the women's cosmetics market like Clarins and L'Oréal launched specific ranges: Clarins For Men (2002) and L'Oréal Men Expert (2004). Both were successful. Since a couple of years, marketing strategists have made men aware that taking care of themselves doesn't call into question their virility, associating them to an effiminate or homosexual universe.
Monday, March 30, 2009
Metrosexual has been ?
the women's cosmetics market like Clarins and L'Oréal launched specific ranges: Clarins For Men (2002) and L'Oréal Men Expert (2004). Both were successful. Since a couple of years, marketing strategists have made men aware that taking care of themselves doesn't call into question their virility, associating them to an effiminate or homosexual universe.
Monday, March 16, 2009
Zara / Mango
Zara / Mango : FASHION CONQUISTADOR
The secrets of a miracle
The precise analyse of a marketing strategy
Did you think that ZARA's and MANGO's fairy tale was the result of luck? Did you wonder why Europeans can't shop without buying a lot of clothes in ZARA or MANGO and getting into debt? The answer is easy. Both brands have an intelligent strategy, an effective production and an unstoppable marketing. It has nothing to do with luck ! Let's analyse together and dissect, after a short history, what makes the spanish prêt-à-porter so successful.....
ZARA
The company's track record is pretty impressive. Since 2000, Inditex (Zara, Massimo Dutti, Pull and Bear, Stradivarius, Bershka, Oysho) tripled its sales and profits as it has doubled the number of stores. In 2001, Ortega became the world's 23rd richest person, with a personal fortune that Forbes estimated at $12.6 billion.
Inditex has managed to get so far, so fast largely through the use of innovative management and logistics techniques, which have now become the subject of studies in business schools around the world.(1)
(1) For instance, a Zara Fast Fashion Workshop was held on October 21st, 2005, at the Fashion Institute of Technology in New York City
--> History
Spanish entrepreneur Amancio Ortega Gaona started a firm manufacturing lingerie and nightwear in 1963 in La Coruña (Galicia). He opened the first Zara store in 1975, to sell stock after a customer cancelled a large order. Since then Zara has made high fashion universally, generating sales of 3.8 billion euros. The 1980s saw rapid expansion across Spain, followed by the opening in 1988 of the first Zara store outside Spain, in Porto, Portugal. Other shops followed swiftly in New York in 1989, Paris in 1990.
Now the group has nearly 3,900 stores in 70 countries around the world. It has expanded so rapidly in recent months that it has even overtaken its main US rival Gap to become the world's largest clothing retailer. The difference may be tiny, but for the first time the Spanish group has inched past its American rival. It is three years since Inditex overtook H&M, to become the biggest clothing retailer in Europe.
Regarding the present context in the textile wear production (= a bitter competition), Zara's success seems to be a fairy tale… a fairy tale that has been very precisely organised since years thanks to an innovative and audacious commercial strategy.
--> The concept
"Zara was a fashion imitator. It focused its attention on understanding the fashion items that its customers wanted and then delivering them, rather than on promoting predicted season's trends via fashion shows and similar channels of influence, which the fashion industry traditionally used." (2)
(2) according to Businessworld magazine
The 3 golden rules :
1- Follow the trends of fashion shows... Zara's talent consists in observing in a discerning way the trends to follow. As a consequence, what is proposed is perfectly adequate to the client's desires.
2- Tease the desires of customers... Zara turns the last musts of high fashion houses into affordable clothes.
3- Be in tune with the desires of customers. 200 designers receive informations from all shops in order to know what is being sold and what is not. So they simutaneously adapt the products to consumers' behaviours. They are also informed about sails of creators and houses they inspire themselves of. Therefore, they can determine more precisely the potential of each item.
--> Strategy "Design on demand"
The success of items lies in the fact that Zara is able to adapt the offer in the shortest time possible to what customers want. For Inditex, time is the main factor to take into account. ,It is even more important than the costs of production.
When Zara opened in England, it was the first fashion chain to constantly restock. That has become commonplace but then it was a brilliant strategy at the beginning.... luring customers back weekly by offering something different on every visit. Nowadays, deliveries arrive at stores twice per week from Zara headquarters. At all stores. Ken even checked in Kuala Lumpur, in Malaysia. Failure rates of Zara's new products were reported to be just 1 per cent, considerably lower than the industry average of 10 per cent.
The company can design a new product and have finished goods in its stores in four to five weeks; it can modify existing items in two weeks (compared with a six-month industry average). It produces about 11,000 distinct items annually compared with 2,000 to 4,000 items for its main competitors.
If a design doesn't sell well within a week, it is withdrawn from shops and further orders are cancelled. A new design is pursued. No design stays on the shop floor for more than four weeks. An average high-street store in Spain expects customers to visit three times a year. That goes up to 17 times for Zara.
