in China • 2010: first Zara store opens in India • 2010: Zara launches first online store Zara Case Study 4 Inditex’s performance indicators, 2012 • Net income totalled 2.3 billion euros, an increase of 22% from 2011 • 6,009 stores, 482 more than a year earlier • Online store network covers 23 markets, with new launches in China and Canada • Creation of 10,802 new jobs in 2012, bringing workforce to 120,314 employees Zara Case Study 5 Inditex Group Brand Portfolio (1 of 8) Zara • Fashionable, yet affordable clothes for a wide range of people, cultures and generations, who, despite their differences, all share a special fondness for fashion • 1751 stores in 86 countries • www.zara.com Zara Case Study 6 Inditex Group Brand Portfolio (2 of 8) ...
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...complex system which should remain unique and reliable to all stakeholders. Rapidly changing society, technologies and trends make the big fashion companies to propose not just a brand but also a fast fashion brand accessible to all eager customers. One of companies “…that introduced the idea of fast fashion some two decades ago, then developed a highly centralized and often studied—but rarely duplicated—design, manufacturing, and distribution system” (Berfield & Baigorri, 2013) is Zara International. Zara International belongs to, “…Spanish retail giant Inditex owns some of Europe's most popular clothing stores and is rapidly expanding around the world” (Inditex Group (Zara), n.d. para.1). After releasing the company Zara International by Index Group, parent company, Zara’s brand becomes one of the most popular in clothing industry worldwide and continues to keep the position despite of the fierce competition. The study case Zara International: Fashion at the Speed of Light would reveal and emphasise the main characteristics of the popularity and particularity of the fast fashion industry through analysis some of the aspects and rules of the Spanish company, Zara International. DISCUSSION OF FINDINGS It is well-known that every organization would like to excel in some criteria specific to their sphere of activity. Due to fast changing trends, the management should acknowledge that they should continuously improve and motivate all working parts of the company. Because...
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...Zara Case Study Fast Fashion Zara’s success story begins by offering a product range capable of catering for men, women and children, providing affordable and stylish clothes whatever the season. Coupled with this, is their keen eye for discovering new fashion trends and translating these trends from the catwalk to the high street, both quickly and affordably. Zara boasts a marketing strategy of firstly product variety with a focal point of ensuring speed to market (Capell). At present, Zara launch 10,000 new articles per year across their portfolio of stores. Finally, store location, as any marketing is left to store location rather than advertising. Opting for a strategy of minimal advertising provokes the consumer into having to visit their stores. Zara is the most profitable brand of Inditex SA, accounting for 75% of the overall profit. Zara has remained focused on its core fashion philosophy that creativity and quality design together with a rapid response to market demands will yield profitable results. One of Zara’s many approaches is fast fashion. A contemporary term used by fashion retailers to acknowledge that designs move from catwalk to store in the fastest time (2weeks!) to capture current trends in the market. This "fast fashion" system depends on a constant exchange of information throughout every part of Zara's supply chain—from customers to store managers, from store managers to market specialists and designers, from designers to production staff, from buyers...
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... 1, No. 3, August 2011 Case Study of Online Retailing Fast Fashion Industry Wei Zhenxiang and Zhou Lijie Abstract—The study investigates into the fast fashion industry worldwide, specifically on Zara, H&M and UNIQLO with respect to efficient supply chain management, scarce value creation, low costs promotions and positioning strategy, supported by comparisons between several typical well-known fast fashion brands. Through the overall analysis of B2C apparel online retailing in China, statistics show an enormous space for online retailing fast fashion industry to explore but a far way to catch up with the leading enterprises in the world in terms of e-commerce scale. The next main part demonstrates a case of a Chinese fast fashion online retailer-Vancl, analyzing its keys to success in aspects of proper product positioning, brand positioning, business mode, marketing strategy, products and services, user experience, logistics and team management. In addition, relevant suggestions for further prosperity are proposed in the end of the paper. Index Terms—fast fashion industry, e-commerce, B2C, online retailing retailers to acknowledge that designs move from catwalk to store in the fastest time to capture current trends in the market. The apparel products are designed and manufactured quickly and cheaply to allow the mainstream consumer to take advantage of current clothing styles at a lower price. Since the primary objective of the fast fashion is to quickly produce a product...
