Today, when we discuss fashion, we usually focus on clothes and other accessories. The days when people wore cloth for coverage are long gone. Fashion has taken clothing to a whole different level where it does more than cover our bare bodies.
Everyone now desires to stand out in what they wear. This is because many of us know what we wear can help us reveal a lot about our personality. This could be our style or affluence. When making outfit choices, several brands come to mind. These could be brands like H&M vs Zara.
These clothing brands are known for quality and style. Also, they are fast fashion brands, meaning a vast population is drawn to them for their quick offering of new trends, especially at cheaper rates. Therefore, let’s look at the H&M vs Zara case study in this article and compare these two fast fashion giants.
- H&M Brand
- Zara Brand
- H&M vs Zara Case Study
- Key Differences Between H&M vs Zara Brand
Among similar brands like Uniqlo and Zara, “Hennes and Mauritz” is the oldest. Sweden was the birthplace of this retail brand. This was as far back as 1947. Hence, it’s amazing how this brand has become such a recognizable giant in fashion.
Besides Sweden, that’s native to them, this brand also operates in the United States. It was in 1974 that their public trade in Sweden began. Over the years, this brand has grown more prominent as it stretched out across the globe.
The H&M brand has established over 4000 stores in several countries globally; A number that’s way bigger than that of Zara.
This brand has gotten an edge over its competitors as they’ve been more productive in the US market. It’s just amazing how they got into this enormous market and gained so much success. In the US alone, they have up to 559 physical stores.
However, they haven’t stopped yet and are working towards expanding more throughout the globe. They aim to open more stores, about thousands of them, in the years to come.
Meanwhile, the brand made a broader shift to e-commerce sales from physical ones. This happened because they began receiving most of their purchases online. This also resulted in the brand closing down some physical stores.
Interestingly, aside from the H&M brand, the H&M group has seven other brands under them. They are COS, H&M Home Weekday, Monki, ARKET, & other stories and Afound.
H&M also collaborates with known figures, like Versace, in the products they offer their customers. This is one of the sales-boosting strategies that has helped boost their reputation.
The Zara brand is the latest compared to retail giants like H&M and Uniqlo. The year 1975 was when this brand started. The birthplace was Spain, and the founder, Amancio Ortega.
Zara is the largest brand under the Inditex group. It ranks number one in the apparel industry, particularly fast fashion. They deal in a wide range of products, including clothing, shoes, fragrances, and other accessories.
The brand has also stretched out over the world in about 96 countries, where they have a total of about 2200 stores. Just in the US, the brand has established up to 99 stores.
However, you’ll find most of their stores in their birth country, Spain, where it’s over 400.
The founder improved the brand’s design, production, and distribution process around the 1980s. This improvement led to a faster reaction to the new fashion that came up.
In fact, their distribution is remarkable. They can start selling a product a month after they’ve designed it. Their product turnover is impressively quick!
When they created their first store, they began making similar products as the more high-end fashion brands. As they did this, they offered them at low prices. Interestingly, they then influenced the term “fast fashion” due to this speedy feedback.
Zara offers a lot more products to their customers. In fact, it’s much bigger than the number that other competitors like H&M offer.
The Value of Fashion Brands
The Value of Fashion Brands
They can produce more than 10,000 pieces in a year, unlike the 2000-4000 pieces most other retail brands do. This is one of the brand’s exceptional strategies that have attracted customers with different tastes and styles, especially in the US.
H&M vs Zara Case Study
Looking at the H&M vs Zara fast-fashion business, it’s been very lucrative for them. No matter what these companies focus on, they have one thing in common as a competitive advantage: the customers’ preferences.
As people want what’s trending and at the same time desire to have it quick, these companies have to employ a speedy process. Both H&M and Zara seem to offer low-end market apparels that are alike with high fashion standards. They make these very fast and at a low price.
It’s common with fast fashion for trends not to stay for long. New designs keep coming up, and many people want to try out what’s new. Therefore, these fast fashion brands have to keep making these products available to meet the customers’ continuous demands.
