The Business Mode Of Fast Fashion Zara Is Still Unique.

Rely on leading the industry trend of business mode advantage, fast fashion

Still outshine others.

Zara parent company, the largest in the world.

Group Inditex (BME:ITX) released yesterday's first quarter earnings data, although the fast fashion industry has been showing signs of weakness, but the group still recorded an alarming growth during the reporting period, with sales and net profit exceeding analysts' expectations.

In the three months ended April 30th, Inditex Group sales surged 14% to 5 billion 600 million euros, including sales growth in Europe, Asia and the Americas.

Group gross profit also increased 14% to 3 billion 200 million euros, gross margin 58.2%, net profit rose 18% to 654 million euros, is its main competitor.

Group (STO:HM) has more than two times net profit in the first quarter.

Inditex group has a total of 8 brands, the core brand Zara sales account for 2/3 of the total sales, except Zara, the other brands are Bershka, Massimo Dutti, Pull&Bear, Stradivarius, Zara Home, Home and Stradivarius.

The picture shows the brand of Inditex group, which accounts for the performance of the quarter.

The report also revealed that between February 1st and June 3rd, the Inditex group's online stores and online comparable retail sales recorded an increase of 12%.

Inditex said in its earnings report that all the brands of the company had "increased international influence" in the current quarter, adding 93 stores in 30 countries. As of the end of the reporting period, Inditex has 7385 stores in 93 countries worldwide.

It is reported that over the past year, Inditex has created more than 10000 new jobs, and more than 2200 in Spain alone.

There are indications that Zara is still in the growth stage.

And the growth rate of the fast fashion industry has begun to slow down. In addition to leading the industry trend of business mode advantage, what is Zara still relying on to maintain strong growth?

Societe Generale analyst Anne Critchlow wrote that Inditex group is a rare fast fashion group that has been keeping up with the trend, maintaining strong growth and quickly adapting to the operation mechanism of the fashion business, and has greatly surpassed competitors such as H&M and Gap.

According to the world clothing and shoe net, Gap, the largest apparel retailer in the deep market, seems to have a new turn in the US market. However, the Asian market, including China, has suffered a setback, plunging 20.5% to 283 million dollars, and sales in other regions increased 6% to 53 million US dollars.

As for H&M, sales and profits of H&M are affected due to the decline of customer demand and the increase of procurement cost.

As of February 28, 2017, the 2016 fiscal year report showed that the group's first quarter sales growth was only 4%, less than the 10% to 15% annual growth forecast, while net profit decreased by 3% to 2 billion 460 million euro by 253 million euros.

The Swedish fast fashion brand H&M, which is listed on the Swedish stock market, has fallen by 16% since its start in 2017.

This has reduced its market value to 353 billion Swedish kronor about 41 billion dollars.

In 2015, the market value of its stock market exceeded 600 billion kronor, nearly half of its market value.

At the same time, the whole fast fashion industry is also facing the threat of "ultra fast fashion".

The rising fashion providers, including Boohoo.com and ASOS, are competing for consumers who are more and more difficult to meet with "Ultra-Fashion". Efficiency has become an increasingly important measure in the fashion industry.

The Inditex group has introduced its e-commerce business to more emerging markets, further expanding its online market share and upgrading its inventory management system to cope with the increasingly fierce challenges of the fashion business market.

Inditex group has paid more and more attention to the driving force of technology and data for retail.

Group chief executive Pablo Isla revealed at the meeting after the release of the earnings report that the group has introduced the world's most advanced store inventory tracking system, including RFID tags such as Zara and Massimo Dutti. The group will popularize these latest systems to all the stores in the group within three years.

However, in the complex market environment, Zara still takes the lead, partly due to the well-known "Zara mode", that is, fast and efficient logistics, frequent replenishment and replenishment.

In the past, a lot of analysis focused on the channel and supply chain configuration of ZARA, but when more and more brands began to emulate the "Zara mode", they still couldn't catch up with Zara. We found that the key reason for Zara to maintain strong growth is that Zara pays much attention to fashion.

In social media, Intagram's post on Zara is close to 20 million.

Fashion sensitive consumers often find that Zara is still the most fashionable brand among many fast fashion brands.

Although the allegations of Zara copying luxury brands T and the allegations of plagiarism of small artists have not ceased yet, the trend database of Zara has become more and more powerful, precisely catering to the consumer groups that are sensitive to fashion and price, and this part of the consumer group is expanding rapidly.

Zara brand design headquarters is the core of the whole brand, composed of 350 designers. Unlike its competitors Gap, H&M and Primark, Zara has no chief designer, and each designer has autonomy. The product style will ultimately be decided by the latest sales data from different regions. Therefore, the design department has an unparalleled independence, and two times a week, providing new products flexibly to the store according to the trend of the market.

Designers will analyze products that are salable and unmarketable based on daily feedback sales data, which will directly affect the style of products in the coming weeks.

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In contrast, some analysts believe that the reason for the increasingly embarrassing situation of H&M lies in the fact that its quality is less than that of UNIQLO, but its speed is less than that of Zara.

The COS of H&M group is considered to be the hope of the group, and its design and quality are excellent. However, both the brand style and the operation mode do not belong to the fast fashion category, and the audience is limited after all.

A brand insider told reporters that more than 50% of Zara's products were remixed and redesigned so that the product can keep up with the fast changing tastes of Chinese consumers.

At this point, the "quick response" mode shows its advantages, that is, it can react in real time to consumers' changing tastes, and many other Chinese consumer company can never do that.

This unique mode of operation also enables them to push the latest version of Paris, Milan and other low-level editions to the Chinese market in a matter of weeks.

In fact, fashion is not only a fast fashion industry, but also a key competitive factor in the whole fashion industry.

The Chinese luxury report released by McKinsey and consultancy showed that six to eight years ago, Chinese affluent people bought luxury goods to value materials or workmanship, but now the luxury goods industry is no longer the same. The classic products of core products and brands are becoming more and more important. Young consumers pay more attention to the brand fashion.

With the rise of social media, photo sharing is becoming more and more popular. Whether the product is fashionable or product is "good or bad" or even beyond other factors.

This explains why so many consumers complain that the quality of Zara products is not good, but they are still keen on buying a lot of clothes in Zara.

Inditex Group continues to expand rapidly worldwide.

In order to improve its market share in the fashion business, Inditex group has launched or expanded 20 online platforms in the past year, 12 of which are new, and the group currently offers e-commerce in 43 countries.

Following the launch of Zara in the first half of this year in Thailand, Vietnam, Singapore and Malaysia, the official website of the brand will visit the India market in the second half of this year.

For the current second quarter, Inditex remains confident that sales will continue to grow strongly, and that sales in February 1st to June 3rd will rise by 12% at a constant exchange rate.

After the release of the earnings report, Inditex group rose 2.5% to 36 euros per share, and its market value is now over 100 billion euros to 110 billion 200 million euros.

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