There are many more learnings to write about, many more anecdotes to share. But for now, this is where I rest my pen…
But I want to leave everyone with some thoughts and a few case studies of brands which broke the mould and created new age successes.
For we can all learn from them…
Let’s take one example of a fashion giant to understand the survival techniques of the fashion houses and their rise to glorious echelons, within the shortest possible time frame.
Lessons learnt from the whopper brand Zara’s sustainability would be helpful, since the company’s history says, it has not incurred loss for the last 19 years till the recent pandemic happened which had of course crippled majority of the industries in a flash.
Business lessons from the 15-year-old Amancio Ortega Gaona, a school drop-out, the founder of the chain of Zara, would be a worthwhile study case. Amancio, after dropping out from school, pursued trivial job opportunities for a decade before coming up with the brand - Zara.
In no time at all, Zara became the dominating force in the fashion industry. Zara’s humongous success has been an area of interest for fashion experts across the globe. When studied closely, this success was attributed to three major factors. Amacio studied the market carefully and based his business proposition on the three basic principles that catapulted the sales and reach of Zara to a global best.
All human beings, irrespective of their age group, belong to a world of hunger for possessing a brand for status’s sake, to be accepted more cordially by the people around and by society, at large. Clothes, that people wear, create a veritable impact in setting a status quotient, especially the age group 20 to 34 are forever conscious about the clothes they wear. These clothes were their identity and instruments of status. Therefore, these areas had very little room for compromise. The masses are ready to spend the extra money, walk the extra mile and give in the extra effort to possess these instruments of status. These clothing items add value to status at any time in the history of clothing.
However, the second most important point about owning these clothes is that the critical value or the status is in no way connected with the quality or utility of the products being sold or bought. For women, there existed only two primary parameters – variety and design. These two factors culminated to equip them to create an impact in their social circle. Badly designed clothes lose importance and have no value as far as showing off is concerned. One important takeaway was that nobody cared for quality or utility, but for fetish. Quality of clothes deepened dull in front of designing innovations and that is where Zara could sweep the market with cheaper but designer products. This trend is true even now. No fashionable soul would agree to wear even a very reputed Manish Malhotra or Ritu Kumar, Tarun Tahiliani or Sabyasachi Mukherjee attire twice in public occasions, even if they have spent a bomb on them.
This second knowhow settled with the inference based on the psyche of the masses who eye the designer clothes. The aim was to reap advantage of the unfulfilled demands of owning the very expensive designer clothing. Those coveted clothes on the mannequins and fashion shows have always been the ‘objects of desire’, but also have remained far out of reach. This sentiment was banked on and effectively cashed on by designing much cheaper but updated garments.
Thirdly, the masses have always been extremely fascinated by reel-life celebrities – Marilyn Monroe of yesteryears to Audrey Hepburn and the modern age power dressers of the likes of Rihanna, Cher, Zendaya, Dua Lipa, Harry Styles and Jennifer Lopez. Once a celebrity catches the fancy of the media, millions of youngsters join the brigade by trying to look chic and more socially accepted through imitation of the celebrity styles. Keeping this dynamism in mind, the waves of the rapid changes in the fashion industry had been tuned to adapt to the times.
An agile supply chain was based on these three insights.
Medium quality material was procured in bulk, research on trends and tendencies were carried out extensively, and trends that have been doing well at premium outlets were prioritised. The influence of pop culture was also not to be ignored in recent decades. A hurried chain of picking designs, getting them ready by local tailors and putting them up in the stores in the shortest possible time gave Zara a headway in the competitive scenario.
Some other band war methodologies include cheaper rates compared to other premium brands and releasing new designs every week. This gave way to three to four times customer footfall in the stores across. To further lure the microcosm of fashion ambassadors, attractive discounts served as a booster. The golden equation between just-in-time production and just-in-case consumption was effectively maintained. Zara releases at least 12,000 designs a year compared to 2000 to 3000 designs of other fashion brands. This well-calculated mechanism took the company to soaring heights of making it a 13 billion-dollar company with 2000 stores spread across 88 countries, approximately.
