The fast fashion landscape is a crowded space. Spend a couple of minutes on a train platform, browsing Instagram, scrolling through Twitter or watching YouTube and the vast array of adverts, celebrity endorsers, vloggers and other assorted brand affiliates makes it clear that a fierce battle for the wallets of the 16 – 30+ segment is underway.

While at first glance it might appear that there’s a ‘one size fits all’ template for fast fashion, there are in fact multiple models in operation. From the social sellers, to the online pure-plays, to the multichannel giants, and the more traditional store focused value-based models, fast fashion success comes in many formats.

ASOS leads the UK pack by some margin as it sets its sights on becoming a £4bn business. Its proposition has evolved dramatically since its ‘As Seen on Screen’ days back at the start of the millennium. It now operates a 60/40 split between own-brand and popular international brands such as Nike, Levis and Boss. International growth, range extensions and an ever-evolving service proposition, including recent innovations such as Try before you Buy and Instant (same day delivery) have contributed to impressive year-on-year growth, as site visits, average order numbers and basket size all continue to increase.

ASOS’s focus on investment in technologies such as Artificial Intelligence (AI) and Augmented Reality (AR) mean it has more in common with leading technology businesses than more traditional retail operations.

Core to achieving this vision are the substantial investments in infrastructure and technology, including its giant Eurohub automated fulfilment centre south of Berlin and its new US fulfilment centre outside Atlanta, both bolstering global capacity and strengthening their ability to deliver fast, effective service to a global customer base. In addition, ASOS’s focus on investment in technologies such as Artificial Intelligence (AI) and Augmented Reality (AR) mean it has more in common with leading technology businesses than more traditional retail operations.

Sprinting up behind is Boohoo. Started in 2006 by founders who previously supplied well known high street names such as Primark and New Look, it has a sharp millennial focus with high levels of above the line celebrity marketing and a rapidly expanding international presence. In contrast to ASOS it stocks an exclusively own brand range bolstered through additional successful brand extensions including boohooMan, Pretty Little Thing and Nasty Gal and is already targeting £3bn in global sales. Its ‘test and repeat’ model – buying in low quantities and then piling into successful lines – has worked well, and its trend focused customer base keeps coming back for more.

Also in the race is Missguided. Founded in 2009, it is pursuing a multichannel approach to growth. It sells through its own online channel, other online platforms such as ASOS, and, in the last couple of years, through bricks and mortar concessions at the likes of Selfridges and Nordstrom, two stores of its own, and franchise deals in the Middle East. However, high double-digit growth has been offset by the cost of its push into physical retail, resulting in recent losses and resulting job cuts.

By comparison New Look is the old kid on the block. Founded in 1969 the original fast fashion brand has struggled to keep pace with its newer online competitors, closing stores and fighting high levels of debt because of high rental costs and continued poor trading. Its inability to keep pace with the youth trends and the faster cycle times of its pure play competitors1 and continuous demand for newness has also restricted its appeal to a new generation of celebrity fashion followers. In addition, the heavy store portfolio and the associated costs have dragged down performance.

The chasing UK pack is a mixed bunch  –  family owned brands such as Quiz which have historically operated as smaller store-based retailers have used online as a launchpad to extend their offer, selling through their own transactional website and larger platforms such as Zalando. Others such as Chi Chi have emerged from a supplier background, and are happy to sell through the bigger pure plays (e.g. ASOS), established high street names (e.g. Debenhams, House of Fraser) in addition to their own website.

UK breakdown

Sources: FT, Drapers, Business of Fashion, Fashion United, Business Insider, Company Reports, Twitter, Instagram, Facebook, SimilarWeb (all accessed May – June 2018)

The European pack is led by Zara, the largest brand from Inditex Group – the Zaragoza based behemoth. Zara has long been the darling of supply chain case studies due to its sophisticated and unique operating model. It has over 2,200 physical stores globally and ventured online relatively late on (in 2010). Its model also differs from other store focused clothing businesses. While the industry norm is typically to update the offer every 8 to 12 weeks, Zara updates designs and ships new product to stores on an average 2-week cycle. Design teams crunch masses of daily store data to inform the trends they are designing for.