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...Fast fashion companies coping with internationalization: driving the change or changing the model? The purpose of the research is to investigate the business relationship between fast fashion and the process of firm internationalization. Does the international process drive the change or does the internationalization process change the model? Internationalization is when two or more countries are involved. Fast fashion has been considered original and new within the fashion sector. Firms have tried to follow business strategies aimed at reducing lead times and thereby responding rapidly to market trends in order to gain a competitive advantage. Lead time is time between the initiation and completion of production process. Fast fashion has been a means to access international markets with a focus on competitive advantage, traditional manufacturing, supply and retailing practices in fashion. Two leading fast fashion companies are Zara and H&M. Zara has 70% of total sales in Europe and H&M’s main markets are in Germany, France, UK Sweden, The Netherlands, Switzerland, Spain and Norway. At the minor level, national fast fashion companies are also faced with the challenge of expanding internationally. Tessilform is a small Italian fast fashion firm which this study analyzes ten years of data focusing on the company as they cope with the internationalization process. The main findings of the case suggest that although the strategy is to support the internationalization process...
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...How does celebrity endorsements influence consumer behavior in fast fashion industry? 1. Introduction The fashion industry has come a long way over the past two decades. In the early years, big players such as Marks & Spencer offered a relatively straightforward fashion retail choice. However, with the lower cost of starting a retail outlet, the market has become more crowded since then. So called fast fashion retailers, are by no means the only one who succeeded and grew over the past years. Overall, the fast fashion retailers experienced a greater growth compared to the fashion industry as a whole (Cachon and Swinney, 2011). Such retailers are now ubiquitous and spotting a person on the streets who does not wear at least one fast fashion clothing item is rare. The key point to success lies in their business model; making the trends available to everyone. The rapid global changes have restructured the way fashion retailers do business. In today’s competitive market, using celebrity endorser to promote brands on television is a fairly common practice (Erdogan et al. 2001). Celebrity endorsements is believed to help consumers remember the message of the advertisement and the brand name the celebrity is endorsing. This creates the personality of a brand because when a celebrity is paired with a brand, this image helps shape the image of that brand in the minds of consumers (Argrawal & Kamakura, 1995). Celebrity endorsement is a new strategy in brand selling...
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...CHAPTER 2 CASE STUDY Zara International: Fashion at the Speed of Light At the announcement of her engagement to Spain's Crown Prince Felipe, Letizia Ortiz Rocasolano wore a chic white trouser suit; within a few weeks, hundreds of European women sported the same look. Welcome to fast fashion, a trend that sees clothing retailers frequently purchasing small quantities of merchandise to stay on top of emerging trends. In this world of “hot today, gauche tomorrow,” no company does fast fashion better than Zara International. Shoppers in 78 countries, including Canada, have taken to Zara's knack for bringing the latest styles from sketchbook to clothing rack at lightning speed and reasonable prices. In Fast Fashion, Moments Matter Because style - savvy customers expect shorter and shorter delays from runway to store, Zara International employs a stable of more than 200 professionals to help it keep up with the latest fashions. It takes just two weeks for the company to update existing garments and get them into its stores; new pieces hit the market twice a week. Defying the recession with its cheap – and - chic Zara clothing chain, Zara's parent company Inditex posted strong sales gains. Low prices and a rapid response to fashion trends are enabling it to challenge Gap, Inc., for top ranking among global clothing vendors. The improved results highlight how Zara's formula continued to work even in the downturn. The chain specializes in lightning-quick turnarounds of the latest...
