TMS: The democratization of fashion: How H&M and Zara have reshaped European fashion

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The democratization of fashion:

How H&M and Zara have
reshaped European fashion
Retail Marketing and Sales
By Pedro De Gouveia of Salient Strategic Advertising and Design
The European fashion scene:
Over the last five years, more and more upmarket brands have started
chasing mass consumers. But the trend labeled "massluxe" or "massitge", is
more about chain stores becoming more fashion forward and trendy, and
hires designers who have worked for Calvin Klein and Marc Jacobs.
In November 2004, H&M the Swedish purveyor of fashionable Gap for
instance appointed Domenico de Sol, the former CEO of Gucci to its board
of directors clothes at a reasonable price, launched a moderately price
collection from the world famous Chanel designer, Karl Lagerfeld. It was
advertised worldwide via giant posters and a two-minute commercial.

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More and more people are mixing up it up when shopping for clothes and
accessories, buying top end brands like Louis Vuitton handbags, slinging
these over a bargain priced jacket or shirt bought at M&S, Zara or H&M,
whilst wearing jeans from the Gap and shoes from Chanel.

The trend can be compared to the evolution in sportswear brands where

rappers mix champagne and cross trainers and top-name designers like Stella
McCartney create sports performance ranges for brands like Adidas.

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By the end of the day, the Karl Lagerfeld range for H&M sold out at its seven
Manhattan stores and throughout its flagship stores in cities like London,
Milan, Stockholm, Munich and even in Chanel's home base of Paris. The
launch of this collection was the confirmation of the trend of ever closer
collaboration between haute couture and main street.

The Lagerfeld/H&M partnership was based on the mass market being

attracted to the revived luxury sector, to the extent of saving money for the
occasional expensive item. Upmarket customers in turn, get their thrills in
discovering fashionable bargains at inexpensive stores.

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TMS: The democratization of fashion: How H&M and Zara have reshaped European fashion

McCartney create sports performance ranges for brands like Adidas.

Other similar collaborations have seen a Fred Perry shirt developed by
Comme de Garcons, Puma partnering with designer Philippe Starck, and a
Reebok dress designed by Dian Von Furstenberg.
The supermarket chains are also making inroads in the area of "value led"
fashion. In the UK, ASDA have become famous from their cut-price George
clothing brand created back in 1990.

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more South Africans are set to
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Even though their stores are pretty stark and lack funky imagery, their jeans
at four Pounds along with cheap and cheery items that are wearable, had a
mass appeal.
Walmart has since taken the George brand global by 2005 was promising
stand alone stores.

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Tesco also joined the fray, with its own brands of Cherokee and Flo and
Florence, which have since come closer to matching the edginess of clothes
sold at H&M.

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Aside from the supermarkets, "value" chains like Matalan, TK Maxx and
Primark are taking share away from the mid-market retailers. Matalan has
been selling discounted high street brands from over twenty years.
Customers need to sign up as members before they can shop at any of its
170 stores. With a loyal customer base assured, Matalan cuts costs by placing
stores outside of towns, buying in bulk and cutting down the frills instore.

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TK Maxx stocks genuine designer brands at low prices. It's part of the US
group TJX, which was established in 1976 and is seen as the world's biggest
"off-price" retailer.

The visual presentation in the

store has always been the major
customer motivation accounting
for the a majority of retail
purchases.

These chains all managed to take sizable market share away from high street
stalwart Marks & Spencer. M&S lost its way in terms of carrying appealing
clothing at competitive prices, ending up with an aging clientele in need of
rejuvenation. It was only after the introduction of current MD Stuart Rose,
that the chain has slowly begun reversing this trend.

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For fashion-led chains, the rise of bargain-basement brands represented an

opportunity. If they continued developing exciting shopping environments,
creative advertising and cutting-edge design, they could retain customers
and justify their prices. "Masstige" became their not-so-secret weapon.
Many of the previously dull retailers - Target in the US, Oasis and New Look,
have radically addressed their creativity with the assistance of young, up and
coming designers.
When covering the democratization of fashion, you can't escape the two
giants of high-street fashion.
1) Swedish Style:
H&M has more than 1000 stores across 20 countries, selling over 600 million
items per annum. Overseas sales constitute 90% of the company's turnover,
with Germany accounting for 29%. The company's success is based on three

Manufacturers
improve sales
with lead
generation

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Retail Marketing and Sales

Companies in traditionally
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TMS: The democratization of fashion: How H&M and Zara have reshaped European fashion

with Germany accounting for 29%. The company's success is based on three
factors: inventive design, the best quality at the best price and efficient
logistics.
The company's basic products have long lead times, from 6 to 8 months. It
aims to have high-fashion items instore 2 to 3 weeks after it's been designed.
The company's 21 production offices with more than 700 workers, are
responsible for communicating with around 750 factories.

H&M's first store in Shanghai

H&M doesn't own any factories, but it has a detailed code of conduct that
suppliers must sign, as well as team of quality controllers who call upon these
suppliers unannounced, to enforce the code.
The company employs no fewer than 3200 people to run its logistics.
Completed clothing items pass through its transit warehouse in Hamburg,
before being sent to distribution centres per country.

