Professional Documents
Culture Documents
net/publication/260597428
CITATIONS READS
9 1,534
1 author:
Bruno Završnik
University of Maribor
47 PUBLICATIONS 102 CITATIONS
SEE PROFILE
Some of the authors of this publication are also working on these related projects:
All content following this page was uploaded by Bruno Završnik on 15 November 2016.
Key words: international fashion retailer, fashion, retailing, entry marketing strategy,
fashion marketing, retail brand.
FIBRES & TEXTILES in Eastern Europe October / December 2007, Vol. 15, No. 4 (63) 13
eign opportunities. Often these retailers distinctive products in unique retail January 31, 2006, the group owned 2,692
may operate in specialised product areas environments. There has been little in- stores in 62 countries including Europe,
or possess especially desirable brands. vestigation into the effect of corporate America, the Asia-Pacific region, the
structure, company culture and manage- Middle East and North Africa [20].
Luxury retailers pro-actively expand ment leadership with regard to fashion
abroad to derive benefit from exclusive internationalisation [18]. This increased activity resulted in a
brands or innovative products and spec- 5% sale increase in comparable stores
ify “the brand” as being a key motivator The issue of foreign market withdrawal (stores that have been open for more
for fashion internationalisation, which is and divestment has not been adequately than two years) and a 22% selling area
attractive to retailers operating in niche covered. Foreign markets are often tol- increase. Thus its gross returns rose by
markets such as high-end accessories or erated by international retailers while 56.2% as compared with the previous
children’s clothing [15]. domestic markets are buoyant, but tend year’s 55.4%. With an overall selling
to withdraw from foreign markets when area increase of more than 250,000 m in
RI is a planned and incremental proc- facing difficult domestic circumstances. 2005 and a total of 448 new stores (the
ess controlled by a retailer’s corporate International fashion retailer divestment highest figure in the company’s history),
ambition and experience. However, the is often prompted by a breakdown in each of Inditex’s eight formats have in-
diversity of the industry has allowed franchise relationships or domestic diff- creased their sales by over 15%, with a
retailers to deviate from the incremental iculties, implying that domestic success particularly high increase in the group’s
path depending on the strength of their sometimes obscures foreign market diff- youngest formats. Thus, Stradivarius and
retail offer, marketing resources and iculties [19]. Oysho saw sales increases of over 40%,
product range. Dawson [16] indicated and Zara Home — which has been in the
the five market entry methods available market for less than three years — went
to foreign retailers: internal expansion, n Comparative analysis up by over 90%. In spite of having in-
merger or takeover, franchise agreement, of international fashion creased its selling area by 82% in 2005,
joint venture or non-controlling interest. retailers Zara Home managed to raise its return on
Each of these has advantages and disad- capital employed to 3%. The global aver-
There exists a great connection between
vantages, is chosen by a retailer on the age return for other formats was 41%. At
trade, economic growth and economic
basis of its corporate confidence, product the end of a year of serious expansion
development. In the terms of trade, there
portfolio and brand image and has conse- focused on the main European markets,
quent set up cost and operational control are ongoing, large and intensive changes
in developed market conditions. The its net margin rose by 40 basis points, at
implications. 11.9% of sales, continuing the previous
most important ones are globalization
and transnationalisation of trade. Big year’s rising trend.
Some retailers pursue high-risk strate-
gies despite little internationalisation multinational companies have already
determined that doing business only in Of the 448 stores opened during the year,
experience, suggesting the use of factors 308 are in international markets. These
such as a strong brand influence market domestic markets means the loss of cer-
tain advantages and that they must spread represent 69% of all openings for the
entry method [17].Fashion retailers may year and are mostly in 44 countries. Of
internationalise in a number of ways, as their activities to other new markets.
