January 2016

Competitive Advantage

The fashion industry is renowned for being highly competitive and fast changing. The UK clothing market is worth over £28bn and 11,017 businesses in this market are all fighting for a share. Today, a product at any market level of the fashion industry must achieve the correct balance between price, quality, creativity and wear-ability. Even with all factors considered, business have to protect themselves in the long term from risk and operating in this market means brands can go out of ‘fashion’ just as quickly as last seasons colour.

Away in which many brands protect themselves in the long term is by creating a successful marketing campaign. The words ‘fashion’ and ‘marketing’ are virtually interchangeable. Marketing can be used to resituate themselves in the market, distinguishing their brand from other clothing companies, it can link the brand with a certain style; and therefore attract a certain target market, all in the aim to form consumer loyalty. Some of the most successful marketing has been done by brands such as Jack Wills, Ralph Lauren, Lacoste, etc. What they all have in common is the brands represent heritage, and people believe that when they buy their clothing, it will help them portray a heritage of their own, creating an identity. Through clever advertising these brands have linked the companies style with a high price point suggesting luxury, and therefore the legend of the brand full smoothly into place. Consequently, everyone wants to own a piece of the legend. This distinguishes them from other high-street stores, resulting in consumer loyalty and this protects them from long-term risk. However it's important that the marketing promotes to the correct target market to create brand association, and example of this is going wrong is Burberry in particularly its iconic check pattern, which became associated with ‘chavs’. Although Burberry was lucky with its long history of heritage, Burberry has been able to become successful once again in emerging markets and has made a full recovery in the UK. Therefore through marketing and forming a brand creating consumer loyalty, this protects the business from long-term risk.

Another way that businesses can protect themselves from risk in the UK market is to expand abroad. Topshop open the store in New York and aims to exploit the gap of cool mid market fashion for trend lead fashion. Their promotional concept connects the New York store to Topshop strong links with London, which helps build the brand as the US market aspire to the UK for fashion, which enables Topshop to benefit from economies of scale. By being into countries, this spreads the risk of the brand in the long term. With the added benefit of expanding overseas enables access to emerging markets, not only for cheaper resources and labour, but also to benefit from an increase in middle class and the demand for western lifestyle. UK luxury brands such as Burberry and Mulberry have done well form expanding in China due to the passion consumers have for British heritage brands. When the UK has an almost saturated luxury fashion market, the Chinese market is booming. However by expanding abroad, this brings in new threats of competition, although the fashion industrious is so global, the chances are they're all ready competing against them in the UK market therefore isn't a problem overseas. China has also provided opportunities for more affordable brands such as NEXT and ASOS due to the increase of low-paid wages and consumers looking for more mid-priced fashion. Therefore expanding abroad and taking advantage of emerging markets enables businesses to spread the risk and protecting themselves in the long term from just the UK market fluctuations.

Fashion is not art; its business, therefore being cost-effective is one way of staying competitive in the market. A way of doing this is shortening the supply chain. Through clear focus on the demands of the consumer, Zara has tapped into the power of fashion. It shortens the conventional supply chain response from 5 to 7 months to 2 1/2 months which in such a highly competitive and fast changing market allow Zara to become market leader for high-street fashion, making consumers eager to get next week's fashion, compelling them to frequently visit stores due to the two week turnaround of merchandise, this helps generate cash, reduce inventories and eliminates the need for significant debt. Zara sells it self to consumers as low cost but high-fashion quality. They don't waste money on advertising; they believe the money should be spent on producing the best product (this is their selling point). Zara only spends 0.3% of revenue on promotion, when its competitors spend 3 to 4%. Zara’s success has shown that fine-tuning the supply chain is no longer a strategic plan, but I necessity in order to stay competitive. Supply chain management can provide sustainability in such a competitive market differentiating themselves from their competitors eliminating them from risk in the long term.

Many fashion brands have diversified into offering new services and products. This might be to add to brand image, add to the brand experience or to keep up with technology and shopping habits. For whatever reason diversifying their brand may help spread risk. Now fashion is one of the largest categories online. Fashion addicts now regularly by clothing over the web for a site such as ASOS, YOOX, My-Wardrobe and gilt groups, all these online retailers prove hard competition to the branded stores as the online brands have much lower overheads, which enables them to charge lower prices. This makes it harder for high-street stores to remain competitive. Therefore brands such as Burberry, Topshop and Ralph Lauren have tried to add to the shopping and brand experience but opening cafes and restaurants inside their flagship stores. This is the way of competing against online websites however building huge flagship stores in cities all over the world is a strategy that cost them billions. In order to compete with online sites like eBay, brands have developed apps and gorgeously deliver packaging and enable customers to shop 24 hours which is a convenience that seems to trend due to busier lifestyles. Therefore it's important that businesses cover both virtual shopping and physical in order to compete in the market successfully and by competing in both spreads the risk.

In conclusion I believe that in the UK clothing market it's essential to secure a competitive advantage based on quality, unique design, technology or trend to eliminate the level of risk. It's important that firm spread their level of risk in the fashion industry, as it can be so unpredictable. Therefore my first solution was the ability to build a successful brand name through marketing creating consumer loyalty. However it will depend on the success of the marketing strategy as consumers are highly sophisticated, and they can decode marketing so swiftly and effectively that the message is not presented in a suitable and elegant manner, it's actually damages the brand. My second solution to risk in the UK market was expanding abroad and taking advantage of emerging markets. However the success of this method will depend heavily on the other countries culture, tastes, spending power, language, competitors, exchange rates and style of marketing that appeals to their particular style of fashion demands. Also whether there is a gap in the market for their brand. With all this considered expanding overseas should provide opportunities to the UK fashion retailers, and protects them from risk but it also comes with a high level of risk. Thirdly, firms should consider how cost-effective they are like Zara and their short supply chain. However Zara's risk will depend on how they maintain a high fashion and quality product with such short and cost-effective supply chain. Also will a business like Zara, who does very little advertising, be able to protect themselves in the long term from risk as other fashion brands catch up with the supply chain. Finally I looked into how firms diversify to add to their brand experience to compete against the likes of eBay. The investment into restaurant apps and flagship store is what depend on whether people are willing to pay extra for an experience, or are consumers more bothered about price and convenience. Personally I think it depends on the type of brand and market level, but either way, it's vital they either sell themselves as a brand experience or a low cost and convenient to remain competitive and reduce risk in the long term. However the main problem with this evaluation is that it's about the fashion industry. Tomorrow, everything will have changed.

No comments

, by Unknown