Fast Fashion: SPA Model With Chinese Characteristics

Northwestern University's EMBA case contains a Chinese brand -- Noble In the case, "I mean," Fast fashion At the core of sales, the consumption of 95% of the stores is from the members, and more than 80% of the members are duplicated. As a matter of fact, the direct result of letting consumers buy and not buy is the result of the average annual sales of more than 12 thousand yuan per square meter. If we call it the "odd phenomenon", in the context of China's "transformation and expansion of domestic demand" during the "12th Five-Year" period, the brand management mode and innovation of this phenomenon undoubtedly deserve the attention of the industry. Let's use the case of Northwestern University (part of the case referred to hereinafter referred to as the case) to analyze the phenomenon behind the odd.

Building Chinese characteristics SPA mode

Case 1: Ding Hui, the founder of Jinjiang, opened the first clothing store in the town of Jinjiang in 1997. Like other clothing stores, he sold different kinds of brands and clothing made by different manufacturers, and the business in the store was good. However, he was not satisfied with it and dreamed that one day his store could become the leading brand of China's clothing retailing industry. So he began to learn the operation mode of ZARA. The ZARA brand was founded in 1975 in La Coruna, Spain. Its mode is that the company controls all aspects of the design, production and sales channels, and responds quickly to the clothing needs of consumers. This mode is called SPA mode, that is, "private brand clothing professional retailer" mode. Ding Hui immediately fell in love with this model and saw unlimited business opportunities, so he began to build his own SPA store. He summed up the essence of SPA mode as "accurate, fast and low cost". To achieve this model, we need to understand the needs of the terminal consumers, and then integrate the design, production and distribution of the product. This model greatly reduces the time spent on a garment from design production to shelf sales, and because the company controls all aspects of the supply chain, thus greatly reducing the cost of all aspects, such as reducing inventory.

Analysis: the full name of SPA is Specialty Retailer of Private Label Apparel. The simplest expression of the core of this model is the integration of production and circulation. The development of SPA mode has gone through three stages. It was first extracted from the business mode of the fast moving consumer goods industry by GAP company of the United States, and developed as its business philosophy. It was formally defined in the annual report of 1986. In the second stage, the Japanese SPA model represented by UNIQLO appeared, characterized by low price popular basic and warehousing supermarkets. The third phase of the SPA model is represented by Spain ZARA and Sweden H&M. It emphasizes the integration of the supply chain, based on the efficient production capacity and ensuring the rapid updating of products. The "parity" plus the "fast fashion" has created a new miracle in the clothing industry.

Since 1990s, the success of fast fashion has attracted the attention of the world's garment industry, including China. Many Chinese enterprises have attempted to transform into ZARA in China. But for various reasons, they have only turned the fast fashion into the consumer's mouth. The reason why SPA is able to make consumers addicted, the key is to use the SPA mode as a support for the fast fashion system and carry out the transformation and development with Chinese characteristics. It subverts the traditional thinking of upgrading product value added to the high price, closely following the terminal guidance characteristics of SPA mode, building a characteristic supply chain management system and membership database marketing system, and integrating design, technology and operation into an optimized and efficient system through various means.

Information supply chain management in pursuit of "fast and accurate"

Case 2: after setting up the SPA development mode, the company started to create the characteristic supply chain. Ding Hui used to sell other people's clothing brand. Now he leads his team to pay attention to the main links from accessories, clothing production, brand marketing, channel management, logistics distribution and even after-sale service. Under the traditional sales mode, a garment reaches the terminal consumers and needs to go through many different levels of distributors. From production to logistics, and then to retailers, every link needs to benefit from it, so the price of this garment finally reaches the consumer will be several times its ex factory price. In the traditional way of supply chain, he controls the main links of the supply chain, so that the cost can be decided by himself. Therefore, despite the fact that the clothes of VIC are very fashionable, they can provide consumers with a relatively low price. The production department sends products from suppliers from all over the country to the company's logistics warehouse, and then unified distribution according to the different needs of different stores throughout the country. Headquarters set up an information sharing system with local stores. Once the hot selling styles were found, the headquarters immediately followed up. From processing orders to distribution and delivery, the whole process was generally controlled for about 3 weeks, which is called "fast fashion", that is, the charm of SPA mode. In order to maintain its loyal customer base, he has made full use of this model in order to maximize the interests of his customers.

Analysis: to parity, we need to reduce costs. In the immaterial society with abundant clothing products, simply reducing the production cost of the product itself is limited, and it is easy to damage the quality and taste of the products, thus ultimately injure the core value and brand assets of the brand, so it can only rely more on the supply chain construction to reduce the cost of the products in the circulation link. To achieve fast fashion, we need to have a rich style and fast track to follow up, which requires high data collection and response speed in the supply chain. The successful experience of "fast and accurate" information supply chain construction and management has been a useful reference for the industry.

First of all, the SPA mode attaches importance to the control, coordination and supervision of all aspects of the entire supply chain, and guides the operation and operation of all links. As a clothing retailer, he emphasizes the vertical control of all chain stores for the construction of the channel. As a private brand of clothing, he focuses on the planning, design and retail channel control of goods, while other low value-added production links are outsourced. By innovating supply method and supply chain process, the circulation cost is reduced and the market reaction is achieved quickly.

