Fast fashion retailers like Spain’s Zara, Sweden’s H&M and Japan’s Uniqlo have taken lots of business away from of numerous low and middle-priced fashion brands in recent years.
Pioneers of the fast fashion model like Zara’s founder Amancio Ortega and Uniqlo’s Tadashi Yanai are among the world’s richest men.
Traditional fashion brands typically bring new products to the marketplace every quarter or half year. But fast fashion brands are able to provide new offerings every month.
By paying less attention to details like cutting or materials, fast fashion retailers can offer products cheaper. Shorter product cycles also help by accelerating the flow of capital and achieving economies of scale.
This business model fits very well with the buying habits of millennials, who would rather spend money to buy more pieces and change them quickly rather than invest in high-quality and lasting clothes.
But now fast fashion retailers are being challenged by a new generation of ultrafast fashion brands.
Boohoo.com, Asos and Missguided are now able to further shorten the cycle with new technology, offering more than a thousand new clothing each month, compared with several hundred new styles in the case of Zara or H&M.
By using artificial intelligence to assist design, these companies would then test the new designs by posting them online and than analyze the market response (such as click rates) to decide which one will likely sell well.
It only takes two weeks for Boohoo and Asos from designing the product to putting it on the market. Missquided even claims it can shorten the process to one week.
Also, these online-only fashion retailers are able to offer even cheaper products. For example, Boohoo prices its products at 5 pounds, 10 pounds and 20 pounds. Buyers can pay an extra 9.99 pounds and enjoy full-year free next-day delivery.
It’s reported that Asos, Boohoo, and Missguided made annual revenue of 1.4 billion pounds, 290 million pounds and 270 million pounds, respectively, in the lastest financial year, up 26 percent, 49 percent and 75 percent from the year before.
While these ultrafast fashion retailers are still small, they will certainly grow at the expense of their bigger rivals.
This article appeared in the Hong Kong Economic Journal on June 2
Translation by Julie Zhu
[Chinese version 中文版]
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