Fast Fashion and Supply Chain Management

This assignment delves into the complexities of managing supply chains within the context of the fast fashion industry. It examines how rapidly changing trends and consumer demand influence supply chain decisions. The document highlights the need for strategic approaches to address these challenges, including internal environment analysis and Porter's Five Forces framework. Additionally, it references various academic publications and online sources that provide insights into the sustainability, technology, and marketing aspects of fast fashion.

Retail theory and
practice

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
a) Key relevant changes in fashion industry of UK clothing market.....................................1
Cyclical Theory.................................................................................................................4
b) Strategies and tactics to respond towards changes.............................................................5
Macro environmental analysis ...............................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
The term retail consists the sale of goods from a single point to the consumer in small
quantities for his end use. In other words, its a transaction of goods between the seller and the
end user in small quantities to satisfy the needs of the individual and for their direct
consumption. On the other hand, a retailer is the person who sells products and services directly
to customers; the person buys goods in large quantities direct from manufacturers as well as
through a wholesale, and then sells smaller quantities to the consumer for getting maximum
profitability (Twigg, J., 2012). The supply chain process of retail consists of four players:
manufacturers who produce the goods, wholesalers who buy from manufacturers and resell to
retailers, and retailers who buy from wholesalers and then sell to consumers.
The retail industry is vital to the UK economy; in 2016 alone it generated £358billion
worth of retail sales. It is the largest private sector employer with approximately 290,315 bricks
and mortar retail outlets in the UK. In addition, there are different retail shops in UK, such as-
food & Grocery, home-wares, furniture, electricals, health and beauty, clothing, footwear etc.
In this competitive era, the political and economic environment has changed markedly.
Retail industry is known as one of the leading sector of the world; it encompasses the process of
selling products and services to customers by using multiple channels of distribution for earning
profits. In addition, retailers are liable for satisfying the demand of customers through an
effective supply chain. Retailers need to reduce costs and increase efficiency in a challenging
market where consumer spending is being squeezed and costs are rising (Xia and et. al., 2012).
At the same time they need to invest in online, refresh core systems, and develop smarter,
personalised offers in addition to rethinking the role of their stores. ZARA is known as one of the
largest growing retailing fashion industry over the world. The fashion group has its own 2300
stores and its own brands are – Massimo, Pull & Bear, Dutti etc. Apart from this, the present
assignment will describe different trends and challenges in fashion industry and strategies to
overcome with them.
TASK
a) Key relevant changes in fashion industry of UK clothing market
The retail sector of UK involves customers' spending in stores as well as online. In 2016,
the total customer spending was around £388 billion in retail purchasing. Along with this, the
retailing sector is the largest private sector employer with approximately 290,315 bricks and
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mortar retail outlets in the UK. Due to changes in purchasing power of customers, the market of
fashion retail is dismissed. It occurs because now people are spending on leisure activities, i.e.
going and eating out rather than clothing (Twigg, 2012).
ZARA is a Spain based clothing retailer which was founded in 1975 and it deals in
clothing and accessories. The uniqueness of tracking as well as involving customers' preferences
make the firm market leader in apparel industry. The main product lines of the company are –
men, women and children are showcased by its stores as well as online market presence over the
world. In addition, the major competitors of ZARA are – Mango, H&M, Uniqlo, GAP and
Benetton etc. The firm targets those people who have high and medium spending power and
always love to stay in fashion. Zara has approximately 2,266 stores across the globe whereas at
31 January 2017, Zara had 66 stores across the UK.
Zara is one of the world’s most successful fashion retail brands – if not the most
successful one. With its dramatic introduction of the concept of “fast fashion” retail since it was
founded in 1975 in Spain, Zara aspires to create responsible passion for fashion amongst a broad
spectrum of consumers, spread across different cultures and age groups. Zara has recorded a
sharp fall in UK profits despite sales breaking through the £600m barrier for the first time. Zara
opened up the newly refurbished store in Westfield London (White City) after taking over next
door's Banana Republic to create one gigantic Zara shopping space.
Mostly, stores of Zara offers a selection of women’s and men’s clothing for online
purchase directly in-store, along with the rest of the brand’s fashion ranges. Zara UK reported
pre-tax profits of £39.2m in its latest accounts submitted to Companies House, compared to
profits of £58.3m in the previous year.
Challenges in fashion retail industry of UK: -
Supply chain – The apparel sector supply chain encompasses contractors, suppliers,
merchandisers, retailers, logistic players etc. The entire supply chain management process of
Zara requires integration whereas managing logistics needs proper coordination over the
suppliers' network, distribution centres, stores and transportation providers. Traditional supply
chains create isolated plans for inventory, production and distribution which are difficult to
manage.
