Posts Tagged gap
Zara Thrives by Breaking All the Rules
Zara is doing really well!
How the Spanish apparel chain gets new designs into stores in two weeks while keeping costs low
ARTEIXO, SPAIN Many U.S. apparel retailers are choking on slow-moving inventories as consumers hold back on spending. But Spain’s Inditex, whose Zara chain pioneered cheap chic, is zipping ahead. The $13.8 billion company, which is closing in on Gap (GPS) for the title of world’s biggest clothing retailer, has nearly quadrupled sales, profits, and locations since 2000. This year, Inditex plans to expand by up to 640 stores. “They will weather the storms better than most of their rivals,” says Michael Lewis, a supply-management professor at University of Bath’s School of Management.
Inditex’s secret? Besides selling relatively cheap clothes, which fit the times, the company maintains an iron grip on every link in its supply chain. That enables it to move designs from sketch pad to store rack in as little as two weeks. This “fast fashion” way of doing things has become a model for other apparel chains, such as Los Angeles-based Forever 21, Spain’s Mango, and Britain’s Topshop, which is set to open in New York next year.
Inditex has spent more than three decades perfecting its strategy. Along the way it has broken almost every rule in retailing. At most clothing companies, the supply chain starts with designers, who plan collections as much as a year in advance. At Inditex, Zara store managers monitor what’s selling daily—and with up to 70% of their salaries coming from commission, there’s a lot of incentive to get it right. They track everything from current sales trends to merchandise customers want but can’t find in stores, then shoot orders to Inditex’s 300 designers, who fashion what’s needed instantly.
HIGHER PAY AT THE PLANT
Typically, apparel chains outsource the bulk of production to low-cost countries in Asia. Inditex produces half of its merchandise in factories in Spain, Portugal, and Morocco, keeping the manufacturing of the most fashionable items in-house while buying basics such as T-shirts from shops in Eastern Europe, Africa, and Asia. Wages are higher at Inditex—its factory workers in Spain make an average of $1,650 a month, vs. $206 in China’s Guandong Province. But the company saves time and money on shipping. Also, Inditex’s plants use just-in-time systems developed in cooperation with logistics experts from Toyota Motor (TM), which gives the company a level of control that would be impossible if it were entirely dependent on outsiders.
Add comment October 11, 2008
Yet Another British Invasion
so be warned 
Things may be tough enough for a lot of American retail chains, but maybe that’s the best time for foreign invaders to strike. British retail sensation Topshop is invading our shores as we speak, having already launched a U.S. e-commerce website as it plans for its first U.S. store (in New York), which is set to debut in the next couple months.
There has been a lot of buzz about Topshop — owned by privately held Arcadia Group — prior to its official U.S. arrival. It’s a player in what’s known as the “fast fashion” category, which also includes Spain’s Zara, Sweden’s H&M (OTC BB: HMRZF.PK), as well as Forever 21 and Charlotte Russe (Nasdaq: CHIC).
These companies come out with high-fashion pieces with lightning speed, at low or medium price points. Shoppers often snap up the limited-quantity goods, and the quick turnover of items encourages them to stop in frequently. These retailers are adept at nimble turnaround and some choose to manufacture apparel close to home to save time to market. Talk about a wake-up call for less nimble fashion retailers across the board.
Topshop has a Kate Moss line to speak for it, too; the supermodel is a business partner with Topshop head Sir Philip Green. (Similarly, H&M has had collections linked to celebrities like Madonna and Stella McCartney.)
This wouldn’t be the first time a “British invasion” could be perceived as a competitive challenge for American retailers. Britain’s Tesco’s small-scale encroachment onto U.S. soil has been viewed as possibly significant for retailers as different from one another as Wal-Mart and Whole Foods Market (Nasdaq: WFMI); both have experimented with small, nimble stores, possibly at least partly in response to Tesco’s entry.
A single U.S. store for Topshop — albeit in a U.S. fashion mecca — may not seem like a big deal in the retail landscape, but I think the website is, since many fashion-minded American women have probably been waiting eagerly for Topshop. This could prove a competitive challenge not only to similar retailers, but also to hip retailers like Urban Outfitters (Nasdaq: URBN), American Apparel (NYSE: APP), and Target (NYSE: TGT). (On the other end of the spectrum, maybe the landscape looks even more depressing for perennial strugglers like Gap (NYSE: GPS)).
Add comment September 12, 2008
Most Powerful U.S. Fashion Magazine Editors
have you ever asked yourself who they are?Forbes has the answer
Anna Wintour, for two decades the editrix behind Vogue, is known for helping fledgling talent become fashion stars.
By nominating them for scholarships like the annual Council of Fashion Designers of America/Vogue Fashion Fund, Wintour has helped designers fund runway shows and grow their businesses. Phillip Lim, Scott Sternberg of Band of Outsiders and Gap’s (nyse: GPS – news – people ) Patrick Robinson have credited Wintour with boosting their careers.
Still, this clout doesn’t afford Wintour the top spot on our list of America’s influential fashion editors. That title goes to Cindi Leive (pictured above), editor-in-chief of Glamour magazine. Wintour ties for second with Elle’s Roberta (Robbie) Myers. Cosmopolitan’s Kate White is in fourth, and Charla Lawhon, who edits In Style, ranks fifth.
