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Collection of full-length papers and in-depth analysis of economic and management issues.

Fast Fashion: Out-of-the-Box Thinking in the Apparel Industry

Fast Fashion: Out-of-the-Box Thinking in the Apparel Industry

LEE Joon-Hwan

May 25, 2011

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Originally released on April 6, 2011

Fast fashion companies like Inditex (Zara), H&M, and Fast Retailing (Uniqlo) that came into their own after the 2000s are now some of the strongest players in the global fashion industry. Their niche, "fast fashion," refers to their ability to capture the latest fashion trends and bring them to the public as quickly as fast food. Global fast fashion businesses over the past five years have been characterized by high revenue growth (15%) that far exceeds industry averages, and profit margins (10%) that surpass those of global IT firms. Their success has done much to counter the conventional wisdom that apparel is a declining industry with little potential for profits.

Fast fashion owes its global success to "out-of-the-box" thinking that departs from convention by carefully studying changes in the environment, particularly today's shortened fashion product cycles, as well as the rise of emerging markets (particularly in Asia) and the fragmentation of the industry's value chain. These departures from convention include: ① A shift from "planned production" to quick response production that responds to changes in the market ad hoc, instead of anticipating demand and preparing products for the season in advance. ② A shift from "local business" to "global business," with globalized HR and operations, and a focus on attaining dominance in emerging markets. ③ A shift from following trends to leading trends, by continuously providing leadership and innovation in new products instead of imitating famous designers. ④ A shift from media centric marketing to spatial marketing, by using retail space to directly reach customers a nd build brand identity, instead of relying on traditional advertising.

Fast fashion has proven that industries that have long faced low profits and low growth can monitor changes in the environment and reinvent their ways of doing business to seize new opportunities. Lessons learned from fast fashion include: ① Businesses have to pursue "quick management" to respond to the environment. By strengthening consumer monitoring, they can build a base for product planning, production, supplies, distribution, and marketing. ② Businesses must secure global competitiveness by reinvention and process innovation from a perspective that departs from existing convention. ③ A flexible and creative culture is needed to create constant change.

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