Only transport is contracted out, otherwise H&M controls each step of the
process, acting as importer, wholesaler and retailer. Computerised stock
management ensures that new items are delivered to stores, daily.

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Their logistics strategy is different to the other high-street titan Zara's

centralized distribution model. But it isn't the only difference between these
two fierce European rivals.
Cooler than ABBA or Electrolux !
One of them is marketing strategy. Unlike Zara, H&M has always gladly
embraced advertising. It's simple but effective posters showing models in
casual poses against plain white backgrounds, have become part of the
European retail landscape. Until recently, its Christmas lingerie campaign,
featuring provocative shots of the hottest models, was a festive tradition
attracting looks of appreciation, complaints and free PR coverage, in equal
measure.
Along with focusing on the qualitative aspects of its clothes and the
production process, H&M have worked on the appearance of their stores.
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TMS: The democratization of fashion: How H&M and Zara have reshaped European fashion

4/12/15 1:18 PM

production process, H&M have worked on the appearance of their stores.

They've radically redecorated and rebuilt their stores, based around the fact
that their customers love to shop and consider it entertainment.
The company has launched an online loyalty programme, whereby upon
signing up members receive the H&M magazine (a cross between a catalogue
and traditional glossy) along with video podcasts of new range launches,
email bulletins, special offers and discounts.

In 2007 H&M collaborated with Madonna

Therefore reinforcing the brand's core values of being fashionable, exciting
and accessible. H&M is doing for clothing what IKEA did for furniture.
2) Viva Espanya!
Amancio Ortega, founder of clothing success story Inditex, opened his first
Zara store in La Coruna, Spain in 1975. This, after failing to secure permission
to use the preferred the name of Zorba (as in the film Zorba the Greek) for
his first entry into clothing retailing.
The chain grew steadily throughout the 80's. It opened its first store outside
of Spain in Oporto, Portugal in 1988. Paris and New York followed, with
London only getting a store in 1998. Over the years Zara become the
cornerstone of billionaire Ortega's Inditex empire.
Zara accounts for 66.4% of its income, with Bershka (young mainstream
fashion), Pull & Bear (urban streetwear and accessories), Oysho (lingerie),
Massimo Dutti (classic fashion), Kiddy's Class (children's clothing) and
Stradivarius (fashion and accessories)

Zara Home which launched in 2003, aims to do for interiors what Zara did
for fashion. In 1997 the Inditex Group had sales of over 9,4 billion Euros
from a total of 3 691 stores in 68 countries serviced by close to 80 000
employees. Delivering a net profit of 1,25 billion Euros.
International sales make up 62.5% of its business. Its key market is Europe
which accounts for 80% of its business.
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TMS: The democratization of fashion: How H&M and Zara have reshaped European fashion

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which accounts for 80% of its business.

It has 350 designers with 250 of them dedicated to Zara.
The secret to Zara's attraction is that, although shopping there is cheap, it
doesn't feel cheap. The stores are large, smart, modern, swanky and centrally
located. The clothes are given room to breathe and unless there's a sale on, so
are the customers.
Zara is famous for developing cut price interpretations of catwalk styles and
getting them into its stores with breathtaking speed. A designer dress
photographed on a model during fashion week won't arrive in department
stores for months, but it can easily appear in a Zara store within three weeks.
The company prides itself on never having used any form of advertising. The
brand is rather promoted via swanky store locations and smart facades,
interiors and window displays. The stores are therefore Inditex and Zara's
main communication tool.

One of its stores in Asia

Everything is streamlined for maximum efficiency. Purchasing, design,
samples, pattern-making and visual merchandising are all done in house.
Over 50% of the clothes, especially high-fashion items, are made in Zara's own
Spanish factories, close to head office.
A huge 480,000 square metre warehouse is able of handling 60,000 items per
hour, processing orders twice a week to all parts of the world.
In 2007 its seven Spanish distribution centres distributed 627 million
garments globally

Zara doing what it does best, Fast Fashion

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TMS: The democratization of fashion: How H&M and Zara have reshaped European fashion

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Zara doing what it does best, Fast Fashion

Each order contains the latest items and those requested by the store
managers. The store managers play a key role by monitoring the tastes and
demands of their customers, and tailoring their stock accordingly. That's why
no two stores stock the exact same products.
Zara's product managers are in constant contact with the stores, seeking
customer feedback and monitoring the popularity of items. They know
within a day or two whether or not a product is successful.
Zara specializes in and clearly delivers fast fashion mucho fast, pushing out
11,000 different fashion items annually.
Zara takes the Gap!
Earlier this year, the company overtook US based Gap, to become the world's
largest clothing maker. Its parent company Inditex recorded a 9% increase in
sales to 2,218 billion Euros.
Today it has nearly 3700 stores in 70 countries across the world.
Sales at Gap have been in decline since 2004. Last year the company recruited
a new CEO Glenn Murphy, to turn it around. Just as there were signs of
improvement, the US economic meltdown led to a slow down in consumer
spending.
The Inditex Group has always prided itself on being socially responsible and
this is reflected in the Massimo Dutti store it opened in Ourense in 2007,
which is totally managed and staffed by disabled people.
For more information please visit the agency's website at www.salient.co.za

Source: Salient Strategic Advertising and Design

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