Why did the fashion apparel brands Zara and H&M succeed?

Zara and H&M are the two most successful fashion apparel brands in recent years. Why did they succeed? Every one of us is usually a little perceptually aware of their successes: their costumes change very quickly, attracting consumers to visit the store repeatedly, in Zara.
For example, consumers will visit its stores 17 times a year, and the industry average is 3-4 times. One of the cornerstones of the management of well-known fashion brands is the exquisite advertisements in various fashion magazines, and Zara rarely advertises. It succeeded in letting everyone talk about it, just like Starbucks. In the "Model: Strategic Thinking and Development Model of Retail Chain Industry", Lang Xianping, who specializes in corporate finance but is often misunderstood as an economist in China, conducted an in-depth analysis of companies such as Zara and H&M, collectively referred to as "rapid garments." From this we can see that their success is actually the success of a system that is interlocked.

The success of Zara and H&M was first and foremost because they changed the economic model of the fast apparel industry. The apparel industry can be simply divided into two categories. One is the top luxury brands such as LV, Gucci, and Versace, which are located at the high-value end. Their core assets are brands; the other is Gap, such as the United States. There are a lot of Baleno roads in the country. Zara and H&M have created a peculiar mix and match between the two. Their brand image is closer to the former, and the economic model has the same scale economic effect as the latter. The difference is that Gap’s economies of scale are based on “low-cost, large-volume,” cheap routes, while Zara and H&M’s economies of scale are based on “quick, small, and varied”. Zara launches tens of thousands of garments each year, and the style is in sync with fashion, and pricing is closer to that of premium brands. Lang Xianping predicts that in the future, the fashion industry will develop towards the "Zara model."

To observe the Zara model, it is important to look at the operating system behind "fast, small, and varied". There is a professional vocabulary in the clothing industry - lead time, referring to the time it takes for a garment to go from design to sale. Zara has significantly shortened the lead time. It can be completed in two days from design to production. The fastest lead time is 12 days. In comparison, Gap's single design brewing period lasted for two to three months. Clothing depreciates rapidly over time, devaluing 0.7% daily and computer products at 0.1% per day. Thus, there are multiple benefits to shortening the lead time: “The faster lead time will allow clothing companies to respond quickly to market trends, which can increase the value of clothing, but also allows companies to do a lot of clothing in advance, reducing inventory costs and inventory risk In addition, a shorter lead time can also enable the company to reduce its forecast of the trend and avoid the production of clothing that is not popular with customers, thereby avoiding the company from hoarding due to miscalculation and avoiding the loss caused by discounted promotions. ."

Neither Zara nor H&M attempted to be a fashion creator, but instead acted as a fast-fashion responder. "As soon as the fashion trend has emerged, accurately identify and quickly launch the corresponding clothing styles to quickly respond to trends." The advantage is that "there is no need to guess quickly and easily changing fashion trends, and in the case of reducing the risk of inventory, the gestation period of design is greatly shortened."

Fast mode requires a fast supply chain. Zara and H&M are not the same. Zara's approach has the following characteristics: The fabrics it purchases are undyed, but are dyed according to real-time requirements. Zara chose to make his factory only highly automated work, use high-tech production equipment for dyeing, tailoring, etc., and outsource the labor-intensive work. In order to respond quickly, Zara's procurement and production are carried out in Europe. Only 20% of the most basic models are produced in low-cost regions such as Asia. Zara has a high-tech automated logistics and distribution center. It can be guaranteed to arrive in Europe within two days by truck. For the United States and Japan, Zara even does not hesitate to use air to increase speed. H&M's approach focuses on using IT technology to compress time at every point.

Unlike our usual impression, Zara is not a manufacturer of these companies. Lang Xianping used a very slogan to explain them - "Specialty Store Retailers of Private Lab Apparel" (SPA). . As Paolo Borzatta, a columnist and consultant of the newspaper, wrote in an article entitled “When a Manufacturer Becomes a Retailer and a Retailer Becomes a Manufacturer”, retail strategy is such a traditional concept in the vendor. Unimportant content will become an important part of strategic decisions in the future. For Zara these companies, retail is an important part of the entire chain. Zara's retail is in a self-reinforcing cycle between "fast delivery and quick sales": stores are ordered twice a week according to sales, which reduces the need for discounted inventory and reduces inventory. cost. Style updates quickly enhance the freshness and attract consumers to repeat visits. Quickly updating the items in the store also ensures that they meet the taste of the customers.