Four factors fuelling the growth of fast fashion retailers – Econsultancy

The fast fashion industry is big business – and it’s only getting bigger.

According to new research, the industry has grown 21% over the past three years. When compared to the luxury market, which saw mediocre growth in 2016, it’s clear that fast fashion retailers are growing in favour.

Despite many retailers struggling on the high street – with the likes of House of Fraser, GAP, and Forever 21 announcing store closures in the past few years – the online fast fashion industry has continued to generate growth.

According to Hitwise data, fast fashion retail (compared to mid, premium, and luxury brands) accounted for 66% of all online fashion traffic in the first half of the year.

The McKinsey Global Fashion Index forecasts overall fashion industry growth of 3.5 to 4.5% in 2019. But interestingly, it predicts the best-performing segment to be luxury, fuelled by fast-growing Asia-Pacific economies. However, value and discount retailers are also predicted to see continued growth.

So, what’s fuelling the fast fashion boom? Here’s how brands are capitalising on the consumer desire for instant and affordable fashion, as well as tackling new challenges within the retail industry.

What is fast fashion?

Before we go any further – what exactly determines a fast fashion retailer?

Essentially, it is when the production process is accelerated in order to get new catwalk trends into stores or online as quickly as possible. It also reflects the growing consumer desire for speed and value within retail.

It means that, instead of waiting for new seasonal collections (i.e. spring / summer), consumers can get their hands on a continuous cycle of trend-led clothing, all year round.

Brands such as H&M and Zara were said to be among the very first fast fashion retailers. When the latter opened its first US store in 1990 (having first launched in Spain in the 1970s) it announced that it would only take 15 days for a garment to go from concept to completion.

So, what’s fuelling fast fashion brands?

Speed and agility

It’s not an easy time for the fashion industry, with all segments being impacted by economic uncertainty and increased market competition. Even Asos – which has continuously posted strong growth – issued a profit warning in December 2018 following a decline in sales.

Having said that, there’s still evidence that fast fashion is in big demand.

Boohoo is one retailer that successfully braved the retail storm of Christmas 2018. Despite the UK seeing the worst retail sales for the period in a decade, Boohoo reported 44% overall growth in the last four months of the year.

While there is a myriad of factors that contribute to Boohoo’s success, a stand-out characteristic is not only how it engages millennial consumers – but how it keeps them coming back for more. One way fast fashion retailers in general do this is by delivering on the demand for new fashion, as younger consumers typically like to spend around seasonal events (such as festivals or Christmas) as well as after payday.

Asos stocks over 60,000 items at any given time, allowing the ecommerce retailer to constantly update its inventory with ‘new in’ products. It constantly tracks how well (or poorly) trends are selling online, before adjusting its inventory accordingly. This means that it reduces the risk of unsold stock, and in turn, delivers a steady stream of new trends for fashion-hungry consumers.

Boohoo’s business model also aligns to this type of consumer. Its ‘test and repeat’ strategy allows the retailer to test various new items on-site, and to re-order based on what proves to be the most popular. So, as well as regularly giving consumers new stock, it is able to guarantee that these products will be big sellers.

Influencer endorsement

Fashion Nova is another of the most successful fast fashion retailers of the moment. Its CEO, Richard Saghian, told WWD that the company grew 600% in 2017. It was also the most-searched for fashion brand of 2018, according to Google.

Despite being around since 2006, Fashion Nova’s recent burst of success can be largely put down to social media, and the use of influencers as a key marketing strategy. It has worked with the likes of Kylie Jenner and Cardi B on Instagram, capitalising on the reach and influence of these high profile personalities. Fashion Nova also ensures it generates high levels of engagement across the board by working with small or ‘micro’ influencers, creating a pool of 13,000 influencers in total (also known as #novababes).

While influencer marketing is now a strategy utilised by a wide variety of industries, it particularly aligns with fast fashion thanks to the ‘see it, want it’ nature of Instagram. This, coupled with low prices points and regular discounting, means that there is very little stopping consumers from converting through the channel. 

Sales through social

Today, consumers are constantly craving fashion and lifestyle-related digital content, not just to inspire their choices, but also for the purpose of entertainment. So, in order to deliver this, many retailers have started to act more like media brands – fusing the worlds of shopping, entertainment, and social media.

Unsurprisingly, Instagram reigns supreme as the most effective platform for fashion brands, with many using videos, Instagram Stories, and shoppable content to enable users to smoothly transition from the act of browsing to buying.

So, alongside influencers, fast fashion brands have mastered the use of social media to enable and drive sales (rather than mere desire).

Instagram has now made buying on the channel even easier with its new Checkout feature – introduced in beta to 20 retailers in March 2019 – which allows users to complete product purchases without having to leave the app. It also enables Instagram to store data (such as purchasing info) on the channel, as well as allows users to track purchases and manage returns within its walls.

The benefits for fast fashion retailers will be a smoother customer journey, allowing shoppers to enjoy a faster, easier, and more instantaneous experience when browsing influencer content. 

One brand that has effectively used social to increase sales volume is Missguided; its shrewd partnership with Love Island generated a spike in sales for the brand during the show’s run in the summer of 2018. Encouraging viewers to ‘get the look’, it used Instagram to drive sales of the clothes featured in the show, capitalising on the ‘influence’ of its stars, even before they’d left the island itself.

Sustainability and ethics

The fast fashion industry has come under fire in recent years for its impact on the environment, as well as suggestions that the demand for cheap clothing is driving poor working and labour conditions.

Interestingly, 2017 Hitwise research shows that 19% of the top fast fashion related searches are linked to the environment, ethics, and sustainability. In order to counteract this, many brands are now displaying increased levels of transparency, with some also introducing initiatives relating to ethical and environmental issues.

H&M, for example, launched its ‘Conscious Collection’ for Spring 2019, which comes as part of its wider goal of using 100% sustainably sourced cotton by 2020.

Meanwhile, Zara and others have pledged to boycott Uzbek cotton, which is an industry linked to forced labour. The Better Cotton Initiative promotes sustainability and best practices for workers in the cotton industry.

Of course, there is still a long way to go before fast fashion retailers prove themselves, however, these examples are helping to satisfy increasingly conscientious consumers – as well as enhance their brand reputation. With new initiatives like the Sustainable Clothing Action Plan also pushing retailers to make real change, it’s likely to become an increasing topic of conversation for the industry in the near future.

Other brands playing catch-up

So, what impact has fast fashion had on the wider industry in general? Interestingly, mid-tier and luxury brands are recognising that the consumer desire for fast fashion is not only based on low prices.

Often, it can simply be because consumers do not want to wait for seasonal collections.

As a result, some brands are introducing ‘see now buy now’ model to allow consumers to get their hands on clothes as soon as they’re seen on the catwalk. For Rebecca Minkoff, the concept reportedly resulted in a 211% sales increase during the first season it introduced it.

It’s not just luxury brands either. Elsewhere, more affordable retailers like JC Penney have accelerated the delivery of merchandise in order to update stock mid-season, while Gap has also trialled a fast-fashion model to get new designs into stores on a more regular basis.

Spearheaded by the continued growth of retailers like Missguided and Boohoo, fast fashion doesn’t look like it will be slowing down any time soon.

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