In an “insight report” on fast fashion from L2, researchers at the data firm found that retailers such as Zara and H&M have created a business model that intertwines online searches and social media while creating an operating platform that is “fast, flexible and lean.”
These retailers keep inventory planning to a minimum – making sure that most of it is based on demand, which is becoming critically important in the current “see now, buy now” market, L2 said.
Some of the key findings include that fast-fashion brands’ “‘just-in-time production’ is a fluidfeedback loop involving online and in-store purchaseanalytics, social media follower engagement, andtrend-based search-engine analysis,” L2 noted.
“Omnichannel fulfillment efforts vary by region, as fast-fashion brands invest more in click-and-collect in the U.K. while being more aggressive with free shipping optionsin the U.S.,” the researchers said, adding that byconsistently “updating their sites, and acting on currenttrends, fast-fashion brands capture significant organic-search real estate.”
Related Articles
Some lessons for other apparel retailers include keeping inventory low. “Fast-fashion brands pilot outfits andconstantly restock inventory based on demand, allowingthem to avoid eating losses or discounting surplus items.”
By way of a case study, L2 said that Zara’s “process to get a product from design to the racktakes a maximum of only three weeks, a fraction of howlong it takes most brands (between six and 12 months).”
And with inventory, L2 noted thatZara avoids “eating losses and discounting surplus itemsby planning just 15 percent of its inventory in advance,informing subsequent inventory in response to consumerdemand.”
L2 said that fast-fashion retailers useonline and in-store “purchase dataanalytics to gauge interest in specific items and collectionsthat helps inform inventory cycles” – which they restock about twice aweek online and in store “and saving shelf space for theitems that truly sell.”
Some of the other insights from the report include fast-fashion best practices such as setting in place “flexible fulfillment optionsand leveraging direct-to-consumer capabilities on socialplatforms,” which allows fast-fashion brands to continue to capitalize on the see-now-buy-now market. Simultaneously, fast-fashion retailers closely study the shopping habits of their customers. “Before investing in sophisticated sitefeatures to replicate the in-store experience, brands shouldtrack how customers shop in order to better customizethe online experience,” L2 suggested.
The researchers observedthat fast-fashion retailers were late to embrace e-commerce. “Zara and H&Mlaunched e-commerce in 2010 across the U.K. and Europe, expanding to the U.S. in 2011and 2013, respectively. Each brand experienced spikes in retail sales growth the year afterlaunching e-commerce in the U.S., with Uniqlo, which launched its U.S. e-commerce in 2012,achieving 23 percent growth in 2013.”
L2 said in the report that the combination of short inventory cycles and online selling “initially raised logistical concerns regarding the coordination of thousands of stores,warehouses and factories.” But the high inventory turnover worked to their advantage, L2 said, adding that these brands have come of age in the see-now-buy-now environment, which is “supported bylower price points and agile, flexible supply chains.”