these, Inditex stores were opened for the
indicated by the differences between first time in Monaco, Costa Rica, Indo-
the strategies followed by two succ- In the retail trade of fashion distributors,
we are now facing strong competition nesia, the Philippines and Thailand. As a
essful international fashion retailers. result of this expansion, sales in interna-
Some authors have identified a global from western multinationals, which
have already pushed their way into the tional stores rose to 56.9% of the total, as
standardisation approach to internation- compared to the previous year’s 54.5%.
alisation as being critical to the success Slovenian market and are now trying
to win the markets of southeast Europe. All chains increased their sales percent-
of fashion retailers. Success has been
From this perspective, the reasons for age outside Spain, led by Zara’s 68.9%.
attributed to the presentation of alluring
brand image through standardised adver- the internationalisation of retail trade
amongst fashion distributors is obvious. Most of the new stores were in European
tising imagery, retail format and similar
markets, which accounted for up to 82%
products using international advertising
Table 1 presents a comparative analysis of net openings (366 new stores). As a
campaigns.
of three international fashion retailers, result, the group passed the 2,000-store
the Inditex Group, H&M, and Mercator mark in Europe, with 2,309 European
International retailers require adequate
Fashion House. stores as of January 31, 2006.
resources and competitive advantages
and must possess some “differential
The European countries (apart from
firm advantages”, including a dedica- n Inditex Group Spain) with the largest number of open-
tion to developing an attractive brand,
in order to be internationally successful. Inditex is a fashion distribution group ings were Portugal (54), Italy (37, dou-
These advantages could include product, that owns Zara, Kiddy’s Class, Pull and bling the number of stores ), Greece (27),
lifestyle, image and niche differentials, Bear, Massimo Dutti, Bershka, Stradi- France (21), the UK (15), Ireland (11),
illustrated by internationally appealing varius, Oysho and Zara Home. Its con- Germany (10) and Russia (10).
brands and products or innovative retail solidated turnover for 2005 was €6,741
formats facilitating international succ- million, 21% more than in 2004. Its net
ess. A strong brand has been identified profit was €803 million, a 26% increase,
n Hennes & Mauritz
as a factor assisting the international which established it as one of the world’s Hennes & Mauritz (operating as H&M),
expansion of fashion retailers offering largest companies in its sector. As of is a Swedish clothing company, known
14 FIBRES & TEXTILES in Eastern Europe October / December 2007, Vol. 15, No. 4 (63)
for its inexpensive and fashionable cloth- 2. Buying in large volumes. turnover has decreased gradually, while
ing [21]. 3. Having a broad, in-depth knowledge the other markets have been growing and
of design, fashion and textiles. new countries have been added.
H&M’s business concept is to offer fash- 4. Buying the right products from the
ion and quality at the best price. H&M’s right market. H&M does not own any stores. It leases
growth target is to increase the number 5. Being cost-conscious at every stage. store premises. In this way it does not tie
of stores by 10–15% per year but also 6. Having efficient distribution. up capital and can freely pursue its busi-
to increase sales at existing stores. The ness concept.
availability of attractive business loca- It has been a very eventful year during
tions is the major deciding factor in its which H&M attracted a great deal of att- Before establishing stores in a new mar-
rate of expansion. The goal is to grow at ention from media around the world. ket, H&M conducts a thorough analysis
a controlled pace and maintain profitabil- of such factors as demographics, employ-
ity. In 2005, 145 stores were opened and The highlight of the spring was H&M’s ment, purchasing power and purchasing
20 were closed, increasing the net store big fashion show in New York, where the behaviour.