The capacity of reaction has to be short : a climate change, a surpise, a new trendy product that all stars wear. According to Zara, the climate is the first factor to be taken into account. A rainy summer or a warmy winter can ruin a whokey words of Zara.
Zara became adept at picking up up-to-the-minute trends and churning them out to stores in a matter of weeks. For example, after Madonna's first concert date in Spain during a recent tour, her outfit was copied by Zara. By the time she performed her last concert in Spain, some members of the audience were wearing the same outfit. Thanks to whom?
By constantly refreshing the collection, Zara was able to prevent the accumulation of non-saleable inventories and customers constantly returned to stores to browse new items.
--> an intimate communication / a marketing of scarcity
Zara chose an interactive relation with its clients.
- No noisy advert : In comparison with other clothing retailers, who spent 3-4 per cent of sales on advertising, Zara spent just 0.3 per cent. The little it did spend went to reinforce its identity as a clothing retailer that was low-cost but high fashion.
- No glamourous partenrship or media-related events : Zara most importantly wants to create desires among customers and make them come back.
- Communication Strategy : its weekly shop windows
Zara relied on its shop windows to communicate its brand image. They are elaborated in Spain every week and have to be the same in all shops.
This choice of an almost non-existant communication makes them save a huge budget in order to invest in real estate. The stores have the best location possible which is crucial : they must be seen, accessible and in places known for shopping to keep a direct relation with consumers.
Customers entering a Zara store on Regent Street in London, Rue Rivoli in Paris, Fifth Avenue in New York or Avenidas das Americas in Rio de Janeiro generally discovers the same environment: a predominantly white, modern and spacious store, well-lit and walled with mirror.
- Marketing of scarcity : Each item is only producted 10 or 15 000 times, which has two advantages : exclusivity for customers and need for Zara to create new items.
--> Outsourcing ? Zara - a vertically integrated retailer
The key to Inditex's brand diversification lies in the group's vertical integration. Almost all the phases of developing and selling are carried out in house — from design and production to logistics and sales. It designs, produces, and distributes itself. Unlike similar apparel retailers in the same market, Zara controls most of the steps on the supply-chain.
50% of the products Zara sells are manufactured in Spain, 26% in the rest of Europe, and 24% in Asian and African countries and the rest of the world. So while competitors outsource production to Asia, Zara makes its most fashionable items - half of all its items - at a dozen company-owned factories in Spain and Portugal, particularly in Galician and northern Portugal. Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia and Turkey.
At the Zara distribution centre, optical reading devices were used to sort and distribute over 60,000 items per hour. The garments were then picked up and collected by trucks, which transported them to different destinations all over Europe (about 75 per cent of deliveries). Products for more distant destinations were transported by air (about 25 per cent)
Of course outsourcings would make the costs of production go down but it will extend the deadline to 2 or 3 months as well.
Store in Casablanca (at the top) and in the 5th Avenue in NY (at the bottom)
--> Limits
The Zara model seems to work better in markets where customers have an appetite for fashion (such as France, Italy, Japan and the UK). In other markets, where consumers are less fashion-focused (such as Germany and the US), Zara is less successful.
Zara only has one manufacturing and distribution center in the world. It is both a gift (all steps of development can be controled) and a curse. The risk is huge. If there is a power shortage, strike or even a natural disaster in the area, it will be sure to affect Zara dramatically.
Another weakness of Zara is its euro-centric model :
- First of all, there is an expected over saturation of Zara stores in Europe by 2013, which would mean that running the stores would actually cost more money than their revenue.
- Second of all, the european strong currency makes prices climbing in places such as the United States where the same piece of clothing can be up to 50% more than in Spain. Therefore, Zara products are low-cost in Europe, while they are priced as luxury fashion items in the rest of the world. Europeans would be stunned by the prices of items in Buenos Aires (clearly unaffordable for the argentinean standart of living and even more expensive than in Europe). In Singapore, one of the best places to shop in the world, Zara is also very expensive in comparison with other similar non european shops.
--> Future Opportunities
The Zara lifestyle : Zara tends to diverse its offer. Nowadays, the concept that made the brand famous, based on the democratization of luxurious inspired by high fashion is being a little bit forgotten. The brand has to evolve. The offer is more and more diverse. From make-up to furnitures by Zara Home, Zara has the ability to develop a real brand image.
China and India :
Zara's next step is certainly in China, where 9 shops were openend since 2004. Amancio Ortega clearly wants to profit from the emerging chinese middle class and extend rapidly his reign in the market.
The greatest source of growth in the near future will probably come from India. India has been one of the top retail investment markets for the last three years. The opening of stores in India has been planed for 2010.
MANGO
Aimed at urban women aged between 18 and 40, Mango has turned into one of the two leading Spanish clothing exporters, with 1,200 stores worldwide in 89 countries. Indeed, the brand that was created in 1984 has become successfull although the market of women's clothing remains extremely competitive. In 2008, the turnover reached 1,3 billion euros. As a consequence, the main shareholders, the brothers Andic, figure among the 350 world's biggest fortunes, according to the US business magazine Forbes.
