H&M and Zara Case Study – Comparing the Fast Fashion Giants – 440 Industries (2023)

Introduction

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

H&M 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.

Zara Brand

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.

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.

Conclusion

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.