The European textile sector was one of the first victims of globalization and price discrimination. The most important textile markets are Europe (135 billion euros), U.S. (100 billion euros) and China followed by Japan (35 billion euros).
In this hyper-competitive environment, brands like Zara and H & M have embraced the need to undertake major changes to stay competitive. These companies share most characteristics, except that they distribute products at the forefront of fashion in the textile industry therefore leading to the evolution of a chaotic environment. Indeed, fashion is, by definition, in constant motion: it represents the tastes of the moment.
In addition to the uncertainty of time, there are many other variables that must be considered when developing the business strategy. How may these phenomena be combated? Businesses do not employ the same strategies to win customers and survive in a hyper-competitive industry. Strategies which vary between two brands include business management, production of collections, marketing and communications.
To protect themselves from the uncertainty of the fashion market, companies like Zara, for example, chose strategies that contrasted with that of its major competitors. This represents the vertical integration of the value chain. This strategy is made possible thanks to a unique organization and logistics dimension. All this allow Zara to practice management of scarcity, which implies that the renewal of the collections is almost monthly.
Meanwhile, H&M is riding a new trend called ‘masstige'. In practice, this phenomenon allows consumers to afford a luxury product marketed at a very affordable price. The term ‘masstige' is a contraction of two words: "mass market" and "prestige".
‘Masstige' is thus the combination of a prestigious brand and a consumer brand. In 2004, Karl Lagerfeld teamed up with H&M to offer a brand new collection. The brand saw the number of sales increase dramatically, especially due to a cleverly orchestrated first-stage advertising campaign. As for the so-called prestige brand, this operation allows it to transmit its brand image to a wider public by providing the illusion of entering the highly coveted luxury market.
This phenomenon has been gaining in popularity with top designers like Karl Lagerfeld and Sonia Rykiel being involved in publicity campaigns for Kookai. Since then, the instance of masstige has multiplied in the fashion circles including Jean-Paul Gaultier who recently redesigned his famous marinara smock for ‘La Redoute' (summer 2004 catalog) and, more recently, Madonna for H & M.
Luxury and consumer goods are not two worlds as mutually exclusive as we might think as we find certain characteristics that define luxury as well as Zara H & M. Through the example of these two companies, we will try to understand the methods underlying the democratization of luxury. In other words, what are the levers that textile companies use in providing high-value garments to the consumer while maintaining a relatively lower pricing policy?
Established in 1975 by Amancio Ortega, the clothing brand Zara has developed into a textile empire now worth more than 9 billion euros.
Tags: Zara and H&M, global textile industry, vertical integration of the value chain
[...] This helps avoid the need to invest in advertising campaigns, and consumers cannot avoid going to a Zara store. MODEL FOR H&M In November 2004, the retail chain H&M made a daring and innovative commercial. The company has carefully prepared a "fact" which disrupts the frames and borders in the world of luxury and specialty retail. For several days, this distributor of clothing marketed a product line which is designed by the fashion designer Karl Lagerfeld in 20 countries (Europe and North America). [...]
[...] The marketing of luxury is the symbolic reassurance and legitimate membership of the consumer to a high-end world. It also legitimizes extra charge. Karl Lagerfeld's collection is complex and very rich. In the collective imagination, he has capitalized on the consumer's attention for two main reasons: He was first associated with Chanel in 1983 He is a complex media personality, and rather eccentric. In this case, H&M appears to be a windfall for the ordinary consumer. By offering a collection from Karl Lagerfeld, the company allows segments of the population with average incomes to get in touch with the complex world of symbols associated with the designer. [...]
[...] Through the example of these two companies we will try to understand what the methods of the democratization of luxury are. In other words, what are the levers on which the textile companies can play, in trying to provide high-value garments to the consumer while maintaining a lower pricing policy? THE ZARA MODEL Established in 1975 by Amancio Ortega, the clothing brand Zara has developed into a textile empire which is now worth more than 9 billion Euros. The business model of Zara involves minimizing the production cycles for the products which are most "fashionable", through a chain reaction to the demand, with the aim of offering customers quality products that follow or are well ahead of the fashion, at a moderate price. [...]
[...] A powerful information system Every day, the information is sent to the seat of La Coruna, and allows management to see the models that work and those which do not. The daily reporting would be nothing without responsiveness in the supply management and order fulfillment. To achieve a process of 15 days between the decision to create a product and its sale in shops, the entire industry and exclusive subcontractors are integrated with an ECR (Efficient Consumer Response). Subcontractors and suppliers are permanently connected with the seat, and work exclusively for Zara. [...]
[...] In their co-branding, H&M and Karl Lagerfeld have used all the key success factors of masstige which include: collaboration between a luxury brand and a consumer brand codes of communication specific to the consumer, and their adaptation according to the market (luxury brands make, in general, only one speech to the world) ephemeral nature of commercial operations that rely heavily on the announcement effect; appeal to the creators of fashion houses younger marketing target, and more female consumers for luxury goods Thus, H&M was the first company which was able to initially understand the new consumer trend, and to use all the key success factors of masstige. [...]
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