Second, the regional supply chain is a terminal oriented, vertical system from downstream to upstream. The company puts every link of the supply chain in a community of interests. It relies on the self-developed IEAP shoe clothing supply chain information management system to connect all stores. The whole chain achieves real-time sharing of terminal information through the information management system, and improves the ability of the entire supply chain to respond quickly to the market. If a member buys a product in a chain store, the information will be sent to all relevant departments and suppliers in time, including the company's planning, design, buyer, sales management, logistics warehousing staff and manufacturer, raw material supplier will get information and make prompt and accurate judgement and response.

Third, the development of product is also included in the supply chain, and echoes with the sales terminal, which also solves the problem of production to a large extent. In addition to the development of some basic funds, most of the products are completed by buyers. Then, every season, the company releases the product plan to the ODM manufacturer in advance of each season. Through the buyer organization, ODM manufacturers do proofing and production. This way not only greatly reduces the product development cost, but also ensures that the company can only sell more than 3000 men's clothing products every year, and at the same time, it also makes the selection of manufacturers smoothly. If there is a hot selling style in the middle of the season, the company can react quickly to make up the order, or to further develop the style that meets the market demand. At present, the average lead time of the products in the new season is 3 weeks and the fastest is only 10 days.

Finally, he created the "sales monitoring department", which maximizes the rate of commodity optimization and solves the problem of clothing industry as a chronic disease. On the one hand, according to the situation of sales and inventory, the Department will work out timely production plan and arrange production in time, and distribute goods to stores in time and accurately according to the needs of stores. At the same time, under the guidance of the Department, all stores carry out quick and reasonable deployment and integration through the intranet trading platform, so as to continuously optimize the stores' goods and effectively reduce the risk of inventory. At present, the average stock rate of all stores is much lower than that of the industry.

Create "refined" member database marketing

Case 3: since 2001, the company has begun to implement a store membership system, that is, when consumers first shop in the local stores, they will be asked to fill out the customer information form and register as a member of the group, so that they can enjoy discounts when they consume. The membership information list includes customers' birthdays (discount or birthday gifts on birthdays), family background, occupation, educational background, height, weight, dressing style and color preferences. Through the daily consumption records of members, the consumer behavior analysis is carried out, such as consumption habits and commodity style preferences. This database is very unique. It is one of the first batch of Chinese enterprises that really used the customer database in the production and marketing process. First, through the consumer purchase behavior database, he can predict which styles will sell well, which raw materials should be prepared in advance, and even which stores will be delivered to which stores will be substantially reduced. Database marketing is very important to NOGE. Once there are new products that satisfy members' preferences, NOGE will notify members through SMS, MMS or E-MAIL, and interested members will buy them in time.

The number of members of the group also increased rapidly. By 2010, the number of historical consumption members had exceeded 500 thousand, 95% of the consumption came from members, and repeated consumption accounted for over 80%, and the average annual consumption of each member was around 1000 yuan.

Analysis: the 28 law of consumer goods marketing has become a common sense. Membership database marketing is not a new concept, but the Chinese clothing industry can not really do much. Consumer behavior analysis has become a norm in the apparel industry abroad, but Chinese clothing brands are basically at the initial stage of empiricism, and there are few measures to conduct rational consumer behavior analysis. Not only has he made a substantial step forward in the marketing of membership in China's apparel industry, but also has made innovations with the SPA model and achieved fruitful results.

Any clothing brand in the Chinese market will have such a problem, that is, despite huge demand, the Chinese market has formed a diversified market demand due to the differences among regions, populations, climate and consumption capacity. How to meet the needs of consumers in different regions or stores is a real challenge to the accurate supply of SPA mode. The group established membership system, gradually improved CRM system and member database mining and analysis, and carried out the exploration of member database marketing. Through the analysis of the collection of basic members' data and the analysis of consumer behavior, we accurately grasp the demand of members' commodities and carry out commodity planning, design, production and supply as the basis for this. We have realized the customer demand oriented commodity supply mode, reduced the risk of commodity development, and completely solved the risks caused by the uncertainty of supply in different stores due to the differentiation of product demand. In addition, the company launches precise marketing and brand promotion to members through low-cost means such as mail, SMS, telephone, website and so on, and eventually turns most of the members into loyal consumers. The annual consumption of members is more than 3 times, which really makes members addicted to buying or not buying.

It is not difficult for a clothing brand to choose a certain pattern, so it is difficult to build a system optimized brand competitiveness. This is why today's so-called SPA, database marketing, fast fashion and so on have no big secrets in principle, but few are the main reasons for success. In addition to the above three highlights, he has made a lot of practice in selecting men's clothing market segments, building personnel team, strengthening brand culture and corporate culture, working with Donghua University to establish a Donghua fast fashion research center, and joining charities.

In the apparel industry, many international garment giants have been born through the operation of SPA mode. Now, after Harvard University has rated the ZARA brand as the most valuable brand in Europe, it is reported that it is collecting and collects the case of customer management and database marketing. The successful experience of SPA has set up a view of SPA in the industry. Behind the success of the odd phenomenon, it shows not only the power of parity, fast fashion and SPA, but also the tireless efforts made by the Chinese garment industry from becoming bigger and stronger.