In a similar fashion to Boohoo, they also employ a batch testing approach whereby small runs of designs are tested (in Zara’s case in store and online), and if the data says there is customer traction then more inventory is quickly ordered and shipped out to the stores. Many designs are made into finished products locally (around half in Spain or nearby European countries). Compared to the traditional seasonal orientated retailers, who operate on lead times which can be up to 9 months, this gives Zara the edge when it comes to being on-trend and staying relevant. Another key to its ability to stay relevant is only committing to 50 – 60% of their manufacturing in advance versus the 80 – 90% typically adopted by competitors. This means it can react far quicker to changes in trends, maintaining its ability to fulfil customers fashion focus.

H&M is another giant, which, although recently has experienced tougher times, still acts as an aspiration for fast fashion followers. H&M’s supply chain contrasts with Zara. It has longer average lead times (varying from a few weeks to multiple months), and typically places larger order volumes putting more stock at risk of markdown. Recent poor performance has led H&M to invest in its supply chain as it seeks to adapt further to the fast fashion model, introducing greater levels of automation, and looking to reduce lead times as it tries to stay on top of trends.

Ireland’s Primark runs a store-focused proposition and is not online, as its high volume low margin proposition leaves little room to absorb online costs. However, one of the original fast fashion businesses has enjoyed strong growth and is making headway in the US.

 European breakdown

*non-transactional

Sources: FT, Supplychain 247, Business Insider, World Finance, Slate, CIPS, Company Reports, Twitter, Instagram, Facebook, SimilarWeb (all accessed May – June 2018)

In the US Fashion Nova is a master of the social selling model, using a network of Instagram stars as affiliate marketers. 4 years since their launch Nova has grown to more than 600 people, who produce roughly 500 new designs a week. Fashion Nova source their clothes in the United States and partner with close to 500 sewing factories in the Los Angeles area. About 80% of its products are made in LA and Fashion Nova marketing is delivered via a network of 3,000 influencers that reach tens of millions of fans. These local social media influencers work as brand ambassadors and share their photo along with a ‘coupon code’ with strategic posts. This tracks back the efficacy of that post or representative.

And we mustn’t forget the Amazon juggernaut – whilst not pitching itself as a fashion icon (just yet), it’s already the largest clothing business in the US (estimates by Nomura for the Financial Times suggest Amazon clothing could be a $45 – $85bn by 2020), and has the scale and ability to disrupt whatever market it chooses. The $1tn+ global apparel market has higher margins than food or electronics, and so is a tasty target for the Seattle giant.

US breakdown

Sources: FT, WWD, Buzzfeed, Twitter, Instagram, Facebook, SimilarWeb (all accessed May – June 2018)

So, while there are many different models at play, the successful operators share these common traits:

A focus on newness (and by necessity speed to market)

The 16 – 30 segment lives in the fast lane, with continuous feeds of the latest media streamed to their pockets. This creates an insatiable appetite for all things ‘new’ and fashion is at the forefront, with seasonal trends and the traditional fashion calendar a thing of the past. To be successful requires a continuously evolving range – something the leaders in this space are expert at.

A continuously evolving customer proposition

It’s not just the product that needs to continually evolve. The customer proposition cannot stand still, as evidenced by the demand for faster delivery (Amazon recently tested a one hour delivery window).

Leading in social

As evidenced by their tremendous social following, the leaders in fast fashion are incredibly well connected to the social media scene.

Strong reverse logistics

Selling and fulfilling outbound orders is only half the battle. With average return rates for fast fashion hovering around the 20 – 25% mark, an efficient returns channel can be the differentiator between profitable growth and losses.

International and infrastructure investments fuelling growth

With global growth comes the requirement to invest in infrastructure to ensure that the customer proposition is achievable around the world. Near-sourcing and more onshore manufacturing are also increasingly being used to speed up lead times, and as fashion trends are changing more quickly and the demand for newness hots up, more demands are being made on manufacturers to become more agile.

Whilst the traditional middle ground retailers such as M&S and Debenhams are busy reinventing themselves to stay relevant, fast fashion leaders are surging ahead using a variety of models to grow their appeal in the 16 – 30+ market. Time will tell if there is a shake-out on the horizon, especially with Amazon entering the fray, but for now the leaders are continuing to focus on what they do well – and they’re sprinting ahead.