Internationalization Of Fast Fashion Retailers: Does It Follow The Uppsala Model?

Abstract

Distinctive from other retailers, fast fashion retailers design, produce, and deliver high fashion goods to consumers in significantly less time. Because of their unique use of their supply chain (Jin, Chang, Matthews & Grupta, 2011), fast fashion retailers, such as Zara and H&M are generating successful financial results when compared to non-fast fashion retailers. For example, profit margins for typical apparel specialty stores are 7 % whereas, fast fashion retailers are 16%, more than double that of comparable stores (Sull & Turconi, 2008). Growth rate is also much higher for fast fashion retailers. While Gap was experiencing negative growth (−1.7%) between 2003–2008, fast fashion retailer’s Zara (Inditex) and H’M experienced a 19.2% and 8.4% growth, respectively (Datamonitor, 2008; Gap Inc., 2009; Hoover’s, 2009; H&M, 2009; Inditex, 2009). Another important aspect of fast fashion retailers’ competitive advantage is their successful management of international operations. H&M sells the majority of their merchandise internationally, selling 84% of their merchandise outside of Nordic countries (H&M, 2010), whereas non-fast fashion retailer Gap only has aspirations to have 30% of its sales outside of North America by 2013 (Gap, 2010), less than half that of H&M’s international sales. Fast fashion retailers also operate in a greater number of countries. Zara has a presence in twice the amount of operating countries (i.e., 77 countries) than Gap (i.e., 31 countries), even though it was established six years later (1975) than Gap (1969).