Zara, in particular, is at the top of the game when it comes to reducing the time between designing and production. In addition, both brands ensure that their supply chain effectively responds to demands quickly. When supply doesn’t come quick, it can badly affect sales.
A common one is when the customers lose interest in the apparel they waited so long for because of the new trends that might have come up. Therefore, the cost of the goods, buying cycle, and, more importantly, market timing build up the fast-fashion concept of H&M vs Zara brand.
Let’s compare these two brands with different marketing categories. This way, we can know what makes them different, especially in their strategies to boost sales.
Key Differences Between H&M vs Zara Brand
Pricing System for H&M vs Zara
The H&M brand emphasizes offering their quality products cheaper as a means to keep customers trooping into their shops. They are known to offer huge discounts very often, unlike most of their competitors.
On the other hand, Zara offers their products at a reasonable price as long as they match the quality. They don’t underprice to keep people trooping in. Similarly, they give discounts but not as much as the H&M brand. Instead, they focus more on the quality of what they offer.
They create value around their product,s which stirs the feeling that what you’re buying is worth the price.
Target Market for H&M vs Zara
These two fashion giants create their target market based on psychographics and demographics. Focusing on an individual’s lifestyle, interests, and social status falls under the psychographic segment. However, considering their customers’ gender, age, income, class, etc., is a demographic way of segmenting their market.
H&M’s brand targets primarily women, particularly those aged between 20-34 years.
These are the younger, working females that still have so much love for what’s trending. On the other hand, Zara still targets the younger population but expands more demographically.
They offer clothing and accessories for both genders, particularly about 18-40 years of age. However, this is just their target market, and this brand offers both articles of clothing for younger kids.
Promotion for H&M vs Zara
H&M is always making regular promotions for their products. Their advertising is quite versatile. They reveal a lot about their products through various means including, TV commercials, prints, billboards, banners, social media, and many more. The brand puts a lot of emphasis on promotion.
A common thing about the Zara brand is that they don’t fancy advertising. You’ll see no banners, no billboards, and no form of promotion. They consider investing in building more stores far more important than advertising their goods.
However, the company employs the system they call evangelism. So, instead of taking their brand to their consumers as advertisements, they bring their consumers into their brand. They nurture their customers as brand influencers, allowing them to boost operations and, more importantly, do the storytelling.
Product Distribution for H&M vs Zara
Zara gets goods on its shelves much faster than H&M. The brand doesn’t have any factory of its own. Instead, they buy from other distributors. About 60% of H&M products come from places like Cambodia or Bangladesh, which are cheaper.
However, these places are far from them, so leading times are always longer. This makes this brand have several orders from customers pending. This situation creates problems for the brand, especially in sales.
This also makes them have more unsold goods in stock, unlike Zara. These goods’ value is more than $4 billion. This could also be why the H&M company focuses more on giving discounts as one of their pricing strategies. Interestingly, the gross profit made by both brands is almost the same, despite H&M making cheaper purchases. So, in essence, they lose the advantage that comes with buying from cheaper places.
Also, the distribution system has made them famous in the fast-fashion world as they can control the number of goods they produce and the supply. Therefore, they don’t have issues with numerous unsold goods in stock. It takes about a day to distribute to their stores in Europe due to their robust distribution network. Moreover, it will take about 40 hours to deliver to the US branches.
Both brands, H&M vs Zara, have grown successfully over the years more than other fast fashion brands. The progress of the Zara brand explains why price isn’t everything. Unlike H&M, they tend to focus more on the value they can place on their products. H&M has still suffered many losses despite its underpricing strategies.
However, in fast fashion, the constant change in trends keeps the demand alive, but what’s more important is that these fast fashion brands make these products available.