Keeping pace with changing tastes and consumer demand has become the business motto. The industry is reeling under the demanding curve of expectations versus supply chain management. Meeting consumer demand is the backbone of the industry and each and every decision can make or break the business mechanics. Let’s take a closer look at the nuances of the fashion industry and why it makes such an interesting topic across the globe, unintimidated by race, religion, age, gender or geography.
First mile strategy was absolutely in place and key players behind Zara’s astronomical success, with new initiatives and new narratives that orchestrated fresh moments of change. Let’s see the interesting way it churned this success story for the brand. Zara employed a unique market strategy so long unknown and untried by other brands. What Zara did was to standardise some eight or nine types of fabrics and played around with the same fabrics. They customised every design by the innovative use of different silhouettes, putting different prints on it, tweaking around with a combination of the same fabrics.
One fundamental strategy was to hold the raw material in stock, that allowed them to move very fast, and, of course, ahead of their competitors. This tactic was based on the principle of engineering the supply chain at the very beginning of the supply chain. They do add special flavours and design some unique products to attract additional attention of the customers but that’s for niche consumerism.
They researched, estimated and responded to market demand and that made their retail stores quite empowered. Zara studied demand very sincerely, and strategically made less than the market demand. The fact that they never made enough, and kept on adding fresh styles almost every week, made customers feel left out if they did not immediately purchase what they liked. Maybe the following week when customers re-visited the store, they found that the designs they had shortlisted or made up their minds to buy were all sold out. Thus, Zara did not give the customers time to ponder, wait & watch, and the fashion-conscious populace grabbed whatever they liked at the very first go. Amancio Ortega Gaona invented this strategy some thirty years ago and developed the concept dramatically to bring about a sustainable global growth for the brand.
They kept the scarcity in demand fuelled and the styles running. Let’s say the style of ‘puffed sleeves’ in women was in, and let’s also assume that the colour black was in. What Zara would then do is to create various designs in solid black with puffed sleeves. But they would again produce less than what the market demanded. Next time, when you were at the store, you would have noticed that puffed sleeves are still in but instead of solid black they have now reverted to printed black. And moreover, the solid black would have all sold out. Thus, they made people walk the extra mile to reach the stores. People had to go the shop to buy the latest design on display, almost every week or every fortnight.
This concept is majorly dependent on the backend. The demand is studied, and the product is designed and put out for people to buy. Thus, Zara dictated people’s choices. The birth of fast fashion started off with Zara. The model is widely known all over the world. Zara’s success inspired many fast companies in Spain to get into the race, but sadly, they never could keep up. All major business schools have case studies on Zara. They have white papers on its business model. Thus, for thirty long years, people knew what to do but they never could copy the model successfully.
Hail Zara! The pathbreaker into the realm of Fast-Fashion.
ASOS and Boohoo are epitomes of remarkable growth in the fashion industry. ASOS stands for ‘AsSeenOnScreen’ with the clear message to the customers, ‘Buy what you see on film and TV’. ASOS sold exclusive imitations of clothing that appeared on screen, big and small. Brad Pitt’s ‘red leather jacket’ from the movie Fight Club (1999) is a classic example. Founded in 2000, this British online clothing, accessories, shoes and beauty products retailer targeted the young adults. With a whopping more than 850 brands under its umbrella, and a team of efficient creative retouches delivering advanced image editing and product matching, ASOS was the go-to fashion point from wherever you are located across the globe.
Boohoo was established in 2006 in the United Kingdom and is a leading online fashion group. It showcases an incredible portfolio of 13 market-leading brands, that comprises items of clothing, shoes, accessories and beauty. It has successfully reached millions of customers across the globe.
