Zara - Analysis of Fast Fashion Industry

Hello, everyone, I’m Xin Huo. So my article is about an industry that has become more competitive in recent years. So the industry I choose is the fast-fashion industry.

Here is my content. First is the introduction, I will give more basic information about this industry in that part. Then I will analysis it through the five forces model. Next is the information of the changing environment. Following is the examples I found that can be the representatives of the fast-fashion industry. Finally is the conclusion.

Moving to the introduction. Actually, “fast fashion” refers to low to middle cost clothing brands that focus on supplying their consumers with fast changing collections in the current fashion trends. What’s more, this industry has been expanding and developing dramatically in recent years because of the consumer’s rising incomes and their growing demands for fashionable products.

Next is about the five forces model. As we know, if the boundaries of an industry have been identified, the managers will face the task of analyzing the competition forces within the industry environment in order to identify the opportunity and threats. So there exist a well-known framework, named “the five forces model”, to help managers with this kind of analysis. And in this model, we need to consider 6 forces which including: the risk of entry by potential competitors; the bargaining power of buyers; of suppliers; the closeness of substitute to an industry’s product; the power of complement providers and the firm rivalry.

Following is the graph that fast-fashion industry adapts this model. Initially, for fast-fashion industry, there is a medium to high threat to new entry. It’s true that the market still has a huge potential and market share in nowadays, but at the same time, the capital requirement is also high and the customer’s loyalty to already established brands also seems like a deterrent. Moreover, the fast-fashion industry has the high buyer power and the low supplier power. The majority buyers in the market will seek quality for a good price among plenty of brands and easy to switch a new brand if they think it is more valuable than another. Also, the number of suppliers is quiet high and their ability to influence prices is limited.