h&m in fast fashion continued success case study

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H&M IN FAST FASHION: Continued Success?

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Since the end of the 1990s, the most dynamic fashion industry has been the so-called fast fashion industry. This business model has grown faster than the fashion industry as a whole and its market share has increased, driven by the international expansion of companies such as Spain's Inditex (the parent company of Zara), Sweden's H&M, Japan's Fast Retailing (Uniqlo), America's Gap, Ireland's Primark, and Britain's Topshop. While the global fashion industry as a whole grew at an average annual rate of 4.3% between 2000 and 2012, 1 the sales of Inditex and H&M, the two largest fast fashion retailers, increased in real values after discounting inflation, at a rate of over 10% in the same period. 2 Furthermore, fast fashion chains have enjoyed wider profit margins than traditional clothing brands, more than double on average, in the early years of the twenty-first century. 3 This success has placed these companies among the most well-known and respected international brands: In the ranking of the top global brands elaborated by the consulting firm Interbrand in 2019, Zara and H&M held positions 29 and 30, that is, among the five most highly valued fashion brands on the list, only behind Louis Vuitton, Chanel, and Hermès. This chapter analyzes the origin, characteristics, and evolution of fast fashion, as well as its high social and environmental costs. The main sources of information have been, in addition to the extensive literature on the subject, the economic, corporate governance, and sustainability reports of the largest fast fashion companies, the economic press, and specialized fashion magazines. The study first delves into the bases of the competitive advantage of fast fashion companies and shows how the development of social networks and electronic commerce is affecting this business model, with the appearance of "pure players" that are very competitive in price. The text then discusses the fundamental role played by offshoring and the establishment of agile supply chains. In the fourth section, the evolution of Inditex, the world's leading company in this type of fashion, is delved into. The following section reviews the social and environmental problems generated by fast fashion and the strategy applied by the main companies to reduce them. Finally, some brief conclusions are offered on the need to transform this business model.

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Purpose – This paper seeks to address the complex nature of fast fashion buying through case studies with a supermarket, department store and own brand label. The phenomenon of fast fashion raises questions about traditional approaches to sourcing and buying, which are addressed here. Design/methodology/approach – Case studies were compiled with companies managing fast fashion, alongside other purchase and retail activities, namely a supermarket, department store and specialist fashion chain. Findings – Reveals the buying practices for fast fashion, namely, a combination of global and local suppliers, a leagile approach is typical; trust is an important factor in the supplier-retailer relationship to ensure fast delivery at an agreed quality; and integration of key internal activities and processes to facilitate the speed of buying decisions that may be required. Originality/value – Gives insight into the factors affecting buying behaviour for fast fashion. Introduction The fashion industry is turbulent and certain factors have driven this change (Kilduff, 2005), particularly overseas sourcing to take advantage of cheaper labour costs. The industry can no longer compete on price alone, and thus is facing tough competition from low labour cost countries (Jones, 2002). In fast fashion, sourcing and buying decisions are compounded by the speed by which decisions have to be made and innovation introduced into the store. Fashion consumers expect and thrive on constant change and so new products have to be available on a frequent basis. This fast turnaround is achieved through sourcing new suppliers with different products and having a relationship with existing suppliers who understand the need for change and have the capability to deliver this. In fast fashion, buying activities play a crucial role through supplier selection and product decision-making, and indeed, buying is arguably changing from purely operational to much more strategic. This paper addresses the complex nature of fast fashion buying through case studies with a supermarket, department store and own brand label. It is proposed that effective buying behaviour for fast fashion focuses on the management of a portfolio of suppliers, relationship building, as well as interfacing effectively with internal activities.

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The apparel supply chain is a dynamic industry made distinctive by demand uncertainty and the handling of very many Stock Keeping Units (SKUs) during one season, which make it impossible to forecast demand accurately. Hence, apparel brands have to continuously maintain reactivity to the changing trends in consumer fashion tastes through quickly creating new designs that are suitable for all customers with affordable prices. In this context, fashion retailers adopting a new approach called fast fashion raised. In this paper, we will examine at first, from a literature review, the emergence of fast fashion model especially the ZARA Case. Then by conducting semi-structured interviews, we will analyze DIAMANTINE (a Moroccan fashion retailer brand) fast fashion model and identify the way of its success from a supply chain management perspective.

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A fast fashion system combines quick response production capabilities with enhanced product design capabilities to both design " hot " products that capture the latest consumer trends and exploit minimal production lead times to match supply with uncertain demand. We develop a model of such a system and compare its performance to three alternative systems: quick-response-only systems, enhanced-design-only systems, and traditional systems (which lack both enhanced design and quick response capabilities). In particular, we focus on the impact of each of the four systems on " strategic " or forward-looking consumer purchasing behavior, i.e., the intentional delay in purchasing an item at the full price to obtain it during an end-of-season clearance. We find that enhanced design helps to mitigate strategic behavior by offering consumers a product they value more, making them less willing to risk waiting for a clearance sale and possibly experiencing a stockout. Quick response mitigates strategic behavior through a different mechanism: by better matching supply to demand, it reduces the chance of a clearance sale. Most importantly, we find that although it is possible for quick response and enhanced design to be either complements or substitutes, the complementarity effect tends to dominate. Hence, when both quick response and enhanced design are combined in a fast fashion system, the firm typically enjoys a greater incremental increase in profit than the sum of the increases resulting from employing either system in isolation. Furthermore, complementarity is strongest when customers are very strategic. We conclude that fast fashion systems can be of significant value, particularly when consumers exhibit strategic behavior.

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The Key Role of Retail Stores in Fast Fashion Companies: The H&M Case Study

• First Online: 05 December 2017

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• Elisa Arrigo 6  

Part of the book series: Springer Series in Fashion Business ((SSFB))

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The chapter investigates the key role played by a system of directly operated stores in the fast fashion business model . For this purpose, a descriptive case study has been carried out on Hennes & Mauritz AB (H&M), one of the leading companies in the fast fashion sector with a wide network of retail stores across the global market. The case study has shown that the store represents the heart of H&M’s business model, since, through direct control over the retail network the company is able to develop a profound level of market knowledge , advantageous for launching onto the market, continuous and successful ranges of fashion apparel.

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Arrigo, E. (2018). The Key Role of Retail Stores in Fast Fashion Companies: The H&M Case Study. In: Chow, PS., Chiu, CH., C. Y. Yip, A., K. Y. Tang, A. (eds) Contemporary Case Studies on Fashion Production, Marketing and Operations. Springer Series in Fashion Business. Springer, Singapore. https://doi.org/10.1007/978-981-10-7007-5_8

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