These companies brought in extraordinary innovation in process and thinking to orchestrate their immaculate success story! The ‘Dotcom boom’ happened during the late 1900’s and early 2000’s. As a result of this struggling phase, few companies could survive and the companies that did, thrived, such as Amazon, which is a product of the Dotcom boom. While the other big entities such as Zara were thriving on the first-mile strategy, the new-age companies were focusing on the last-mile strategy.
Their business model was completely based on warehousing and logistics and the efforts were concentrated on getting the product to the consumer at their doorstep. Unlike Zara, that targets people and compels them to step into their showrooms, Amazon had been perfecting their reach to the consumers for over a period through a different approach. Their model was based on putting up as many products as possible on the website, with infinite variety and selling whatever they could, which came to be depicted by the terminology — last-mile strategy. The tech disruption that happened with endless Isles, which translated to putting up as many products as you like on the web, broke the whole retail chain. As a result, the companies that were based primarily on forecasting methodology, started losing out on sales. They failed to understand the new and fast spreading industry trend.
ASOS turns their stylists into social media influencers. The YouTube channel of ASOS has almost 70,000 subscribers and more than 1,000 videos. Their Instagram accounts each have more than 4 million followers. They are thinking ahead of incorporating buy-buttons on social media sites such as Pinterest, Instagram and Facebook Messenger.
Talking of Boohoo, pitted against its competitors, it has a USP. Instead of simply showcasing the product images, they go one step ahead by playing a video of a model wearing the product to give its customers a better idea of how they will look wearing it.
Likewise, Boohoo following similar steps has 7.4 million followers on Instagram and 1.7 million followers on BooHoo Man as of April 2021. They have a decent LinkedIn account, and they update their website regularly. They engage in active email marketing and host an original chapter with attractive content for target customer base. Utilizing the social media, to reach its customer base, has been a common strategy for both companies.
Amazon was thus a forerunner in breaking the chain and very soon it was followed by other companies such as Boohoo and ASOS. They came out with the concept of making very little products and sometimes no product at all and creating virtual products or 3D products to be put up on social media. These brands had a wide range of social influencers working for them and many social media platforms. They were into the mode of manufacturing products based on customer response. Let’s say, there were 100 likes on a product, they go and produce 50 such items and, effectively, sell them. If that sells, they make another 100 products and so on. When people stopped liking the product or buying the product or when sales started going down, they stopped producing those items.
This model completely defeated the concept of forecasting. You put out a product and check out whether people like it or not or how many people like it and then you go backward and create that product. This is what is known as the ‘Test and Repeat Model’, which is a very clear FMCG model.
1. Products – Wide variety of products made by ASOS or collaborated brands
2. Price – Affordable price
3. Place - Internet-based platform delivering at the registered addresses
4. Promotion - Website, mobile app, magazines and social networking sites
5. People – Web-based company with fewer employees and thus less man management and costs
6. Process – Online portal displaying a huge variety of products
7. Physical evidence parameter – Easy-to-use mobile and app and website
This was a huge twist in the fashion industry tale and innumerable companies started to put this into practice. A lot of manufacturers, who earlier did not have access to the market, now started accessing products through the online channels. People now started buying through these online channels and stopped visiting the retail stores, hampering the spray & pray method of the earlier years. These companies were slowly dying out. These new tech companies were, on the other hand, not even aware of how majorly they were influencing the buying mechanism and habits of the consumers. Herein, came into the picture companies such as ASOS and BOOHOO, and more recently, Shein. They revolutionised the whole game of the fashion market.
We shall see how Shein did this in a subsequent case study.
The Chinese fashion brand, Shien made the headlines by conquering the west through its brilliant market strategy. The aggressive pace at which Shien became the largest cross-border fast-fashion, e-commerce company in the world makes for an insightful case study. It has spread its reach across more than 200 countries, including the United States, France, Russia and Germany. Studies show that the Shien app had more than 177 million downloads in 2021 and had more than 43.7 million clients. Shien had more than 10 million monthly active users in the US alone. Its annual revenue in 2021 is believed to have exceeded $16 billion USD, which was a straight jump from $10 billion in 2020.
