Introduction
“The high street” is an expression commonly used by UK locals, and they apply it as a name for a street where most of the main stores are located (Arfin, 2017). For those of you who wonder how this phrase is related to fashion, the answer is very simple − high street fashion is the clothing one can find in large chain stores, which are frequently launched in main shopping hubs: malls, department stores, and so on. High street fashion mainly refers to a mass-market retail style (Arfin, 2017). Each of the listeners in the audience can compose a long list of high street fashion brands. Those, which are most likely to pop in your mind, include Zara, Topshop, H&M, and so on. What is especially fascinating about these brands is the speed and scope of their growth.
As you may notice, many high street fashion retailers are international enterprises. One of the best examples of rapid global expansion in the given sector is Inditex Group (Bershka, Oysho, Stradivarius, Zara, etc.). Since 2004, the Spanish enterprise managed to increase its sales rates from 5.569 million euros to 23.311 million euros in 2016 (“Inditex Group’s sales worldwide,” 2017). By 2012, Inditex owned over 5.700 shops in 84 countries and employed more than 110.000 people (Wit, 2012). The statistics show that in its growth rate, Inditex outruns the main rivals in the global fashion industry (Caro & Martinez-de-Albeniz, 2014). In my opinion, smart product development, marketing, and logistics strategies used by the company largely defined the fast pace of its international expansion.
Essay Body
First of all, when speaking of Zara, it utilizes a unique fast-fashion business model. As stated by Caro and Martinez-de-Albeniz (2014), the main aim of fast-fashion retailers is to respond as quickly as possible to ever-changing needs and preferences of target customers, identify trends promptly, and meet all market requirements rapidly. To achieve this, Zara and other Inditex held brands vertically integrate just-in-time production, distribution, and retail sales to accelerate communication between customers and the design team. Consistently with the fast-fashion model, Zara employs a production cycle (10-15 days) that is significantly shorter compared to traditional fashion retail models implementing a several-months product lifecycle (“Fast fashion goes global,” 2015). Moreover, the enterprise employs an automated inventory system that captures real-time customer and sales information (i.e., most demanded items, less purchased pieces, etc.) and supports the design and fast production processes (O’Marah, 2016).
Secondly, as part of its international marketing and branding strategy, Zara adapts pricing, and positioning according to different market characteristics but utilizes a standardized approach to product designs and promotion (Mo, 2015). Since every country is characterized by distinct customers’ purchasing power, the given method helps the company to maximize profits in every new market by making products affordable to large groups of local consumers. At the same time, standardized design and promotion help minimize costs. It is worth noticing that unlike many other high street fashion brands, such as H&M and Topshop, Zara does not spend money on advertisement campaigns. However, it relies on the store as its main promotional tool in both domestic and international environments. As stated by Kalb (2016), all Zara’s stores are located near “high-end retailers that draw considerable traffic,” and since Zara offers more affordable prices, many consumers become easily motivated to come in (para. 7). Although it may seem to be a risky promotion strategy, it proved to be a success and provided multiple advantages for the company regarding savings.
Another advantage that has largely contributed to Inditex’s fast growth is that it owns all its production facilities, which are mostly located in Spain. According to Macchion et al. (2015), “the decision to use international suppliers located in countries far from a firm’s home country has had a significant impact on the effectiveness of operations, often having negative effects on the timing and variability of processes among different suppliers” (p. 165). By locating most of its manufacturing facilities in Spain and the nearest regions, Zara obtained the advantage of producing collections in short time spans. The localized production helps reduce the time needed for the replacement of defected items, decrease costs for transportation and labor (Macchion et al., 2015).
Additionally, since customers’ preferences in the fashion industry are heterogeneous and diverse in their nature, an effective product diversification strategy helps the high street retailer to satisfy the needs of diverse customer groups. Zara has several lines: Zara Woman, TRF, Zara Man, Zara Kids, and Zara Home. Different lines have distinct price ranges and styles and serve to meet the interest of people of different ages and genders.
Conclusion
The example of Zara is certainly a unique one − the high fashion brand is associated with many unconventional marketing and production practices, e.g., non-advertisement policy, just-in-time manufacturing, the limited extent of outsourcing, and so on. However, it unarguably explains why high street fashion, mass-market, or fast-fashion retailers grow so fast compared to high-end brands. The contributing factors include affordable prices, reduced operational costs, efficient environmental analysis, product diversification, and advanced infrastructure. Moreover, it is possible to say that the case of Zara, the most rapidly growing brand in terms of sales and revenues, shows us that innovation is key to success. Of course, some risks are associated with thinking outside the box and non-compliance with conventions. However, companies may largely benefit from innovation at different organizational levels − it may help capture and develop competitive advantages and maintain the leading position in the market.
References
Arfin, F. (2017). What is “the high street” and what is high street fashion? Tripsavvy. Web.
Caro, F., & Martinez-de-Albeniz, V. (2014). Fast fashion: Business model overview and research opportunities. In N. Agrawal & Stephen A. Smith (Eds.), Retail supply chain management: Quantitative models and empirical studies (pp. 1-30). New York, NY: Springer.
Fast fashion goes global. (2015). Strategic Direction, 31(11), 17-20.
Inditex Group’s sales worldwide from 2004 to 2016 (in million euros). (2012). Web.
Kalb, I. (2016). If you think Zara does not do marketing, think again.Huffpost. Web.
Macchion, L., Moretto, A., Caniato, F., Caridi, M., Danese, P. & Vinelli, A. (2015). Production and supply network strategies within the fashion industry. International Journal of Production Economics, 163, 173-188.
Mo, Z. (2015). Internationalization process of fast fashion retailers: Evidence of H&M and Zara. International Journal of Business and Management, 10(3), 217-236.
O’Marah, K. (2016). Zara uses supply chain to win again.Forbes. Web.
Wit, R. (2012).Spanish exception in overheated fashion industry. Inditex: Reaching the top worldwide in 37 years. Web.