count by almost 12%. world’s fashion elite gathered in Central
Park to get a glimpse of H&M’s autumn
H&M is an expansive and financially collections. n Mercator – Fashion House
strong company. The strategy is to grow
whilst maintaining good profitability and H&M is continuing to grow. Over the past Mercator is one of the largest and most
control. In the past five years H&M has five years, it has increased the number of successful retail chains in South Eastern
increased turnover by 100% while the stores by almost 75%, increased turnover Europe. It is the leading retail chain in
number of stores has increased by 75% by 100% and increased net profit after tax Slovenia and is gaining both reputation
and earnings per share by 262%. This ex- by 262%. At the end of the financial year, and market share in Croatia, Bosnia
pansion has been entirely self-financed. it had almost 1,200 stores in 22 countries and Herzegovina, Serbia and Montene-
in Europe and North America and more gro. In 2005, Mercator also entered
In order to offer the latest fashions, than 50,000 co-workers around the the Macedonian market by establish-
H&M has its own design and buying world. Its primary expansion markets ing a company and purchasing landed
department that creates collections. The are Germany, the United States, the U.K., property. As markets of South Eastern
products are of good quality - checks are Poland, Spain, France, Italy and Canada. Europe are characterized by fast growth,
carried out frequently. In Germany, H&M’s biggest market, the company is focused on constructing
23 new stores had opened to make a larger shopping centres in capitals and
They achieve the best price by: total of 288 at the end of the financial regional centres with the most potential
1. Few middlemen. year. Germany’s portion of the Group’s with regard to population and purchasing
FIBRES & TEXTILES in Eastern Europe October / December 2007, Vol. 15, No. 4 (63) 15
power. Ultimately, Mercator wishes to Gap), which have successfully entered fashion retailers have to take into care-
gain a significant market share in every the Slovenian market. The main objec- ful consideration the assortment, brand
market as soon as possible, thus becom- tives of the multinationals are to achieve range and the customer's needs and ex-
ing one of the five leading retailers in the economy of scale, globalisation of trade, pectations. The fashion industry is quite
market program [22]. presence in the most important world specific in terms of image and fashion,
markets, increased brand recognition the customer will only follow the brand
The aim of Mercator’s textile chain and to satisfy the consumer with lowest if it will satisfy his or her needs and
Fashion House is also to introduce possible costs (regarding articles whose wishes. This can be turned into a com-
the format of Fashion Avenue onto the production is located in the less-devel- petitive advantage for the fashion retailer
Slovenian market. Its offer includes re- oped countries). and increase its chances of strengthen its
nowned trademark clothing at medium position in a foreign market.
and high price ranges. These formats will The fact that Slovenia is a very small
be developed in larger towns in all mar- market is suggestive of one of the ob- The most important advantage of a retail-
kets and larger Mercator Centres. Fashion jectives of the Mercator- Fashion House ing company over a production company
House also wishes to present a new sales company - to internationalise its activi- is the capability for quick response to
format to the market – a shop for men ties in the new markets. This objective of changing market conditions. A retailing
with a full range of of men's clothing, the company follows the vision and strat- company must be capable of adapting its
footwear and fashion accessories. It has egy of its owner, Mercator, which has al- assortment in the shortest time possible.
been established that this area actually ready selected new markets to enter and This is shown in the case of Zara, with its
represents a market niche. In the more has also already entered into them. So the approach of complementing the assort-
price-sensitive environment of market key problem of Mercator-Fashion House ments in its stores twice a week.
segments with lower purchasing power is to shape distribution for the most opti-
in general, Modiana outlet shops will be mal entry mode into selected markets of Based on analysis of two models of in-
developed. At these outlets, the clothing South Eastern Europe. ternationalisation - H&M and Zara - this
of past seasons will be sold at favourable research concludes that the Slovene retail
prices. Mercator - Fashion House’s vi- fashion distributing company Mercator-
sion is to remain the leading trading com- n Conclusion Fashion House will have to utilize its ad-
pany of textile products in Slovenia and vantages in the markets of South Eastern
The most significant factor when plann-
to become an important textile merchant Europe before the entrance of other com-
ing to enter into international markets
in the markets where Mercator has been petitors. It must also develop a clear and
is the selection of an appropriate entry
widening its retail network. Mercator well-known image in those markets. The
mode. This reduces the level of risk and
also hopes to become a recognized trader company should also consider cultivat-
affects the company’s presence in interna-
in a segment of drugstores and perfum- ing connections with acknowledged local
tional trade. This analysis has established
eries; therefore it plans to take over the retailers in order to establish its presence
that fashion retailers most frequently
chain ‘Beautique’ and bring it under in these markets (as also displayed in the
choose between direct investments or
Fashion House’s umbrella in 2006. case of Zara). Doing so will enable the
franchising. The latter means establish-
ing a relationship with an acknowledged company to extend more quickly into
The selection of foreign markets, in the
local partner in order to reduce the degree these markets and encourage its future
case of Mercator- Fashion House, is
of risk when entering into a new market. extension to neighbouring countries.
