On the surface, it seems that ZARA, H&M, Uniqlo, and GAP are all opening stores at a similar pace, but in fact, these fast fashion companies are really different. The content of this issue is shared freely. Cao Yang, who studied at Istituto Marangoni, known as one of the three major fashion schools in the world, takes everyone to have an in-depth understanding of the four major fast fashion brands and what their respective methods are.
Let’s talk about ZARA first. Among the four brands, it is the strongest and currently successful but unique, so it may require more nonsense. I would like to say that ZARA’s brand core competitiveness cannot be imitated by any fashion brand in the world. Not to mention scale, after all, everyone can achieve scale. Here we focus on its non-replicable model. The model adopted by ZARA is called Vertical Integration, vertical shipping. The shipping time is greatly shortened: an average of 2 weeks, so fast fashion brands represented by ZARA can have 15-20 collections a year.
In comparison, the entire process of shipping for ordinary brands takes 4 to 6 months, and there are generally only two collections a year. However, due to the adoption of the Vertical Intergation model, ZARA can control the entire process (from market research, to design, pattern making, sample making, mass production, transportation, retail) better and faster than other fast fashion brands. H&M, which is famous for its shipping speed, was 5 days faster.
In pursuit of speed, ZARA has sacrificed a lot of costs:
1. In the production process, ZARA relied on countless handmade workshops and family factories in La Coruna, where its headquarters is located. Many products were produced directly locally. It was not until recent years that they were gradually outsourced. However, 75% of H&M’s products were produced in the past few years. Made in Asia, all production is now outsourced. However, for this reason, H&M’s price is about 50%-70% of ZARA’s (leaving aside the cost of raw materials for the time being)
2. All long-distance transportation is by airplane instead of cargo ships. They are willing to pay high freight rather than spend on advertising and marketing expenses. ZARA’s marketing expenses only account for 0.3%-0.4% of the total cost, but other products Brands account for about 3%-4%. Even though it has spent high costs to pursue speed, ZARA’s gross profit margin and net profit margin are still comparable to H&M. At the same time, ZARA is not willing to save the above costs in order to increase profit margins. Therefore, ZARA has reached unprecedented heights among all fashion brands and retailers (my teacher in Milan never called ZARA a brand, because it focuses more on the production and retail links, and never uses design to position the style of brand products, and does not Brand Identity that no fashion brand should have): 1. All clothes in the ZARA headquarters warehouse will not stay for more than three days. The store will place orders with the headquarters twice a week to replenish products. The inventory turnover rate is 3- higher than other brands. 4 times 2. On average, only 15% of clothes are discounted every season, compared with 50% for other brands.
3. On average, customers go to ZARA 17 times a year, compared with only 4 times for other brands. At the same time, ZARA’s popularity is also attributed to their “inverted” design concept. When I participated in the ZARA interview, HR told us that the core of ZARA is the store, because only in the store can we truly contact customers and understand their needs. Therefore, the store provides sales data and then submits it to the store manager. After sorting it out, the store manager hands the results to the design department. The design department designs styles according to customer needs and then submits them to the commercial department to evaluate costs and prices. Start making patterns and making samples, then transfer them to the factory for production, and then store them in ZARA’s super-large logistics warehouse (9 times the size of Amazon). There are countless trucks at the entrance of the warehouse to transport the products to other parts of Europe or the airport twice a day. . In this process, in terms of design alone, it takes an average of 20 minutes to design a piece of clothing, and more than 25,000 new styles can be designed every year, which is 4-6 times that of H&M. Because customers’ demands for fashion are changing, and the information collected from stores is time-sensitive, speed is the fundamental and important key to winning in this model.
It is precisely because of ZARA’s unique model that other existing brands cannot imitate it, because if they imitate it, it means that the brand’s designers no longer play a decisive role in the design, and even need to rebuild the designer team and logistics system. , production process and so on.
But this model also has drawbacks:
1. Because of the control over the entire process, operational risks increase. If there is an economic downturn or industry downturn, the pressure cannot be transferred to suppliers (such as requiring suppliers to reduce prices…)
2. Unable to integrate the advantages of various countries to maximize interests.
3. Stores are directly managed by the brand and cannot expand quickly through agents and other forms (such as Benetton in Italy), and part of the property needs to be invested in new stores and renovations of existing stores, which reduces the asset turnover rate (ZARA’s Assets Turnover is 1.4, GAP is 1.8, H&M is 2) 4. As we all know, ZARA has been plagiarizing openly for many years. If you sue me, I will sue you. If you lose the lawsuit, I will pay you. Anyway, I can make it back (unlike After the lawsuit against Forever21 in the United States, ZARA created a scandal.What we have created is a brand new business model, a business model completely based on customer needs. Therefore, ZARA’s current enemy is only itself. Only by fully understanding and controlling the pros and cons can long-term, stable and sustainable development be achieved.
GAP, I just want to use one sentence to describe its current situation: a skinny camel is bigger than a horse. As the former sales leader in the fashion industry, GAP was actually named by Forbes in 2014 as one of the ten fashion brands that may disappear in the next ten years. GAP just found us this year to help them with a project to promote their brand in Italy. , after taking this project, I also consulted a lot of information about GAP. Since we are asking about competitive advantage here, there is no need to mention the business model, which saves a lot of nonsense.