A key differentiator between the retailers is their approach to sales. Zara has traditionally taken a subtler approach to reductions, only discounting during key sales periods while H&M takes more frequent and aggressive markdowns.What are the similarities between Zara and H&M? ›
Looking at the fabrics that are most prominent in each brand's assortment, there is an evident similarity between the two, both ZARA and H&M placing the largest emphasis on cotton and polyester, including recycled versions of both fabrics, each making up between 20 percent and 30 percent of the brands' fabric mix.What is so appealing about fast fashion brands such as H&M and Zara? ›
12-8. The most appealing case about fast fashion brands such as Zara and H&M is their short lead time. The time of designing the garment, manufacturing it and then packaging and shipping it is very fast and so they are able to reach to the customers …How can Zara maintain its leadership in fast fashion thanks to artificial intelligence case study? ›
Artificial intelligence can help solve the “just-in-time” manufacturing loophole, by improving demand forecasting. The company focuses on responding to current fashion needs rather than forecasting fashion trends for a distant future: 85% of its production is done during the current season.Why is Zara more successful than H&M? ›
Zara's strategy is to offer a higher number of available products than its competitors. While most clothing retailers manufacture and offer to the public for sale 2,000 to 4,000 different articles of clothing, Zara's production has been markedly higher, at over 10,000 pieces produced per year.What are the key strategies of Zara have led the brand to success What is Zara's biggest competitive advantage over other retailers? ›
The Zara brand strategy
Its core values are found in four simple terms: beauty, clarity, functionality and sustainability. The secret to Zara's success has largely being driven by its ability to keep up with rapidly changing fashion trends and showcase it in its collections with very little delay.
- H&M. Year founded: 1947. Headquarter: Stockholm, Sweden. ...
- Uniqlo. Year founded: 1949. Headquarter: Yamaguchi, Japan. ...
- Gucci. Year founded: 1921. Headquarter: Florence, Italy. ...
- Nike. Year founded: 1964. ...
- Urban Outfitters. Year founded: 1970. ...
- Gap Inc. Year founded: 1964. ...
- Forever 21. Year founded: 1984. ...
- Adidas. Year founded: 1949.
Gap is an omnichannel retailer of clothing, accessories, and personal care products for men, women, and children. Fast Retailing is a retail holding company. Uniqlo is a casual wear designer, manufacturer and retailer. Inditex is a company operating as a clothing and fashion retailer.Why is H&M considered fast fashion? ›
With more than 5,000 stores worldwide, H&M is one of the many fast fashion companies known for copying high-end fashion, rapid clothing turnover, unsustainable practices including the use of harmful chemicals in its products, as well as inhumane working conditions.What is the H&M fast fashion controversy? ›
Last summer, Quartz carried out an explosive investigation into H&M's claims that it was sustainable and accused the fast fashion brand of “greenwashing” — i.e., making false or misleading claims about their sustainability efforts, particularly through the use (or misuse) of the Higg Index, which is H&M sustainability ...
Zara's business strategy is so much more than its supply chain strategy. The company created the “fast fashion” term and industry. When other companies were manufacturing their collections once per season, Zara was adapting its collection to suit what people asked for on a weekly basis.Are Zara and H&M fast fashion? ›
Ultimately, while Inditex and H&M are both fast-fashion retailers, “Zara has been coming back to having a pretty strong product in store,” Ramirez said.What are the greatest risks that Zara faces nowadays why might Zara fail? ›
However, the brand has recently faced three main challenges: e-commerce, competition and sustainability. To sustain its global expansion, the brand made a step toward digital expansion even before the pandemic hit, and it paid off. So far in 2020, Zara reports a 74% jump in online sales alone.How does Zara keeps leading the fashion industry? ›
Zara designs, produces, distributes and sells its collection in only four weeks, as opposed to the several months that its competitors take to do the same thing. This also means updating the stores with two new designs a week and keeping low stock levels.What targeting strategy does Zara use? ›
Targeting of Zara
ZARA's target consumer is often between the ages of 18 and 40, with a medium-high income. Furthermore, it targets customers based on their fashion awareness. They are frequently busy individuals, which is taken into account in ZARA's strategy, which aims to get customers to buy on impulse.