Consumerism – In today's business environment, customers hold the power of
bargaining; thus, retailing fashion industries are forced to be highly delicate towards consumers’
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needs and wants. There are several online provides products to customers at lower prices, thus,
retailers are also bound to offer similar products and services. It can hinders sales and
profitability of fashion retailing industry.
Brand Sensitivity - Retailers and fashion brands have very long and sensitive supply
chains as if the supply chain fails to deliver, it’s the brand’s name that is impacted. A wide range
of variables put a huge impact on a brand’s quality or name. If a brand is reported for treating
workers unfairly then people may shop elsewhere and criticize the brand on social media and tell
their friends.
Economic trends and complex tax regimes – The growth and success of fashion and
retailing industry is based upon economic trends. Various economic factors, i.e. raising
disposable income, job growth, customers' purchasing power interest rates plays a significant
role clothing retailing industry (Goworek and et. al., 2012). In UK, ZARA is surviving with
several issues, like complex tax structure which must be followed by it. Duality in tax enactment
authorities leads to duplication of taxes are different point of the fashion retail value chain.
Government restrictions on the FDI are leading to an absence of foreign players resulting into
limited exposure to best practices. Even though the British Government is trying to regulate a
uniform value-added tax across states, the system is currently plagued with 136 differential tax
rates for various states leading to increased costs and complexities in establishing an effective
distribution network.
Heterogeneity of the market - UK fosters wide range of geographies, cultures and
regional trends that intrinsic promotes heterogeneity in retailing market of the nation. It creates
complexity in consumer groups in these heterogeneous markets; this can expose fashion trends
of the country.
Lack of infrastructure - Unreliable power supply, poor roads, lack of adequate
warehouses, etc. can hinder the growth of fashion retail industry. Due to these factors, retail
industry have to linked with multiple vendors so as to fulfil their requirements, thereby, raising
costs of products and prices of the products.
Shortage of Skilled manpower – In this competitive era, every business association, i.e.
Zara wants to hire a well skilled and qualitative workforce. In retailing industry management
practices are related with marketing, customer relationship management, supply chain, data
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analytics etc. Due to dynamic nature of environment, there is lot of changes in business activities
which translates shortfall in efficiency of human resources (Bruce and Daly, 2011).
The Brexit effect: - Brexit is having an effect on all retailers, specially in fashion industry
which also serves at international level. However, now “Fashion and retail industry bodies are
working to ensure the UK retains adequate trade agreements with countries inside and outside of
the EU following the result of the EU Referendum vote in favour of Brexit and some leading
retail chiefs have warned prices will rise as a result of the decision.”
Key relevant changes Urban engines - city-based strategies trump country-based strategies: a new class of
rapidly growing wealthy cities in newly influential markets are becoming central to the
evolution of fashion (thomassey, 2014). Generation correlation - opportunities to serve the young and the old better: fashion
companies should consider how to fine-tune and diversify the way they approach both
retired and millennials consumers. The wellness dividend - feeling good is the new looking good: more fashion players can
start profiting from the wellness movement rather than competing with it. Changing the rhythm - disruptions to the fashion cycle: expectations set by the faster
pace of fashion and consumer desire for instant gratification must be addressed to deliver
fashion immediacy.
Theories of Retail
Cyclical Theory
McNair represents this theory through a Wheel of Retailing it signifies that changes took
a wide place in retailing. According to the author, new entrant retailers are often into low cost,
low profit margin, low structure retail business, which offers some unique, real benefit to the
consumers. Cycling theory from innovators to traditional retailers to mature retailer. Constant
evolution of retailers trends in due to course of time. Thus, in certain time period they are able to
establish themselves well, prosper and expand their products with more expensive facilities,
without losing focus on their core values. Although, cycling theory states to provide place to new
entrants as they also can expand their business over there.
Conflict theory -
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The theory states that retailers change in response to competition. Phases include problem
recognition, implementation of solutions and the emergence of a new retail business. In the first
phase, retailers may ignore new competitors and fight to maintain the status quo. When this fails,
the business attempts to imitate or differentiate itself by improving products or services. Those
moving into the third phase create an entirely new business.
b) Strategies and tactics to respond towards changes
In order to respond quickly towards these changes or alterations in retailing industry it is
necessary for retailers, i.e. ZARA to formulate effective and innovative strategies which helps
them to obtain high competitive edge. Such tactics also put a huge impact on decision making
process of the company by improving its working practices and operations. The firm believes in
in-house production, it does not outsource its goods in order to reduce labour cost (Turker and
Altuntas, 2014). Along with this, it is require for business entities to formulate a marketing plan
in order to analyse needs and wants of target and potential customers; for this ZARA can conduct
a proper market research.
