Zara is Fastest in Fashion
By George Anderson
By U.S. standards, Chico’s FAS is fast when it comes to getting new fashions from the drawing board to store shelves. The retailer can often complete the full cycle in only six months.
Compared to the Europe’s fastest retailers, however, Chico’s is moving at a glacial pace. Spain’s Zara store chain uses an in-house design staff, its own factory and tightly controlled distribution network to get new product to the stores in as little as two weeks – no typo – two weeks.
According to a column on BusinessWeek Online, Zara has higher costs using its own factories paying European wages, but it saves by reducing shipping time and expenses. The company is also able to protect itself against fashion mistakes by producing goods in small quantities and removing sales laggards off store racks quickly.
Kris Miller, a retail analyst with Bain & Co., said Zara shoppers know they need to buy something they like because, while it is here today, it could very well be gone by tomorrow.
“They’ve built up an excitement around snapping up new clothes before they go,” she said. “As well as keeping sales high throughout the year, it also keeps margin-stripping markdowns to a minimum.”
While Zara and others, such as H&M, have enjoyed success, the impact fast fashion retailing has had in the U.S. lags behind what has taken place in Europe. According to NPD Group, fast fashion represents only one percent of all U.S. clothing sales compared to 18 percent in Spain and 12 percent in the British market.
Today, Zara has only 19 of its 1,200 stores in the U.S., leaving it plenty of room for growth.
Moderator’s Comment: What sector of apparel retailing is most at risk from the emergence of fast fashion businesses
such as Zara? Do you expect that fast fashion will grow to the point where it accounts for a similar or higher percentage of apparel sales in the U.S. than it does in European
markets? – George Anderson – Moderator