The clothing industry, as one of the most globalized industries in the world (Bonacich et al 1994), is currently undergoing a restructuring, especially the fast fashion sector. Fashion markets are synonymous with rapid changes and short product life cycles. Therefore, changes in consumer demand for newness and fashion trend force the emergence of ‘fast fashion’ strategy in retailers like Zara and H&M and shifts in the focus of competitive advantage from price towards quick response. That is to say, clothing firms, which are adopting global or offshore sourcing strategy, are not considered to have more competitive advantages as before. However, the question is: should fast fashion retailers adopt quick response strategy instead of overseas sourcing strategy immediately, or adopt both strategies? In the first section, a literature review of the nature of fashion market and related arguments will be introduced. The overseas sourcing strategy and the quick response strategy will be explained with examples of existing clothing firms in the second and the third section. The fourth section will compare and contrast the advantage and disadvantages of these two strategies. Combining theoretical knowledge with empirical case studies, it is argued that companies could reach the maximum profit by adopting overseas sourcing strategy as well as quick response strategy.
1. Literature Review
Fashion retailers, such as Zara, H&M, Benetton and Marks & Spencer have revolutionized the fashion industry by creating a concept of ‘fast fashion’. The change in the culture of fashion from haute couture to fast fashion has attracted numerous researchers to identify and explore the nature of fast fashion market (Tokatli 2008, p.22, Christopher et al 2004, p.367, Sull and Turconi 2008, Tokatile et al 2008). Accordingly, short life cycles, rapid prototyping and high volatility are identified as the key features of the fashion market. Compared to other industries, apparel product manufacturing has unique features, for instance, numerous SKU (stock keeping unit) in a season, hard to estimate customers’ demand and wide range of products for basic to fashion items (Jin 2004). All these unique characteristics require a different approach to production sourcing, Sull and Turconi (2008) pointed out that fast fashion retailers prefer using an opportunity-pull approach to the traditional designer-push model. By adopting the new approach, retailers could respond to the shifts in the market as quickly as possible. As a result, the more continuous production schedule (eight to twelve fashion ‘seasons’) has substituted for the traditional two to four ‘seasons’ calendar (Tokatile et al 2008, p. 264, Dicken 2011, p.316). In relation to global production networks, Dicken (2011) identified the ‘core’ of a global production network as the circuit of four basic operations, which refers to inputs, transformation, distribution and consumption. Theoretically, the quicker the production circuit flows, the higher the gross margin the company can gain. When we apply the theory into the clothing industry, the cost of production and the speed to response to changes in consumer demand are equally important. Both of them could contribute to the flow of production circuit. Since numbers of studies have elaborated the benefit of production relocation, the implementation of quick response strategy by fashion retailers has attracted the interest of researchers in recent years (Birtwistle et al 2003, Perry and Sohal 2000, Iyer and Bergen 1997). However, results of an exploratory study (Birtwistle et al 2003) shows that the advantages of quick response strategy have not been fully understood by fashion retailers. They tend to implement quick response strategy for internal supply chain management. Moreover, Iyer and Bergen (1997) tried to use formal model to examine the impact of quick response strategy on fashion retailers. Although there is...
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