closely related to the future development
of Mercator. The main goal of Mercator It can also provide faster extension in the
is to remain the biggest and the best market and strengthening of brand in the References
retailer in Slovenia and to become the eyes of the consumer. The internationali-
sation of business activities also entails 1. Azuma N., Fernie J.; Fashion in the glo-
leading player in Croatia, Bosnia and
finding the right answer to the question: balized world and the role of virtual ne-
Herzegovina, Serbia and Montenegro.
tworks in intrinsic fashion design, Journal
The company will achieve this goal to where do we spread future business ac-
of Fashion Marketing and Management,
through both strategic alliances and tivities? Or, where do we look for future
Vol. 7. No. 4 (2003) pp. 413-427.
through direct investment in the devel- business opportunities? 2. Waarts E., van Everdingen Y. M.; Fashion
opment of its own retail network. The retailers rolling out across Europe, Inter-
long-term objectives of the company are In the research we have established that national Journal of Retail & Distribution
also to enter the other markets of South most of the global and multinational Management, Vol. 34 No. 8 (2006)
Eastern Europe - for example, Romania, companies have spread their activities pp. 645-657.
Albania, Macedonia and Bulgaria. throughout the markets where there are 3. Newman A. J., Patel D.; The marketing
But in the forthcoming medium-term advantageous possibilities for growth directions of two fashion retailers, Eu-
plan for the period 2006 to 2010, the and further development. Significant fac- ropean Journal of Marketing, Vol. 38,
tors for entering foreign markets include No. 7 (2004).
focus of the company’ activities will
4. Wigley S. M., Moore C. M.; Product and
be on the markets of Slovenia, Croatia, acquaintance with the political, econom-
brand: Critical success factors in the
Serbia, Montenegro and Bosnia and ic and cultural nuances of each market as
internationalisation of a fashion retailer,
Herzegovina. well as knowledge and understanding of International Journal of Retail & Distribu-
the purchasing habits, desires and expec- tion Management; Vol. 33, No. 7 (2005).
The Mercator - Fashion House entrance tations of those markets’ consumers. 5. Akehurst G., Alexander. N.; Developing a
into the markets of South Eastern Europe framework for the study of the internatio-
is dependent on the globalization of This analysis has established that there nalisation of retailing, in Akehurst, G. and
trade. The retail trade of fashion distribu- are some differences between the in- Alexander, N. (Eds), The Internationali-
tors is dominated by big multinational ternationalisation process of retail and sation of Retailing, Frank Cass, London,
companies (i.e. H&M, Inditex (Zara), production companies. In the first case, 1996, pp. 204-9.
16 FIBRES & TEXTILES in Eastern Europe October / December 2007, Vol. 15, No. 4 (63)
6. Završnik B., Mumel D.; The use of marke-
ting communications in clothing industry
on
7. Završnik B.; Uloga marketinške komuni-
kacije u odjevnoj industriji Slovenije. Tek-
XIPS’ 2007
enian clothes market. Fibres &Textiles in
Eastern Europe, Vol. 14, No. 2 (2006) pp.
8-12.
9. Moore C. M., Fernie J., Burt S.; Brands
without boundaries – The internationa-
lisation of the designer retailer’s brand, 5-7 December 2007, Kraków, Poland
European Journal of Marketing; Vol. 34
No. 8 (2000) pp. 919-937. organized by the University of Bielsko-Biała, Poland
10. Brïdson K., Jody E.; The secret to a and the Catholic University of Leuven, Belgium
fashion advantage is brand orientation.