On the other hand, there are several tactics which can be used by retailing firms, like-
internal and external environmental analysis and porters' 5 forces model.
SWOT analysis -
STRENGTH
 ZARA has its own 90% stores in 88
countries involving, i.e. Europe, Asia,
US , Middle east etc. and remaining
stores are joint ventures. The firm
boasts in-house production factories in
vicinity of its headquarters. Thus, it
makes effective command over supply
chain management process, i.e.
selection of raw material,
manufacturing, distribution etc.
 ZARA uses various and effective media
channels so as to promote its season's
trends. It is known as fashion imitator
WEAKNESSES
 ZARA does not believe in strong
advertising, as this is the main reason
people of local areas not knows more
about the brand.
 Inditex over dependence on ZARA; it
constitutes around 80% of Inditex
business (8 companies) which means a
failure in ZARA can put the whole
group at a risk.
 ZARA is a imitator not creator as it is
imitates running fashion; its designers
also copied design of fashion week
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because the organisation emphasis on
providing products as per market trends
(Fernie and Sparks, 2014). ZARA has
acquired adroit design strategy as it
quickly designs new styles and get
them into stores in few days.
 The fashion giant was ranked 53 and its
brand value was evaluated at 10.7
billion dollars. The brand equity of
ZARA is higher than its rivals; behind
this the main reason is performance
over the past decades and consistent
improvements in quality. ZARA is always come up with new and
novel designs of products. The firm is
having plethora of local and
international designers who understand
psyche of people who visits ZARA
stores.
rather than producing new one.
 Another major weakness of this
clothing retailing giant is – centralised
distribution system because if there is
any technical issue is occurred in its
distribution system then the whole
process will be collapsed.
OPPORTUNITIES
 ZARA can effectively take cutting edge
from online buying trend and make its
clothes available at E-commerce stores.
It helps in improving sales and
profitability of the organisation.
 The brand is highly popular among
customers; it results growing market
potential. A drive in earning potential
of buyers increases the demand of
products.
THREATS
 There are so many competitors of
ZARA which provides same variety
and quality of products to customers.
Market competition always leads to
saturation and affect profit margins of
the company.
 It is needed for ZARA to raise its
tremendously; the firm functions
through out its stores. There is no
smaller displays or stores of ZARA.
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 New markets gives an opportunity to
the firm to start new business and
getting higher competitive edge. It
requires to keep an eye on emerging
markets.
 Economic downturn can also be a threat
to their target customers.
Macro environmental analysis
Political factors These factors can affect any business as the financial
regulations of any country. Every nation and its government
has different outlook on business; not every government
prefers foreign direct investment. In addition, government
interference is also through taxes and by restricting certain
products. ZARA is one of the leading brand by having
vertical integration system thus it is necessary for the
company to keep fulfil all legal laws and regulations. Due to
its global presence, it is necessary for the fashion giant to
understand political situation of the nation in which it
performs; it supports to reduce unusual closures of business.
Economical factors Business organisation also have to taken account the
economic growth so that management can acquire adequate
knowledge regrading inflation rates. Furthermore, interest and
exchanged rates should be accessed in order to recognised
importing and exporting costs of products (Piotrowicz and
Cuthbertson, 2014). On the other hand, it is fundamental for
ZARA to be familiar with tariffs, taxation, interest rates and
exchange rates. The retailing fashion unit has adopted the a
great strategy, i.e. affordable pricing in order to attain and
retain customers. In this manner also produces and sell
products to middle class people so as to grab high cutting
edge.
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Social factors In this over dynamic environment, the needs and perception
of customers are rapidly changing thus, it is too difficult for
organisations to meet and satisfy their desires. Changes in
social trends put a huge impact on customers' taste and
preferences; people always willing to acquire something new
and innovative in order ton satisfy their demands. Moreover,
strong brand names has an imperative in increasing sales
because people will only prefer to branded goods as
comparison with generic products. Due to global economic
recession, people faced poverty, unemployment; in case
ZARA had to be familiar with purchasing patterns of
customers as well as changing market trends. On the other
hand, the organisation serves across the world providing
services to different cultural, thus, ZARA needs to recognise
the taste and preferences of every cultural or geographical
area. For instance- in south countries customers prefer to
bright colours and they do not want any changes in their
dressing sense. Therefore, to stay ahead in market
competition, fashion retail industries should keep focuses on
innovation and follow market tendency so as to attain and
retain customers for long term period.
