A Glance At The Fashion Industry

The fashion industry has been evolving since the dawn of time.

However, mass media like TV and Cinema became the primary propellers for various fashion trends.

From luxury to fast fashion and more.

Audrey Hepburn’s 1961, Breakfast at Tiffany well epitomizes the acceleration of mass fashion trends.

By the 1980s the most prominent fashion brands had been born like Fendi (1925), Gucci (1921), Prada (1913), Chanel (1909), Burberry (1856), Louis Vuitton (1854), Hermès (1837).

And by the 1990s those fashion brands would start being merged into giant, multi-brand luxury corporations (LVMH and Kering will give us the picture):

lvmh-group-business-model
LVMH is a global luxury empire with over €46 billion in revenues for 2018 spanning across several industries: wines and spirits, fashion and leather goods, perfumes and cosmetics, watched and jewelry, and selective retailing. It comprises brands like Louis Vuitton, Christian Dior Couture, Fendi, Loro Piana, and many others. 
kering-business-model
Kering Group follows a multi-brand business model strategy, where the central holding helps the brands and Houses part of its portfolio to leverage on economies of scale while creating synergies among them. At the same time, those brands are run independently. Kering is today a global luxury brand which made over €15 billion in 2017 based on this multi-brand strategy. Within Kering group there are brands like Gucci, Bottega Veneta, Saint Laurent, and Puma. The two primary operating segments based on luxury and sport & lifestyle.

Only a few brands, (like Prada) would escape consolidation and stay independent.

Yet, while by the 1990s this trend consolidated, and by the 2000s, most of the Luxury Fashion industry is in the hands of a few giants (LVMH also managed to take over Tiffany).

In the same span of time, a separate phenomenon emerged: Fast Fashion.

fast-fashion
Fash fashion has been a phenomenon that became popular in the late 1990s, early 2000s, as players like Zara and H&M took over the fashion industry by leveraging on shorter and shorter design-manufacturing-distribution cycles. Reducing these cycles from months to a few weeks. With just-in-time logistics, flagship stores in iconic places in the largest cities in the world, these brands offered cheap, fashionable clothes and a wide variety of designs.

While Luxury brands targeted the higher end of the market, by emphasizing quality, uniqueness (or at least scarcity), and status. Fast fashion brands focused on the opposite side of the market. Focusing on speed, variety, and low prices.

Zara epitomized that evolution, as part of the Inditex empire:

inditex-fast-fashion-empire
With over €25 billion in sales in 2017, the Spanish Fast Fashion Empire, Inditex, which comprises eight sister brands, has been able to grow over the years thanks to a strategy of expansion of its flagship stores in the exclusive locations around the globe. Its largest brand, Zara contributed to over 65% of the group revenue. The country that contributed the most to the fast-fashion Empire sales was Spain, with over 16% of its revenues.
zara-business-model
Zara is a brand part of the retail empire Inditex. Zara business model, with over €18 billion in sales in 2018 (comprising Zara Home), and an integrated retail format with quick sales cycles. Zara follows an integrated retail format where customers are free to move from physical to digital experience.

By the 2010s the web had finally managed to scale to billions of people and a further penetration happened as smartphones equipped with shopping apps took over.

This enabled a transition from fast fashion (with a focus on speed, shortened manufacturing cycles, and effective logistics, and focused on operating flagship stores where items could be easily distributed) to ultra-fast fashion (where the focus on speed was achieved also thanks to an only-online presence, thus cutting operational costs, and focusing on shorter manufacturing cycles and global logistics).

ultra-fast-fashion
The Ultra Fashion business model is an evolution of fast fashion with a strong online twist. Indeed, where the fast-fashion retailer invests massively in logistics, warehousing, its costs are still skewed toward operating physical retail stores. While the ultra-fast fashion retailer mainly moves its operations online, thus focusing its cost centers toward logistics, warehousing, and a mobile-based digital presence.

ASOS and Boohoo well represented this change:

asos-business-model
ASOS is a British online fashion retailer founded in 2000 by Nick Robertson, Andrew Regan, Quentin Griffiths, and Deborah Thorpe. As an online fashion retailer, ASOS makes money by purchasing clothes from wholesalers and then selling them for a profit. This includes the sale of private label or own-brand products. ASOS further expanded on the fast fashion business model to create an ultra-fast fashion model driven by short sales cycles and online mobile e-commerce as main drivers.
boohoo-business-model
Boohoo – sometimes referred to as Boohoo.com – is an English online fashion retailer founded in 2006 by Mahmud Kamani and Carol Kane in the historic textile district of Manchester. Boohoo makes money by selling fashion items for more than the cost of manufacturing, advertising, marketing, and distributing them.

On a parallel track, companies like Patagonia had been emphasizing much more on sustainability, thus building their brands on the premise of slow fashion.

slow-fashion
Slow fashion is a movement in contraposition with fast fashion. Where in fast fashion it’s all about speed from design to manufacturing and distribution, in slow fashion instead quality and sustainability of the supply chain are the key elements.

While slow fashion took over, also another evolution of fast fashion made it to the masses: real-time retail.

real-time-retail
Real-time retail involves the instantaneous collection, analysis, and distribution of data to give consumers an integrated and personalized shopping experience. This represents a strong new trend, as a further evolution of fast fashion first (who turned the design into manufacturing in a few weeks), ultra-fast fashion later (which further shortened the cycle of design-manufacturing). Real-time retail turns fashion trends into clothes collections in a few days cycle or a maximum of one week.

Well exemplified by SHEIN, real-time retail brings the concept of fast fashion to another level. Where fashion trends are made and fast followed through digital channels, and also operations are primarily online and logistics global:

shein-business-model
SHEIN is an international B2C fast fashion eCommerce platform founded in 2008 by Chris Xu. The company improved on the ultra-fast fashion model by leveraging real-time retail, which quickly turned fashion trends in clothes’ collections through its strong digital presence and successful branding campaigns.

Read Next: LVMH, Kering, Prada, Fast Fashion, Zara, Inditex, Ultra-Fast Fashion, ASOS, Boohoo, Slow Fashion, Real-Time Retail, SHEIN.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"