Shien was founded in 2008, as a B2C Chinese online clothing and accessories retailer selling worldwide, outside China. It has clothing for men, women and children of all sizes, suited for all occasions. It also includes home life products. Not much is known about Chrs Xu, Shien’s founder, who is said to be a Chinese American graduate from Washington University or maybe from Qingdao University, as heard from various sources.
Shien, as a part of its marketing strategy, has no permanent brick-and-mortar stores. But it has opened temporary pop-up stores in the big and happening cities such as Madrid, Melbourne, Las Vegas, Milan and Barcelona that include social media friendly spots, where we find customers eagerly hogging the limelight and getting clicked for social media, while enjoying shopping.
Shien’s business model targets the western gen-z consumer base; and as Google trends indicate, US-based netizens look up for the brand Shien three times more than their western counterparts such as Zara, Boohoo and H&M.
Shien’s real-time fast-fashion model is extremely quick to identify fashion trends and continuously strives to have minimum manufacturing cycles. To achieve trends identification, designing, manufacturing and shipping at record time, producing 500-2000 new products every day, Shien uses an in-house design team and comprehensive analysis of fashion trend data.
The speed and frequency of launching new products make it a champion among the fashion frontrunners. In 2020, Shien launched an astonishing 150,000 new items, which comes to approximately 10,000 new items per month. They could reach Zara’s annual new product volume in merely a couple of months, and it had grown even faster since then. Records of March 2021 show that Shien produced an average of 2,000 new products per day in the women’s clothing category.
Shien sells its products at half the price of its western counterparts and showcases items that are more diverse in terms of colours and patterns. The brand is focused at reaching people even of lower economic strata by offering trendy clothes at very affordable ranges. Shien also believes in the micro-influencer mode of marketing. They give out free products to a handful of followers for posting their products on Instagram and YouTube, among others. Through referral schemes, these followers stand the chance to win 10 to 20% commission too, which is an effective strategy in spreading brand awareness.
Statistics of January 2022 show that 10% of the web traffic to Shien websites were through influencer recommendations, while 45% accounted for reach through organic search results. Direct access traffic of more than 38% indicates that Shien enjoys a very high proportion of returning customers.
After entering the Middle East market in 2016, Shien’s sales reached 200 million RMB that same year. Shien enjoys being among the top ten shopping apps in UAE and Saudi Arabia. Shien’s footfall in any new country has been remarkably intense.
Shien uses Amazon’s strategy of promoting the shopping habits of the West through data collection from search optimization. The company was so well equipped that they could ably compete and even defeat Amazon at its own strategy. American teenagers voted Shien to be the most popular online clothing store in the US. Currently, monthly downloads of Shien exceed that of Amazon. Shien and Amazon have now mutually agreed to incur the benefit of cross-promotion by listing Shien’s products on Amazon.
Shien has a catalogue that is easy to navigate with very clearly categorized products based on gender, size, fashion trends, seasonal trends, type of clothing, material and styles. Shien maintains a humongous range of products and keeps on updating its catalogue at short and regular intervals, which keeps customers hooked every time they visit the online stores.
Shien’s methodology is perfectly suited for the young and price-aware consumers, who do not need a long-lasting professional wardrobe, rather a huge variety of stylish clothing. Shien has 27.6% customers between the ages of 18 and 24 and 29.2% between 25 and 34. Besides their huge pool of micro-influencers, Shien also collaborates with media personalities, who are adored, imitated and followed by young adults, such as Katy Perry, Lil Nas X, Rita Ora, Nick Jonas and Hailey Bieber.
The pandemic habit of e-buying of the consuming mass gave a huge boost to the brand. People in general had started exploring e-commerce options more during the lockdown phase. They spent much more time browsing and shopping online, which acted as a huge incentive for the newcomers in the industry such as Shien and the brand took very good advantage of it by pushing their sales to dramatic levels.
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