rm report (yamini shami and gaurav gomez)
TRANSCRIPT
A
RESEARCH PROPOSAL
ON
FAST FASHION CHANGE
BY
GAURAV GOMEZ
YAMINI SHAMI NATIONAL INSTITUTE OF FASHION TECHNOLOGY,
GANDHINAGAR
PROBLEM STATEMENT
Fluctuation in customer mood due to more insecurity in terms of social image and
decrease in validation of any event has led to increase in buying tendency of varied
products, frequently.
The prolonged instability in the world economy has taken its toll on the
Branded Apparel market. Slowing economic growth, reduction in household
wealth, falling consumer confidence, frugal discretionary spending patterns, and
shifting consumer demand to value for money bargains have all eroded sales growth
over the last 5 years(-0.5% CAGR domestically and 1.4% CAGR overall). The decline
in consumer spending has also battered down retailers’ operating margins. With
consumers changing to lower price points, cheaper private label brands have been
offering tough competition to premium brands.
Moreover fierce competition, with little brand loyalty, low barriers to entry,
constant pricing pressure from competitors and a critical need to be fashion-right
turn to be one of the main investment negatives for the branded apparel industry.
Entrance of new brands easily at lower price limits,
Threat of substitutes, Highly competitive ecommerce format, Increase in
competitors rivalry, challenge in effective pricing in development and distribution of
products, decrease in product quantity per style; restricts the fast changing brands,
to increase their products price for fast changing fashion.
RESEARCH OBJECTIVE
To study the fast changing fashion and suggest how brand should implement the
fast changing fashion method to increase the life span of brand maturity.
HYPOTHESIS
Ho –Customers are not ready to accept Fast changing fashion.
LITERATURE REVIEW
APPAREL RETAIL INDUSTRY
The apparel retail industry consists of the sale of all menswear, womens wear and
childrens wear. The menswear market includes mens activewear, casual wear,
essentials, formalwear, formalwear-occasion and outerwear. The womens wear market
includes women's active wear, casual wear, essentials, formalwear, formalwear-
occasion and outerwear. The childrens wear market includes baby clothing, boys
activewear, boys casual wear, boys essentials, boys formalwear, boys formalwear-
occasion, boys outerwear, girls active wear, girls casual wear, girls essentials, girls
formalwear-occasion, girls outerwear and toddler clothing.
The global apparel retail industry had total revenue of $1,031.5 billion in 2009,
representing a compound annual growth rate (CAGR) of 3.1% for the period spanning
2005-2009. In comparison, the European and Asia-Pacific industries grew with CAGRs
of 1.7% and 4% respectively, over the same period, to reach respective values of $384.2
billion and $262.8 billion in 2009.
Sales of womens wear proved the most lucrative for the global apparel retail industry in
2009, with total revenues of $534.4 billion, equivalent to 51.8% of the market's overall
value. In comparison, sales of menswear generated revenues of $335.6 billion in 2009,
equating to 32.5% of the industry’s aggregate revenues.
The performance of the industry is forecast to decelerate, with an anticipated CAGR of
2.4% for the five year period 2009-2014, which is expected to drive the industry to a
value of $1,162.8 billion by the end of 2014. Comparatively, the European and Asia-
Pacific industries will grow with CAGRs of 1.7% and 3.2% respectively, over the same
period, to reach respective values of $417.5 billion and $307.2 billion in 2014.
Fluctuation of customer moods and desire to buy and wear, more variable products has
led to fast changing fashion need of the hour.
BRANDED APPAREL INDUSTRY
The branded apparel industry has benefited from demographic shifts and changes in
consumer preferences over time due to globalization and a rise in brand awareness.
With fashion emerging as a means of self-expression, consumers are increasingly
choosing apparel with brand images or logos over private label. The United States
represents the world’s largest branded apparel market having an estimated share of
29.26%2, followed by Europe and Asia. However, growth in emerging markets such as
Asia-Pacific is very encouraging for the branded apparel industry.
Companies compete on the following key points: timeliness of fashions, trendiness,
breadth of merchandise, brand recognition, pricing, quality, and overall shopping
experience and environment. Despite some potential for companies to create
competitive advantages, the industry has relatively low barriers to entry and is
highly competitive.
Buyers in this market vary in size from the international department stores to the
individual retail customer. Due to the majority of sales coming from the company retail
stores the large department stores have very little power over the branded apparel
players. Their sales contributions are not large enough to have a significant impact on
the players’ annual sales. The individual retail customer has very little financial power
compared to any branded apparel player. However, individual customers are prone to
switching due to the many undifferentiated products offered by players and low costs
involved (difficult to maintain brand loyalty). The sheer number of consumers in the
market decreases the impact from consumer switching to make the power arguably
evenly split between apparel retailers and consumers. Therefore, these two different
buyer types – department stores and individual retail customers - experience similar
levels of buying power.
Due to the nature of the end product and inexpensive shipping costs, suppliers are
sourced from around the globe. The large number of suppliers available then weakens
their power. Players in this industry also make it their strategy to have no more than
10% of their manufacturing coming from any one supplier in order to decrease the
suppliers’ power even more.
The threat of substitutes is high as large national department stores are much larger
than any player in the industry (ex. Macy’s has $26.4 billion in 2011 sales compared
to the largest player’s, The Gap, $11.3 billion domestic sales). Also, discount retailers
and supercenters like Wal-Mart pose a threat to the industry, especially during
economic recessions when consumers have less disposable income. Finally, foreign
branded apparel firms (H&M, ZARA, etc.) pose a threat US branded apparel firm both
in store and online sales.