--> History
Mango is an exception. Isak et Nahman Andic, two 14 years old turkish brothers emigrated to Spain. When he was 17, Isak traveled in Asia and came back home with tee-shirts he wanted to sail twice more. He started sailing the items on the flea market with his brother. In 1984, they opened their first shop in one of the greatest boulevards of Barcelona : Passeig de Gràcia. It was called Mango, a reference to the tropic fruit Isak tasted when he went to the Philippines and liked because it tasted very different from what he used to taste…
Mango's rapid international expansion has enabled the brothers to meet their goal of having a retail outlet in every large city in the world. The brand embarked upon international expansion in 1992 with the opening of two franchise stores in Portugal. The first Mango shop in America was inaugurated in Mexico in 1994. With its entry into Taiwan in 1995, MANGO/MNG established itself in the Asian market. Mango is also the first Spanish brand to have successfully broken into the complicated Italian market.
The store boulevard Haussman in Paris remains the best example to assess Mango's success. Every day, 8, 000 consumers enter this new store of 1 400 m2, located in the quarter with the highest shopping debit in Europe, next to the Grands Magasins (Galeries Lafayettes and Printemps). Bought two years ago, it was highly expensive (approximatively 20 Million Euros). In a few moths, this shop has become the number one for the brand : best turnover.
On November 20th, a new shop MANGO opened in New York in spite of the crisis or rather thanks to the crisis because a lot of brands had to close their shops which brought new opportunies and markets. Mango even has an eye on the 5th Avenue and the Champs Elysées.
--> New Developments
ONLINE STORE : An increasing number of people visit the online store to do their shopping. Thanks to the website, the 713,000 users registered so far, 26% more than last year, have found a convenient and practical way to purchase items from the MANGO collection. 11,000 orders are now placed every month.
FOR MEN : The HE Homini Emerito collection has also recorded an increase in online sales since it was lauched in March 2008. The section of this collection has been enlarged afterwards, in order to be adapted to the men's market.
ASIA : The last major new development is undoubtedly the project to bring Mangoshop.com to China. After Beijing, Mango is continuing its expansion in the Asian giant with the opening of two new stores in Shanghai. Both are large stores and are located in two of the city’s most prestigious shopping centres: Superbrand Mall and Plaza 353 Mall.
--> Marketing in a very competitive market
How to avoid a direct competition ? Simply by creating products that cannot be compared to the ones that the competitors create, mainly ZARA and H&M. That way, Mango brings someting else and aims at a slightly different market.
To face Zara, which does not advertise and creates impeccable basic items, Mango tries to be highly fashion and glamour :
1) by manifolding shows with designers
2) by collaborating with muses such as Pénélope Cruz
To face H&M which is imbattable when it comes to the quality/ price ratio, Mango :
1) proposes more expensive items but more sophisticated
2) renews more often
Mango is consequently an exception within the market. It avoids a direct competition : less trendy than H&M, more intimist than Zara, the brand succeeded to attract urban clients who want to be in without being "fashion victim".
Mango's PLUS ?
1) Mango proposes clothes that are at the same time trendy and practical. Of course the stylists are inspired by fashion shows but they have to design more than 70 % of basic clothes and around 30% of "fashion" products. Prices remain affordable even though they are higher than the ones in Zara. Mango's goal consists in proposing clothes for everything. That is the reason why the brand opened different lines. Indeed, after a few years, it extended its target. As a consequence, one can find pupils, sophisticated thirty years old women as well as older women with a basic style.
2) All shop assistants are personal shoppers. They have been trained to advice customers. MANGO wants to offer an environnement conducive to consumption even though prices will be consequently higher.
--> Marketing Strategy
MANGO's budget for communication is very important. Milla Jovovich created a mini collection a few years ago. Most recently, the famous Penelope and Monica Cruz designed for the brand too. Mango is not only looking for spangles. The headquarter wants the chosen stars to feel free and bring their own vision of fashion through these mini-collections (25 different items). The sisters Cruz decided to create clothes their would like to wear but they were also inspired by the lothes they already wear. Mango uses the image of these beautiful spanish women who are elegant but also modern.
--> Mango and France
Let's not forget that the new strategic market is not only the Asian one but the French one. France is traditionnally a country of shopping. French women spend much more money for clothes than spanish women. The 89 shops in France represent 10 % of Mango's turnover and it is only the beginning. 25 openings have been planned in 2008. What's next? The market of men's clothing is the most challenging. The competition remains less important than for the market of women's clothing. However, the only competitor is a huge one : ZARA MEN.
.... It's fast, it's outrageously fashionable. How could our addicted fashion victims resist ?