Posts Tagged 'Zara'

Will an off-price concept fix H&M?

H&M is jumping on the off-price bandwagon with a new concept called Afound, with the objective of liquidating its goods more effectively. (It’s also a hot segment with a lot of new players over the past few years.) Here’s my comment from a recent RetailWire discussion about what really ails the company:

I’m not sure that another off-price brand in an increasingly overcrowded market is a long-term solution to H&M’s problems. They need to address a few core problems in their existing stores first, as the article points out:

1. How does H&M move faster in the product development cycle, to compete more effectively against Zara and even Forever 21?
2. How does the company figure out a more effective liquidation strategy for its existing stores, instead of leaning on a new concept?
3. How does H&M play catch-up on omnichannel, considering it was late to the party?

H&M stores have always avoided the chaotic, “treasure hunt” feel of a typical Forever 21 store — and with a bigger focus on basic, affordable “wear to work” apparel for budget-minded shoppers. But this has come at the cost of becoming boring and predictable, compared to Zara’s unbeatable speed to market.

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Are social media driving the speed of trends?

The short answer to my own headline question (above) is “yes,” but there is a lot more to this issue. Here’s my comment from a recent RetailWire panel discussion:

Social media may be a factor in fashion trends going Aeand moving faster. But the influence of “fast fashion” retailers (Zara, Forever 21 and others) can’t be understated. They mastered their supply chain in order to bring new goods to the selling floor a lot faster, and in order to react to early test orders in a big way. Most traditional retailers built their logistics around long lead times, especially on private-brand goods, and are scrambling to catch up.

The idea of “speed to market” requires a change in mindset — affecting supply chain management, the willingness to chase big ideas, and the ability of retailers’ vendors to move just as fast.

Is there a market for “ultra-fast” fashion?

RetailWire panelists weighed in on the growing trend toward “ultra-fast” fashion. If the short lead times of fast fashion retailers (think Zara) aren’t short enough, how about two to four weeks from concept to delivery? And what sacrifices need to happen as a result? Here’s my comment:

Retailers have been too slow reacting to the fast-fashion capability of companies like Zara and Forever 21. These two companies (and a few others) have brought great supply chain management and data science to the art of getting relevant product to their customers quickly. But the key word here is “relevant”: Does a two-week lead time offer enough chance to test and reorder in depth?

Cost is another factor: Ultra-fast retailers will probably have to pay a premium for manufacturing labor close to their stores (especially in the U.S.), even if there is some offsetting saving on transportation. Fast turnaround makes sense if your store needs Stanley Cup championship jerseys tomorrow, but for the majority of goods a little extra time is worth the investment.

Is the era of brick-and-mortar growth dead?

The wave of store closures this year (and beyond) casts a shadow over traditional brick-and-mortar retailing, but it’s premature to declare it a dead end for companies that still have growth prospects. Here’s my RetailWire commentary on the issue:

In business school many years ago, I took a retailing class from a marketing professor who often said, “There’s no such thing as ‘over-stored,’ but under-retailed.” Obviously the glut of square footage is an even bigger problem than in 1977, given the development of exurban sprawl, big box stores, new mall formats, retail consolidation, and (of course) e-commerce. But the teacher’s point still has relevance today.

Some stores continue to have a good chance to expand their physical footprint. (There has been recent comment, here and elsewhere, about chains like Zara and Uniqlo being opportunistic about picking up others’ sites.) But growth for its own sake means nothing without a clear brand identity, coherent merchandising and smart use of technology to drive loyalty and omnichannel initiatives.

J. Crew changes its creative director

Here’s a recent comment from RetailWire about Mickey Drexler’s decision to replace Jenna Lyons, the longtime creative director of J. Crew, in light of a continuing sales slump:

Product development is the lifeblood of a brand like J. Crew. There is no question that the company’s merchandise assortments lost their way for the past several years, and Mr. Drexler has been frank about design mistakes in his public statements about J. Crew’s sales problems. While retailers are chasing the success of fast fashion stores like Zara and Forever 21, these tactics may not be right for J. Crew’s preppy brand identity and higher-end positioning.

As to the change in creative directors (after many years where Ms. Lyons’s efforts were instrumental to the company’s success), I guess it’s like a baseball team: If you’re the owner or the GM, it’s easier to fire the manager instead of all the players.

Two new fast fashion battlers?

There’s been plenty of attention paid to Forever 21 and H&M for the past several years, but it’s worth keeping an eye on Zara and Uniqlo as they expand their footprint in the U.S.  I commented recently on RetailWire that Zara has a competitive advantage in terms of product development and supply chain:

Zara has a big head start over Uniqlo in the U.S. retail market although it has plenty of room to grow vs. other fast-fashion competitors like Forever 21 and H&M. More importantly, speed to market is in Zara’s DNA. And they offer a modified “treasure hunt” approach to the merchandise, compared to Uniqlo’s approach of key items in lots of colors. Unless Uniqlo is prepared to change its philosophy, Zara has the edge.

It’s understandable that Uniqlo would want to benefit from what Zara already knows about fast turnaround of product development — supported by great logistics management — but it may not be as easy to imitate. Think of how many e-commerce sites aspire to the level of Amazon’s execution but can’t quite get it done.

Zara continues to impress

From a recent RetailWire panel discussion about Zara’s ongoing growth:

Zara’s mastery of supply chain to exploit trends has long been noted, but their targeting of a fairly broad customer base less so. They seem to straddle the sweet spot between Forever 21’s focus on what used to be called the “junior” customer, and H&M’s emphasis on more wear-to-work clothes.

As to store openings — at least in the U.S. — Zara has been more deliberate than its competitors, so its comps may reflect that it is not suffering from the same square footage overload as many other omnichannel retailers right now. But — as usual — it really comes down to merchandise content.


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