Fast fashion retailers seemed to be made of Teflon. While other apparel retailers scale back or go out of business, companies like H&M and Zara expand. However, their focus on fast sales cycles and short supply chains doesn’t always guarantee success. Recent news in New Zealand seems to bear this out.
Fast Fashion Stands Fast Among Retail Survivors
Physical retail suffered this year, particularly in America where more than 6,000 stores have shut down so far. All retail chains had to face a new reality. First, they’d built too many stores over the years. Secondly, the customers went shopping online. Changing customer behavior reduced the need to carry so much stock on shelves. Subsequently, costs to maintain that supply chain went up at the same time that sales decreased. Fashion retailers felt this acutely. However, off-price fashion retailers, independent fashion retailers, and fast fashion retailers seemed to carve sustainable niches.
The Zara Paradigm
Whenever anyone talks about fast fashion, Zara stands out as the epitome of success. Generally speaking, Zara made it happen by smart supply chain management. From early on, Zara made use of real-time customer and transaction data to inform its production and inventory planning. It also linked design to production to shorten lead times and sales cycles. Frequent cycles and optimal stock levels reduced the need for markdowns on overstock, keeping costs low and margins stable.
Mixed Bag for Fast Fashion in NZ
Huge crowds showed up when H&M opened its first New Zealand store in October 2016. A few hundred showed up for Zara’s grand opening too. In the eyes of some observers, the arrival of fast fashion would change the face of New Zealand retail. Some attributed this interest to a constant appetite for new products and new things. Nearly a year later, H&M was set to open its second store, in Christchurch. In the same week, Topshop, one of the first fast fashion retailers in New Zealand, announced it was going out of business.
Why does one fast fashion chain expand as another goes under in New Zealand? Some say Topshop didn’t work in New Zealand because it didn’t live up to its premise. Specifically, one sentiment goes, Topshop’s range seemed several months out of date. Instead of new, affordable styles delivered in a rapid refresh cycle, it offered what boiled down to clearance items–inventory Topshop couldn’t sell in Europe. Meanwhile, H&M’s regional manager reiterated the fast fashion premise during the Christchurch store launch. “It’s very difficult to predict what people will want to wear in a year’s time,” he said. “It often depends on a new trend or a new movie and you have to be able to move quickly to order it.”
Start a FREE Trial