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...Zara Case Study - Answer the following questions using both the case in the text and online research. Citations (within the text) and a bibliography are required. Be sure to provide an overview of the case in a short paragraph prior to answering each question. List the question you are answering prior to your answer. Vertical Supply Chain Zara uses a vertical supply chain, which is an uncommon strategy in the fashion industry. A company that operates in a vertically integrated strategy has total control of the various business activities, such as designing, manufacturing, sourcing, and to distribution to retail stores. This gives the company total business management. 1. As completely as possible, explain the supply chain for Zara from raw materials to consumer purchase. (5 points) Zara makes about 40% of their raw material (fabric) and produces more than half of its own clothes. (Kotler and Armstrong). The remaining 60% is outsourced from within Spain, mostly from the La Curuna. Designing of clothes at Zara is done by creative teams of over 300 professionals at the headquarters in La Curuna, Spain. (Supply Chain Brain). After the designers complete a design they are sent to Zara’s production system to cut the fabric. The design is then sent for sewing by one of several hundred local cooperatives. After sewing, the clothes are returned to Zara’s facilities for ironing by an assembly line of workers. After this, the items are wrapped and transported on conveyor...
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...Fashion Industry Analysis From the Perspective of Business Model Dynamics Author: Lisa Gockeln University of Twente P.O. Box 217, 7500AE Enschede The Netherlands ABSTRACT The fashion industry is a dynamic and volatile place, continuously exposed to macro-environmental factors that trigger fashion business models to change. The fast fashion model is currently at the forefront of the apparel market casting questions on whether its underlying philosophy is about to change as well. Therefore, the purpose of this study is to identify external drivers that might lead to such dynamic changes in the fast fashion model. Moreover, it will be investigated whether these may allude to a possible convergence to the newly emerged slow fashion model which is currently trying to penetrate the fashion market. The international retailer Zara has served as fast fashion representative for this analysis and has been examined for business model adjustments, which might have been triggered by macroenvironmental factors. It was found that especially social, environmental and technological factors have influenced developments in the fast fashion model and that it has indeed adopted slow fashion principles in some of its building blocks to respond to such emerging trends. The future of the fashion industry appears to be tailored by such externalities, continuously reshaping the fast fashion model to eventually arrive at a version that brings a long-lasting competitive edge. However...
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...CeeCee retail fashion case study Industry overview Over the last decade, the European clothing market has grown by almost 20% (as measured by sales revenue). However, this headline sales figure hides many of the underlying tensions involved when competing in this market sector. The clothing market has suffered from strong deflationary pressures due to the influx of `value’ retailers and intense competition. `Value’ retailers are defined as low price retailers which import low cost clothing manufactured principally in Asia. These `value’ retailers include some high street chains as well as supermarket chains that sell clothing. Generally, it is accepted that there are three tiers of clothing retailers, which are: couture houses and top designer labels high street retailers of fashion clothing `value’ retailers (as defined above) which retail at the inexpensive end of the market. There are a wide variety of retailers which compete in high street and shopping centres all over Europe (and some globally) whose prices, quality and branding varies greatly. Historically, clothing-only retailers dominated the market, taking nearly two thirds of all sales, with large department stores coming second. More recently large supermarket retailers, known principally for their grocery lines, have gained market share with a major push into non-food sales. Furthermore, in an increasingly competitive market, `value’ retailers are also growing quickly. The major force for change in the clothing retail...
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...ZARA: FAST FASHION When Amancio Ortega, a former Spanish bathrobe maker, opened his first Zara clothing store, his business model was simple: sell high-fashion look-alikes to price-conscious Europeans. After succeeding in this, he decided to tackle the outdated clothing industry in which it took six months from a garment’s design to consumers being able to purchase it in a store. What Ortega envisioned was “fast fashion”—getting designs to customers quickly. And that’s exactly what Zara has done! The company has been described as having more style than Gap, faster growth than Target, and logistical expertise rivaling Wal-Mart. Zara, which is owned by the Spanish fashion retail group Inditex SA, recognizes that success in the fashion world is based on a simple rule—get products to market quickly. Accomplishing this, however, isn’t so simple. It involves a clear and focused understanding of fashion, technology, and their market, and the ability to adapt quickly to trends. Inditex, the world’s largest fashion retailer y sales worldwide, has seven chains: Zara (including Zara Kids and Zara Home), Pull and Bear, Massimo Dutti, Stradivarius, Bershka, OYsho, and Uterque. The company has over 5, 618 stores in 84 countries, although Zara pulls in over 60 percent of the company’s revenues. Despite its global presence, Zara is not yet a household name in the United States, with just over 50 stores open, including a flagship store in New York City. What is Zara’s secret to...
