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Global fast-fashion chains growing aggressively

"Fast-fashion chains, over the past decade, have grabbed huge market share in the apparel sector and grew aggressively, opening hundreds of stores. The companies boast of short production and distribution lead times which allows them to respond to market changes in a matter of just a few weeks. They are largely immune to the problems of the larger specialty apparel industry. However, lately they’ve started to encounter certain roadblocks including increasing competition, changing consumer shopping habits and more intense competition from online players like Amazon and ASOS."

 

Global fast fashion chains growing aggressively 2The arrival of fast-fashion brands such as H&M, Zara and Forever 21 has disrupted the specialty apparel sector as these fast-fashion players not only imitate runway fashions at affordable prices, but also beat other retailers in the market to the latest styles.

Making fashion affordable

Fast-fashion chains, over the past decade, have grabbed huge market share in the apparel sector and grew aggressively, opening hundreds of stores. The companies boast of short production and distribution lead times which allows them to respond to market changes in a matter of just a few weeks. They are largely immune to the problems of the larger specialty apparel industry. However, lately they’ve started to encounter certain roadblocks including increasing competition, changing consumer shopping habits and more intense competition from online players like Amazon and ASOS.

Come what may there are certain things in this world that never change ditto for the consumers’ appetite forGlobal fast fashion chains growing aggressively 1 discounted fashion apparel. These discounts allow people to buy high fashion at affordable prices. However there’s an increasing competition in the fast-fashion industry, including pressure on existing US chains because it’s become a huge international business.

Increasing competition

As consumer appetite has been sustained and actually grown, more and more players are coming into this space, which then obviously creates more competition for existing players and can sometimes affect revenue, expansion, profit margins and things like that. Online retailers have opened up a lot of options for consumers that didn’t exist before.

Two factors are affecting fast fashion. These include: decline in demand many of these brands experienced aggressive growth for years and a slowdown is natural. At least two of the three big ones—Forever 21 and H&M—were due for a slowdown anyways. They were kind of reaching capacity in the marketplace. But that’s not to say that they couldn’t find new markets to exploit and get market share… But the two were at the forefront of growth early.”

The second factor is the “encroachment of e-commerce and the rise of the off-price guys. Also, some fast-fashion concepts have been slow to get into online sales and are now paying the price and trying to catch up.

Big players report mixed results

Swedish powerhouse H&M reported a dip in total sales by 4.0 per cent on a global basis in 2017. Sales in the US fell by 6.0 per cent. The retailer would close 170 stores while opening 390 new stores globally, and is dealing with $4.3 billion in unsold inventory. In the first half of 2018, H&M opened 10 net new stores in the United States.

Los Angeles-based Forever 21 is rethinking the size of its stores and looking at downsizing locations. Their average store is 38,000 sq. ft. and the largest is around 162,000 sq. ft., according to the retailer’s website. Forever 21 is rolling out its 21Red concept that’s going into power and community centers. These stores are in the 10,000- to 12,000 sq.ft. range.

Inditex said strong sales and investment in technology for its online and physical stores boosted net profit in the past fiscal 7.0 per cent. The brand’s net profit for the 12 months ending January 31, 2018, rose to $4.11 billion. It posted a 5.0 per cent increase in same-store sales globally for the quarter ending Aprils 30, 2018. Meanwhile, Spanish clothing retailer Zara, revealed same-store sales growth for all regions in which it operates was positive, but didn’t disclose specific figures.

 

 
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