Fast fashion is turning into ultrafast fashion. New players such as Boohoo.com, ASOS and Missguided are bringing products from design to sale in as little as one or two weeks—even faster than traditional fast-fashion pioneers such as Zara and H&M.
The new crop of online fast-fashion retailers is proving highly adept at rapidly responding to consumers’ increasing demands for immediacy and constant newness, in turn driving their rapid sales growth and success.
Boohoo.com, ASOS and Missguided are now able to produce merchandise in 2–4 weeks, compared to 5 weeks for Zara and H&M and the 6- to 9-month cycle for traditional retailers.
The fashion design process is faster than it has ever been, due to the digital revolution. It is much easier for retailers to copy or obtain design inspiration from fashion runways and digital influencers. Social media is now a key tool informing sourcing strategy because it provides data on emerging and popular trends and styles. Pure-play online fast-fashion retailers are able to continuously refresh and rotate a large part of their assortments to drive customer shopping frequency. For example, Boohoo and ASOS add up to 100 and 4,500 products daily to their website, respectively.
Ultrafast fashion retailers also avoid the historical retailer dilemma of product shortages versus excessive inventory, and ensuing markdowns and lower margins. Ultrafast apparel retailers operate agile supply chains to quickly match inventory supply with changing demand and strictly control inventory to create a balance between undersupply and markdowns. Initial designs are made in small batches to test demand, and, if successful, more items are quickly produced. The sourcing businesses target selling goods at full prices and reduced markdowns, hence fast-fashion retailers have much lower markdown levels than traditional retailers, as depicted by the table below.
Fast-fashion retailers are able to bring products to market and adjust inventory levels rapidly by basing large quantities of production close to headquarters and key customer markets.
Boohoo.com: From Two Weeks
British online fashion retailer Boohoo sells own-brand clothing, shoes and accessories, and targets 16–24 year-olds. Earlier this year, Boohoo.com acquired its remaining interest in Prettylittlething and US-based Nasty Gal.
The key to the company’s success is its business model focused on speed to market. Boohoo.com reportedly has the capability to get product from concept to sale in just 2 weeks.
The company operates a test-and-repeat model, which revolves around the concept of producing items in small batches initially and quickly reordering strong-selling product. The sourcing model reduces inventory-holding risk and enables rapid market response to quickly satisfy customer product demand.
Boohoo.com collaborates with celebrities, artists and social media influencers to promote styles and to uncover the most recent fashion trends.
Boohoo has seen robust growth in the UK, Continental Europe and the US, and the company claims it is now the UK’s third-largest online fashion retailer by market share, following ASOS and Next.
ASOS: 2–8 Weeks
UK online fast-fashion retailer ASOS offers 60% own-label product and the remainder by popular international brands. The company is able to bring product from design to store in 2–8 weeks, depending on the complexity of the product and sourcing location. The average time to market is around 6 weeks.
ASOS teams are trying to reduce lead times on ASOS own-label products. ASOS has increased the number of new own-label items launched per week by 10% year over year in fiscal year 2016.
Like Boohoo.com, ASOS has posted very strong sales growth in the past few years.
Missguided: From 1 Week
Privately-held British online fashion retailer Missguided has grown rapidly over the past few years, and is considering a sale or flotation due to this rapid growth.
Zara: 5 Weeks
Traditional fast-fashion pioneer Zara used to produce a few collections a year and now the brand launches over 20 collections annually. Zara’s design-to-retail cycle is 5 weeks, while the company needs only 2 weeks for repeat orders of high-selling product. Stores worldwide receive new products twice a week.
Zara’s sales growth continues to strongly outperform that of most other apparel brands. However, sales growth has been below that of young pure-play online retailers. Zara’s comparable store sales increased 10% year over year in fiscal year 2016, below the 30%+ rates for ASOS and 40%+ for Boohoo.
H&M: A Few Weeks to Six Months
Swedish retailer Hennes & Mauritz (H&M) has a long lead time (less flexible) supply-chain model compared to the new ultrafast fashion players, as well as Zara.
H&M, in particular, has seen sales and margins suffer due to lower customer demand and higher sourcing costs. The company’s first quarter constant currency revenues for the fiscal year ending February 28, 2017 increased 4%, missing its full-year target of 10%–15% year-over-year annual growth.
To address lackluster sales, H&M is investing significantly in its supply chain, such as new logistics solutions with greater levels of automation and optimized lead times.