Zara's Three Success Factors: Speed, Speed, and Speed.What is the competitive advantage of Zara fast fashion? ›
Apart from being agile, its supply chain and production system are efficient and designed to deliver results faster. Another attractive aspect of ZARA's business model is the in-store experience. These stores are designed to offer a great in-store shopping experience and create highest satisfaction for customers.What is Zara biggest weakness? ›
What are some of Zara's weaknesses? Fast-Fashion: Interestingly, the trend that helped propel Zara to the top is the cause of its most pressing weakness. With the focus on sustainability increasing among customers and policymakers Zara's weakness is balancing sustainability with fast-fashion.Who is Zara brand target customer? ›
The Zara target market includes women and men, mainly younger adults in the age range of 18 to 40. This places the Zara segmentation strategy as largely focusing on Millennials and Gen Z, who are both fashion conscious and tech savvy.What are some of Zara's weaknesses? ›
- Limited marketing and advertising as compared to some other brands.
- High competition for Zara means limited market share and high brand switching.
- Zara is perceived to be an expensive brand.
- Zara is not very active in the online space though it is available through online channels with partners.
Overdependence on Outsourcing:
Instead of manufacturing in-house, H&M outsources most of its production to over 900 independent suppliers in Europe and Asia. While this strategy has contributed to its success, it puts the company at the mercy of the suppliers.
The key competitive strategy of H&M in the global market can be characterised as a combination of cost leadership and the elements of differentiation (Varley et al., 2018). The fast-fashion business model of the company is built upon the outsourcing of new designs to multiple independent suppliers.What is H&M biggest strength? ›
Affordable Pricing. This Swedish fashion brand does not have its own production facilities. Instead, it works with multiple suppliers that provide H&M with top-quality apparel for a low labor cost.What is Zara's strategic approach? ›
Zara's customer-centric approach places a strong emphasis on understanding and responding to customer needs and preferences. This is reflected in the company's product design, marketing, and customer service strategies. Zara made fashionable clothes accessible to the middle class.What strategy does Zara use? ›
Manufacturing designs close to home.
Instead of sending production to Asia, Zara manufactures more than 50% of its merchandise in Spain as well as in a few nearby countries, Portugal, Morocco and Turkey. This makes it easier for Zara to quickly send merchandise to its stores.
Price. Competitive pricing: H&M's primary focus is on offering fashionable products at affordable prices. The company employs a competitive pricing strategy to provide customers with good value for money while maintaining profitability.How does Zara's strategy differ from a traditional retailer? ›
Because Zara manufactures only a limited supply of items, it doesn't have to deal with excess inventory or constant markdowns. Each store has a limited inventory of items in each style that are replenished based on demand. New styles based on latest trends arrive constantly.What is Zara's strategy weakness? ›
What are some of Zara's weaknesses? Fast-Fashion: Interestingly, the trend that helped propel Zara to the top is the cause of its most pressing weakness. With the focus on sustainability increasing among customers and policymakers Zara's weakness is balancing sustainability with fast-fashion.What business model and strategies is Zara pursuing? ›
Zara's business strategy is based on vertical integration and logistics trade-offs. Zara's success and global recognition are largely due to these two techniques. Vertical integrations assist the organization in maintaining control over all of its verticals, such as design, manufacturing, shipping, and distribution.What is Zara globalization strategy? ›
In its quest for international expansion, Zara takes a pragmatic approach to each market and selects an entry mode that will work best. It has used different approaches including forming JVs, franchising and running its own subsidiaries according to what it thinks is the best method for each new market.
Promotional Plan − H&M created a multi-channel promotion strategy that includes advertising, sales promotion, and online promotion in order to increase brand awareness globally. Additionally, the business attracts clients by enhancing brand recognition and advertising discounted prices on the goods.What is the key success factor of H&M? ›
The secret to the success of H&M and its rivals like Zara and Forever 21 can be attributed to the fast fashion business model. Fast fashion relies on moving a large volume of merchandise from the designer table to the showroom floor in the shortest amount of time possible and at a reasonable price.What is H&M competitive advantage strategy? ›
H&M's business model specifically is to sell at relatively low prices, which in turn will enable the company to be able to compete with the fashion industry by offering similar fashions, but at lower prices, saving money on the design process.