Challenges determined by the Fast Fashion strategy
<\/strong>The concept of “Fast Fashion”, especially as executed by ZARA, has become synonymous with success in the fashion world, meeting the requirements of the Quick Response<\/em> concept in logistics. The recipe here is very simple: by frequently delivering new products (collections) to clothing stores, we force customers to make subsequent visits and purchase garments even when they no longer fit in their closets. Thanks to the Fast Fashion<\/em> concept, the boundaries of seasonality in collection creation are blurring, and mass production and utilitarianism are coming to the fore. The idea itself was not created by A. Ortega. A precursor to such a system likely originated in the Sentier district of Paris, where in the 1970s, Jews and Armenians, in cooperation with suppliers from North Africa, concentrated all processing links in the traditional garment industry locally, thereby enabling a one-month cycle from order to delivery to the store shelf, as opposed to the traditional period of at least three months.
For specialists, however, the matter is not that simple, because Fast Fashion<\/em> is understood differently: for some, it is the rapid copying of “hot” models or current trends, while for others, it is a greater number of sub-collections and shipping dates to the retail chain. Furthermore, many managers have never performed a thorough analysis of how rapid changes in supply offerings affect costs and profits. It is also characteristic that over 70% of managers in the fashion-related industry do not feel equipped with the right tools to meet the requirements of Fast Fashion<\/em>. The implementation of the idea involves significant risk because the cycle from design to delivery of goods to store shelves is shortened from a period of several months to a few weeks. Consequently, retail companies must produce closer to the target markets or account for high transport costs. Furthermore, much better planning of the supply of materials and accessories for production needs is essential. Along with frequent “refreshing” of the assortment, more and more products are delivered in smaller and smaller batches. Therefore, costs rise, and logistics – already complicated due to production scattered around the world – becomes even more difficult.<\/p>
Whether the implementation of the Fast Fashion<\/em> idea is profitable for the provider is determined primarily by the customer structure. In essence, it is about getting answers to two basic questions: how often are customers of a specific brand willing to spend money on updating their wardrobe? Furthermore, what price would they be willing to pay for it? Answers to these questions are provided in a simplified way by an analysis of 4 distinct customer groups (Figure 1). Most companies in the business sphere that is fashion generally direct their activities toward one of the selected groups. For each group, however, different aspects of Fast Fashion<\/em> must be considered:
Trend-conscious group with a limited budget<\/strong> – in this group, changing the assortment is very important while keeping costs in check, where styles are differentiated but the same materials and accessories are used repeatedly. A consolidated supplier portfolio allows for cost control. Regarding at least 70% of the assortment, the cost factor is more important than updating the offer, because for brands in this group, the established image of low prices cannot be spoiled.
Price and functionality-oriented group<\/strong> – price in this case is so important that the provider should avoid any cost increases that arise as a result of ordering smaller batches or more complex logistics processes. However, they should react to new trends and “bestseller” products while considering the cost factor, if it is possible to purchase consolidated new collections from manufacturers in “cheap countries”.
Classics with quality awareness group<\/strong> – the average customer in this group does not reward frequent assortment changes with frequent purchases. Therefore, frequent collection changes are not purposeful. Instead, products considered bestsellers should be replenished quickly, which means it is reasonable to produce them near the target markets.
Joy of shopping with fashion awareness group<\/strong> – for this group, it is worth changing the assortment regularly because customers shop often and willingly. But beware: too frequent changes lower the value of models from the collection in the eyes of buyers due to their too short life cycle, and thus hinder the formation of a clear brand identity. The best means to “refresh” the assortment is to prepare various variations of signature collections that will clearly help strengthen a given brand.<\/p>
The presented division allows us to state that Fast Fashion<\/em> is not equally profitable for every company. They should therefore decide whether and to what extent they will change their processes and offers and to what extent they will meet customer expectations. It is therefore possible to imagine that for some providers, increasing the frequency of assortment replacement without disrupting production processes is sufficient. Others may shorten order fulfillment cycles only for part of the assortment, adjusting product development cycles and production deadlines accordingly to react faster to current customer demand. A few providers focus exclusively on meeting Fast Fashion<\/em> requirements for their entire offer. In all these cases, however, it is necessary to make specific changes to the entire organizational structure of procurement, production, distribution, and retail operations.<\/p>
In recent years, the nature of competition in the clothing industry has changed radically. Decreasing demand, the entry of discounters into the market, the rapid quantitative growth of the group of so-called “vertical companies” (i.e., vertically integrated), and the tendency of clothing manufacturers to integrate with final product reception links are leading to significant changes in the industry. Regardless of the fact that verticalization processes are understood differently in the fashion sphere, there is a consensus that a vertical company strives to optimize customer service in the market. “Coordination centers, as independent entities, control the entire value chain, trade controls production, manufacturers become traders – the market has turned upside down – this is how some authors summarize this process”. At the same time, specialized studies point to the possibility of obtaining many benefits through verticalization: shortening reaction times to market changes in value chain control links, shortening flow times, and reducing costs compared to solutions based on the traditional market division of labor, although the differentiation of the time perspective conditioning the achievement of specific levels of these benefits is not without significance.<\/p>
The article comes from the magazine “Logistyka” 6\/2009.<\/p>
Logistyka2009-6s59.pdf<\/a>