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...the fast fashion industry Table of Contents 1. Introduction 3 2. Industry environment of fast fashion 4 2.1 PEST analysis 4 2.2 Five forces analysis 6 2.3 Summary of findings 7 3. Analysis of Zara and H&M 7 2.1 Analysis of Zara 7 2.1.1 Vision, mission and objectives 7 2.1.2 Internal analysis 8 2.1.3 Business model canvas 8 2.1.4 Value proposition canvas 9 2.2 Analysis of H&M 10 2.2.1 Vision, mission and objectives 10 2.2.2 Internal analysis 10 2.2.3 Business model canvas 11 2.2.4 Value proposition canvas 12 2.3 Summary of findings 12 4. Comparison of business models between Zara and H&M 12 4.1 Comparison of business models 13 4.2 Comparison of value proposition canvas 14 4.2 Summary of research insights 14 5. Development of a new entrant 15 5.1 Strategic model 15 5.2 Business model canvas 16 6. Reflection on strategic insights 16 7. Conclusion 17 References 18 1. Introduction Fast fashion is a sub sector of the fashion industry that boasts fast response to consumer demand and efficient distribution of materials and products in the global landscape (Hines and Bruce 2007). Hines and Bruce (2007) also imply that fast fashion could quickly identify and capture business opportunities and transform them into products in a timely manner. As fast fashion retailers need to deliver trendy apparels to end customers, low cost production and efficient distribution become primary trends of fast fashion industry...
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...Jeff Bolling MKTG 310 I 28 Apr 2011 WK 5 Zara Case Study 1. As completely as possible, explain the supply chain for Zara -- from raw materials to consumer purchase. 5 pts. Zara makes 40% of its own fabrics and produces more than half of its own clothes. Work that has to be contracted out is done by local companies to maximize time efficiency. Zara stocks all raw materials/ fabric, cuts its own fabric and contracts the sewing to local companies. By stocking the raw material, Zara cuts down on time for getting end product to consumers. Having all this material and labor done locally to include stocking end product and shipping via jets, to distant locations and by truck to local locations, has streamlined the logistical process for Zara and is a role model for new businesses. 2. Discuss the concepts of horizontal and vertical conflict as they relate to Zara. 4 pts. Horizontal conflict is conflict that occurs among firms at the same level as opposed to vertical conflict which occurs between different levels of the same channel. Zara has minimal vertical conflict due to headquarters receiving data from individual stores where 300 professionals carry out the designs. Individual store managers spot trends, send data to Zara headquarters and "shazaam" a new design is on the market sometimes in less than two weeks. This is a prime example of teamwork at its best and shows in Zara's bottom line profits. Zara's approach to design is closely linked to their customers...
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...Inditex is one of the eight-brand groups of the largest fashion retailers, with its headquarters in La Coruna, Spain. The largest brand of Inditex is Zara; they try to keep their customers at mind when bringing new fashion into their stores. The case study goes into talking about how Zara stores setting the starting point for other retailers in making and shipping clothing. Question one ask what are the ways that Inditex guarantee that “fast fashion” is actually fast? The company produces two thirds of the products in a location near Spain, Portugal, and Turkey. This saves the company on transportation cost and faster delivery time. Mr. Isla installed a system where you can monitor sales and order the merchandise. They restock the stores twice a week and they get their merchandise two day after they order it. The clothing is monitored closely and whichever item is popular they send to their designers to recreate the design and then send it to the company’s factories to create more in a mass production. The company added new routes so that store managers get their merchandise on time; the managers have a new device that they can monitor existing and order new merchandise. Question two ask what are the characteristics of a “fast fashion” retailer to customers and store manager, Well Inditex tries to get all their clothing straight from the catwalk to their stores as soon as the new fashion hits the runway, Inditex goal is to have all the latest clothing before their competitors...
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