In terms of design, when we mention GAP, we often think of those simple styles, jeans, and tops with logos printed on them. However, this year’s GAP advertisements fully demonstrate GAP’s purpose of remaining constant and adapting to changes. When GAP’s Marketing Department Manager gave a presentation, he said that GAP hopes to use simple styles to create a style that belongs to everyone. But if you look at GAP’s Facebook and Instagram, you will find that it is completely fresh and fresh. Many of its designs are more in line with the simple and fashionable trend predictions on WGSN. Although GAP has been unable to satisfy the young consumer group who are constantly seeking novelty and differentiation in recent years due to the lack of fixed styles, it has still won a lot of wins due to its simple and versatile design and high-quality fabrics and styles (especially pants, which I love). The favor of loyal consumers, coupled with the trendy style dominated by simple functionality, makes the design reluctantly find a soul destination. Here is a fresh screenshot of GAP’s Instagram.
In addition, it seems that knowing that ZARA and H&M have been accused of environmental pollution by the outside world, Doris and Don Fisher, the co-founders of GAP, deliberately launched the “DO MORE THAN SELL CLOTHES” initiative. It seems that organic cotton should be used to promote agricultural sustainability. Continuous production hopes to arouse people’s brand awareness and re-establish the brand image with the brand’s social mission. Finally, let’s use the original words of the Manager during the presentation: GAP is confident not boastful; simple notboring; optimistic not delusional; courageous not radical; inclusive not lofty; youthful spirit not young; smart not smart-ass; current not trendy; classic notconservative; accessible not exclusive; liberating not revolutionary; human notheroic. These words fully reflect GAP’s brand positioning and image.
H&M, another giant. The fast fashion brand, which is also very good, is more inclined to consider both shipping time and product cost in terms of model. Therefore, it is not as fast as ZARA, but it still has a place in this industry relying on its cost leadership. The level of fashion is not as good as ZARA. After all, ZARA also copied big brands and copied the essence. H&M is the first choice for young people here in Europe. Its recent designs are more street-oriented, with big prints, denim, big letters, and big camouflage. . . . The shortcomings of the product are also obvious. The quality cannot be complimented. The fabric is the worst among these four brands (you will know after washing it once).
But like ZARA, they are innovators who transformed clothing from durable consumer goods to fast-moving consumer goods, so quality is not that important. One of the areas where H&M shines is undoubtedly sportswear. This series is not sold in China (at least it was not available in China when I went abroad). People probably think that Chinese people don’t like sports. In fact, H&M’s sportswear is very professionally made, divided into very fine categories (including running, tennis, and even yoga), and the price is cheap, not a little cheaper than Adidas Nike. Therefore, it is very popular and has outstanding sales. The picture below shows the Replenishment Rate (replenishment rate? I don’t know how to translate it) of H&M sportswear in 2013, which reached 36%, and only 10.4% were sold at discounts (ZARA’s inventory turnover rate is so high, there are still 15%) % needs to be sold at a discount), in contrast, sportswear is definitely a highlight of H&M.
Another point is that H&M has more choices in size, and many are even customized for expectant mothers. The picture below is a comparison of H&M’s additional size statistics in the UK and major local competitive brands:
Therefore, it can be said that H&M and ZARA meet customer needs in different aspects. The former is in daily wear and use, and the latter is in design. In terms of operations, H&M focuses on low cost, while ZARA focuses on product update speed.
The latter one, Uniqlo. This is a brand I like in China. It is cheap, comfortable, has high-quality fabrics, and the styles are simple and easy to match. Later, they added the UT series. I once bought 13 T-shirts from them in one summer, just for the patterns created by different artists. Some of them are so fond of that they are reluctant to wear them. When doing Competitor Analysis for GAP, the first thing I thought of was Uniqlo. Because I like Uniqlo, I bought two books by Yanai Masaru and the book he recommended on Japanese management and economist Kenichi Ohmae, both of which benefited a lot.
If we want to talk about Uniqlo’s core competitiveness, there are a few things that have to be mentioned:
1. Fabric: This is related to the history of UNIQLO. It was popular all over Japan and is still launching new fleece jackets every autumn and winter, allowing UNIQLO to taste the sweetness brought by fabrics. Since then, UNIQLO has been in the use and research and development of fabrics. Continuous innovation, such as a wool ranch in Inner Mongolia that specifically raises sheep to provide fabrics for UNIQLO, and the lightweight Heattech series of thermal underwear, are all products of UNIQLO’s continuous pursuit of high-quality fabrics.
2. Service: There is no need to say more about this. A friend of mine used to work at Uniqlo. He had to say hello to all the customers who passed by him, which made his mouth dry at the end of the day. This requirement for greeting customers alone is unmatched by other brands. Other services can also be experienced by everyone.
3. Details: Like MUJI, the store requires the utmost attention to detail. The way all clothes are stacked is very particular. For example, customers can easily see the width and width of trouser legs. Another detail I have to say, which I believe many people have overlooked, is the mirror. In China, the effect of the person reflected in Uniqlo’s mirror is completely different from that reflected in the mirror of GAP, H&M and ZARA. Part of it is the placement of the mirrors, and part of it is the lighting. Because the contours of yellow people, especially the facial contours, are not deep and are more “flat” than European and American people, in fact, yellow people are not suitable for the effect of lighting directly from above, which will cause the defects of the facial contour to pass through. The shadows are fully revealed, but European and American people with darker contours can show three-dimensional bone contours. Therefore, when looking in the mirror, the light shines diagonally from the front or back, which is more suitable for yellow people. At the same time, the choice of lighting is just right, not yellow, not dazzling, and soft, which can highlight and even beautify the skin.
4. Craftsmanship. I once carefully observed Uniqlo’s shirt craftsmanship. The inverted triangle sewing stitch on the chest pocket is completely a craft requirement for suits. This detail is required. What reason is there to question Uniqlo’s craftsmanship?
5. UT series. T-shirts are originally a simple and direct way to convey culture and art. This UT series is a collaboration with artists. Artistic patterns are directly displayed on T-shirts, restoring the original function of T-shirts and selling cheap products. The taste of art.
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