Technological factors Newer technology makes better level of efficiencies within
organisations. Furthermore, technological changes also
carries out quality control and manage organisational
principles or standards throughout products. In this modern
era, various types of technologies helps in increasing output;
it results enhancement of sales and profitability. ZARA has
global market presence, as it is being present on social media
sites, i.e. Facebook, Twitter, Instagram, you tube etc. so as to
reach large group of customers. The organisation also updates
its website regularly. Recently, ZARA has launched a
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category in which people can share their photos or experience
after wearing its cloths. This makes shopping very interactive
and improve public relations.
Porter's five forces model: - It is also an important tool which can be used to determine
the intensity of competition and profitability which is excepted in future. There are five
components of Porter's five forces model such are described as under: -
Threat of new entrants – Due to fast growing, retailing fashion industry and economic
crises, individuals prefer towards affordable goods. ZARA recognise that problem and
attempting to rendered reasonable products with high quality. Enhancement in Euro rates can
raise selling prices for consumers and that firm may be lose its cutting edge from competitors in
order to being most economical brand.
Threats of substitutes – In terms of affordability and quality, there are so many
competitors of ZARA, i.e. H & M, Mango, Mark and Spencer etc. The organisation also spend
huge amount on advertisements so as to gain high competitive edge; it delivers responsive chain
so as to give higher level of satisfaction to customers (Choi, 2013).
Bargaining power of buyers – ZARA spends 0.03% on research and development
activities; it strives to collect relevant information about customers' needs and wants. The
consumerism of retailing fashion is quite unpredictable, buyers are free to chose whatever they
want over the available brands. But ZARA also has certain loyal customers who immensely
waiting for its new design or product.
Bargaining power of suppliers- In this era of globalisation, retail market is continuously
growing and liberal. As there are so many suppliers of a product are easily available in target
market. Thus, the monotony of suppliers diminishes the power of retail industry. But in case of
ZARA suppliers' bargaining power is high because sell its products individually.
Rivalry – ZARA is a leading brand over the world, it has local, national and international
competitors which can affect profitability and sales revenues of the firm. The growth
opportunities are not so high due to maturity of retailing sector
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CONCLUSION
From the above mentioned report, it get summarised that fashion retailing industry is
rapidly increasing day by day. ZARA has strong market position in fashion and clothing market;
it establishes itself as a brand name in market which create cutting edge fashion in terms of its
rivals on lower costs. Along with this, there are several changes can occurred in clothing industry
due to globalising and changing customers' purchasing power. It effect people decision in
positive and negative manner. Therefore, to move or respond soonly towards these changes
management has to adopt various strategies and tactics, such as- internal environment analysis
and porter's five forces etc.
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REFERENCES
Books and Journal
Bruce, M. and Daly, L., 2011. Adding value: challenges for UK apparel supply chain
management–a review. Production Planning & Control. 22(3). pp.210-220.
Choi, T. M. ed., 2013. Fast fashion systems: Theories and applications. CRC Press.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Goworek, H. and et. al., 2012. The sustainable clothing market: an evaluation of potential
strategies for UK retailers. International Journal of Retail & Distribution Management.
40(12). pp.935-955.
Kant Hvass, K., 2014. Post-retail responsibility of garments–a fashion industry
perspective. Journal of Fashion Marketing and Management. 18(4). pp.413-430.
Piotrowicz, W. and Cuthbertson, R., 2014. Introduction to the special issue information
technology in retail: Toward omnichannel retailing. International Journal of Electronic
Commerce. 18(4). pp.5-16.
Thomassey, S., 2014. Sales forecasting in apparel and fashion industry: A review. In Intelligent
fashion forecasting systems: Models and applications. (pp. 9-27). Springer, Berlin,
Heidelberg.
Turker, D. and Altuntas, C., 2014. Sustainable supply chain management in the fast fashion
industry: An analysis of corporate reports. European Management Journal. 32(5).
pp.837-849.
Twigg, J., 2012. Adjusting the cut: fashion, the body and age on the UK high street. Ageing &
Society. 32(6). pp.1030-1054.
Xia, M. and et. al., 2012. Fashion retailing forecasting based on extreme learning machine with
adaptive metrics of inputs. Knowledge-Based Systems. 36. pp.253-259.
Online
Market value of grocery retail in the United Kingdom (UK) from 2007 to 2017, 2013. [Online].
Available through: <https://www.statista.com/statistics/295669/grocery-retail-market-
value-by-in-the-united-kingdom-uk/>.
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