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OM in the News: Even Faster Fashion Scares Zara and H&M

April 13, 2017

Zara and H&M are the world’s two largest fashion retailers. Not by coincidence, they’re also the pioneers of fast fashion. Zara is able to take a coat from design to the sales floor in 25 days, and it can replenish items even more quickly. In the past couple of decades, the two companies have steadily trounced much of their competition, outdoing them on price and speed to claim an ever-larger share of shoppers’ spending. But both are being beat at their own game by even faster competitors.

British fashion retailers ASOS and Boohoo are now able to conceive, design, produce, and have clothing ready for shoppers on the sales floor quicker than Zara and H&M,” reports (April 6, 2017). ASOS expects sales to grow 30-35% this year. Boohoo predicts sales growth of around 50% for the year.

H&M is aware it’s falling behind, announcing plans recently to invest in and rethink its supply chain. Most of its manufacturing takes place in Asia in order to keep prices down, but it’s considering moving more production closer to Europe, to countries such as Turkey, which would let it get items to stores more quickly. That proximity is key to the speed of its faster rivals. Even Japanese retailer Uniqlo, which emphasizes that it isn’t driven by trends, has acknowledged that it needs to speed up.

Classroom discussion questions:

  1. How are supply chains at the heart of this issue?
  2. Why is speed of new product development so important in this industry?
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