International Journal of Retail & Distribu-
tion Management. Vol. 32 No. 8 (2004)
pp. 403-411.
11. Treadgold E. J., Mavondo F.; Psychic
distance and the performance of interna-
tional retailers – a suggested theoretical
framework, International Marketing Re-
view, Vol. 17 No. 4/5 (2000) pp. 373-91.
12. Wysokińska Z.; Marketing Strategies
in the Single European Market and the
Global Market of Textile and Clothing Pro-
ducts, Fibres & Textiles in Eastern Europe
Vol. 11, No. 3(42) (2003) pp. 7-10.
13. Malinowska-Olszowy M.; Brand Strategy We take pleasure in inviting you to participate in the Seventh International Conference
in the Clothing and Textile Market. Fibres on the X-ray investigation of polymer structure. The XIPS 2007 conference provides
& Textiles in Eastern Europe, Vol. 13,
No. 1 (2005) pp.8-12. a forum for discussions related to the present state of methods and achievements in
14. C. Moore C., Burt S.; Developing a rese- X-ray structural investigations of polymers and polymer materials, as well as
arch agenda for the internationalisation of supporting discussions on the latest and future trends in this field. The conference
fashion retailing, in Hines, T. and Bruce,
M. (Eds), Fashion Marketing – Contem-
is held under the patronage of the Secretary of State of the Ministry of Science and
porary Issues, Butterworth-Heinemann, Higher Education, Professor Stefan Jurga.
Oxford, 2001 pp. 48-65.
15. Portolese Dias L.; Generational buy- Professor Jarosław Janicki Ph.D., D.Sc. – Chairman
ing motivations for fashion, Journal of Professor Stanisław Rabiej Ph.D., D.Sc. – Secretary
Fashion Marketing and Management,
Vol.7 No. 1; 2003.
16. Dawson J.; The internationalisation of
The main conference subject areas:
retailing operations, Journal of Marke-
ting Management, Vol. 10, No. 4 (1994) n Small-angle scattering technique in the studies of polymer structure
pp. 267-82.
17. Guy C.; Internationalisation of large- n Studies of soft condensed and porous materials by means of the SAXS
format retailers and leisure providers in method
western Europe: planning and property n Development of methods and techniques in the X-ray studies of
impacts, International Journal of Retail &
Distribution Management, Vol. 29, No. 10,
polymers
(2001) pp. 452-461. n Software and data bases for polymer structure investigations
18. M. Moore and A. Fairhurst., Marketing ca- n Analysis of SAXS data and modelling of material structure
pabilities and firm performance in fashion
n Morphology and thermal behaviour of polymer materials
retailing, Journal of Fashion Marketing
and Management; Vol. 7 Issue 4; 2003.
19. C. Moore C., Fernie J.; Retailing within an
international context, in Bruce, M., Moore,
C. and Birtwistle, G. (Eds), International For more information please contact:
Retail Marketing; A Case Study Appro-
ach, Elsevier Butterworth Heinemann, University of Bielsko–Biała,
Oxford, 2004 pp. 30-37. Institute of Textile Engineering and Polymer Materials
20. http://www.inditex.com/en Willowa 2, 43-309 Bielsko–Biała, Poland
21. http://www.hm.com/ tel.(+48 33) 82 79 114, fax.(+48 33) 82 79 100
22. http://www.mercator.si/podjetje/company/ Jarosław Janicki – Chairman, e–mail: jjanicki@ath.bielsko.pl
business_data_/activities Stanisław Rabiej – Secretary , e-mail: stanislaw.rabiej@ath.bielsko.pl
www.xips2007.ath.bielsko.pl e-mail: xips2007@ath.bielsko.pl
FIBRES & TEXTILES in Eastern Europe October / December 2007, Vol. 15, No. 4 (63) 17