In Depth: Most Powerful U.S. Fashion Magazine Editors
To compile our list of the America’s most influential fashion editors, we considered every editor of every monthly U.S.-based magazine that includes a significant amount of fashion editorial, including teen magazines, and we used nine data points to rank them.
Add comment September 5, 2008
Earnings Preview: Gap
some economic news from Gap:
Apparel maker Gap Inc. reports earnings for its fiscal second quarter after the markets close on Thursday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: San Francisco-based Gap Inc. (nyse: GPS – news – people ) continues to struggle with lackluster same-store sales, as a turnaround plan aimed at reviving sales growth has stalled amid a difficult retail environment. The Old Navy chain in particular has been a weak spot.
The company is attempting to weather the difficult retail environment by scaling back its store expansion and shrinking the size of many existing outlets. Gap’s fashion experts are working on improving fashion offerings to lure consumers back to its stores.
Last week, the fashion chain announced a new fall campaign featuring such style setters as actress Liv Tyler that marks the full collection created by designer Patrick Robinson, formerly of Paco Rabanne. Robinson was hired in May 2007 to overhaul its fashions.
Add comment August 19, 2008
High fashion on the high street: a step too far
More news from H&M and Comme des Garçons
Remember when collaborations between fashion designers and high-street stores seemed like a win-win wheeze? Clothes touched by the holy sewing needles of Karl Lagerfeld and Roland Mouret, available at H&M- and Gap-sized prices? But the latest partnership might put this theory to the test, when, this November, Comme des Garçons’ collection for H&M arrives in stores.
To the label’s fans, Comme des Garçons strikes a blow against conventional aesthetics, and creates clothes for those sufficiently cerebral to see beyond surface beauty, as demonstrated in one of their characteristic catwalk shows. To everyone else, it is the embodiment of the emperor’s new clothes, convincing people to buy oversized children’s dresses and wonky cropped trousers for three- and four-figure prices. Moreover, there is something grating in the suggestion that the only way an intelligent person can enjoy fashion is if they dress like Grayson Perry crossed with Charlie Chaplin.
Quite which side of the fence H&M customers – fonder of mini rah-rah skirts than awkward tweed jackets – will fall on has yet to be seen. But, judging from the images of the clothes that have been leaked on to some US websites, the collection, with its dropped-crotch trousers and ruffled polka-dot shirts, will be more Comme than H&M.
The purpose of high street/designer collaborations is not just to provide any designer on the cheap, but rather a designer who that particular store’s customer cares about on the cheap. This is why Stella McCartney’s reliably sexy and sporty collection for H&M in 2005 was such a hit, and Dutch experimentalists Viktor & Rolf’s for the same store in 2006 was not. And while Comme’s granddad styles might look like the apogee of chic when done with the highest quality of fabrics and sold in the snootiest of department stores, the budget versions, one suspects, will have a different look.
Add comment August 19, 2008
Zara overtakes Gap to become world’s largest clothing retailer
Impressive numbers and unknown information for me:
(Zara in Talinn by caninhas,under cc-license)
Spanish fashion chain Zara has expanded so rapidly in recent months that it has overtaken its main US rival Gap to become the world’s largest clothing retailer.
Beloved by proponents of fast-fashion, Zara has spread its reach across the globe at a time when Gap has suffered from plummeting consumer spending in the US.
Inditex, Zara’s parent company, recorded a 9% increase in sales to €2.218bn (£1.7bn) in the first quarter of its financial year. It also benefited from the strength of the euro to edge slightly ahead of Gap which saw its revenues fall by 10% and recorded sales of €2.169bn in the same period.
The difference may be tiny, but Inditex claims it is significant: for the first time the Spanish group has inched past its American rival.
The group, whose high street store Zara has led the charge, hopes to consolidate its lead over rivals later in the year as it continues to expand overseas in spite of the economic downturn.
It is three years since Inditex overtook H&M, to become the biggest clothing retailer in Europe. But the rapid growth is nothing new to a company which first started in 1963 in the bedroom of chairman Amancio Ortega’s home in Galicia, northwest Spain, making bathrobes.
The first Zara store was opened in 1975, in A Coruña in Galicia. The 1980s saw rapid expansion across Spain, followed by the opening in 1988 of the first Zara store outside Spain, in Porto, Portugal.
Other shops followed swiftly in New York in 1989, Paris in 1990. Now the group has nearly 3,900 stores in 70 countries around the world.
Inditex has managed to get so far, so fast largely through the use of innovative management and logistics techniques, which have now become the subject of studies in business schools around the world.
In simple terms, it follows the same ‘oil stain’ pattern when moving into a new market. This involves opening one ‘insignia’ store aimed at building up its name in a new location, before setting up smaller shops of different brands to reach a certain density of outlets that allows it to create economies of scale and boost profit margins.
For a company which spends very little on advertising, its shops have always been its principal marketing tool, so many are purpose-built to look like fashion boutiques.
The key to Inditex’s brand diversification lies in the group’s vertical integration. Almost all the phases of developing and selling a new product are carried out in house — from design and production to logistics and sales.
1 comment August 11, 2008