Potential new entrants to the branded apparel industry face very low barriers.
Requirements include an apparel manufacturing partner and a retail store with sales
staff. Even the retail store is becoming increasingly less important. Many people have
noticed the increased sales being generated by players’ direct-to-consumer
operations and new players are beginning to enter the market using online.
The high fragmentation of the industry leads to increased competitor rivalry. The
seasonality of the business is another reason for increased rivalry as players are
fighting for customers during short periods of time throughout the year. As many
apparel products lack major differentiation between competitors, price becomes an
increasingly important factor.
This fierce competition, with little brand loyalty, low barriers to entry, constant
pricing pressure from competitors and a critical need to be fashion-right turn to be one
of the main investment negatives for the US branded apparel industry. Having strong
brand equity enables a retailer to price merchandise higher than commoditized
retailers who compete solely on price. The coverage universe does not offer the lowest
price points, but it attempts to “value price” its goods, offering solid-quality, trend-right
merchandise with a desirable brand name
CURRENT SCENARIO
Customers have become more conscious about their public image and are more socially
active. This has led to increase in buying frequency of a product, thereby decreasing the
product lifecycle.
Emergence of the new brands via e commerce has drastically increase, as lees
investment is needed for the start-up. Thereby decreasing the market share of other
brands.
Globalization has also increased the pressure of the brands to satisfy the customer
locally, at effective and efficient time. Moreover increase in cost of procurement and
development of product and at the same time effective cost competition from other
brands burdened the brands in getting better profit margin.
Thus, the brands maturity stage period has reduced and they are finding it difficult to
sustain in this competitive environment.
ZARA BRAND OVERVIEW
Vertical Integration of a brand from design to the product availability at store is
required to reduce the inventory time and cope up with the fast changing fashion.
Zara, is one which initially introduced this method, and have become the fashion leader
in terms of sales and youth choice. Zara’s clothing is uniquely positioned to serve this
segment of the market because of its fast paced fashion ideas, its latest technology, its
efficient business strategies and its affordable prices.
Unusually for a clothes retailer, Zara designs all its own clothes, makes most of them in
Spain and distributes all of them itself. And many observers attribute Zara's success to
this control of the business from factory to shop floor.
Inditex with its brand Zara has targeted a wide gap in the retail market. The company
targets customers that are interested in high fashion want to be up to speed with the
latest fashion trends but are not able to afford clothes and accessories from the couture
and high end boutiques. In order to target the market, Zara strategy launches its outlets
in high profile locations and provides customers with a turnover time of 4-5 weeks for
its new collections made available at a fraction of the couture cost. This, along with the
brand persona, the collection of the clothes and accessories and the marketing
campaigns pulls the target markets to the Zara stores.
Other than Zara , H&M is also adopting the fast fashion change, with retail format stores.
Competition in the fashion industry has always been tough. H&M Hennes & Mauritz ,
has always been Zara competitor in this industry. H&M has been in business since 1947,
while Zara started business in 1975. Experience can play a big role in business, but
strategy has been the edge of Zara to gain competitive advantage in the business. Zara
has gone against the conventional strategy where other company dare not pursue. The
strategy of Zara is unconventional, other companies in fashion retail uses a different
strategy. Zara’s strategy works in making the products of the company more anticipated
by the customers. The strategy also gives the company the full responsibility in
managing all the business processes; form designing, to production, to shipment, etc.
This allows the company to focus on each process, making each process vital.
RESEARCH DESIGN
Type of research
Descriptive – Qualitative Research.
Since fast fashion change concept has been introduced in the market, and is adopted by
major brands like Zara, H&M; our research proposal is of descriptive in nature as we
will study the fast fashion change concept, why this concept is the new fashion trend
and moreover inspite of being the fashion trend still most of the major brands till date
has not introduced it.
From this study we have to inference out that if customers satisfaction has increased by
the introduce of fast fashion and whether they are awaiting the other brands to also
introduce the same. We would also track the brand perception towards fast fashion
change, whether it is the new future of apparel industry and if so what major reasons
are there that are restricting them to adopt this method.
So it will be Qualitative in nature
Research Instrument
Questionnaire with the customers and Interview with the managers.
Contact Method
Physical & Online Survey, from the customers
Online Survey, Physical & Telephonic Interview with the Brand Managers & Forecasters.
Population
Demographic Segmentation
1. Age
Teenagers between 18 – 24 years
2. Gender
Female
3. Type
Students and young working professionals.
Geographic Segmentation
Tier I cities – Cities which are fast pacing and multi cultural and youth centric.
Tier I cities are Kolkata, Chennai, Delhi, Hyderabad, Bangalore, Mumbai, Pune,
Ahmedabad.
World Population – 7.2 Billion
India Population – 1.27 Billion
India Female Population – 614.4 Million(940 females per 1000
males)
India Female Population (18 to 24 yrs) – 232 Million
Tier I City Population – 131.1 Million
Tier I Female Population – 63 Million
Tier I Female Population (18-24 yrs) – 23.86 Million
Ahmedabad Population - 8.4 Million
Ahmedabad Female Population – 4.1 Million
Ahmedabad Female Population (18 – 24 yrs)– 1.4 Million
SAMPLING TECHNIQUE
Non Probability Convenience Technique
Since the listing of people is not there, and we are taking random group of
female people aged between 18 – 24 years.
SURVEY ON FAST FASHION CHANGE
We, the students of NIFT Gandhinagar are conducting a research on the FAST FASHION
CHANGE and want you to be part of our research. Your answers are very valuable for us
and will help us a great deal in our study. So, we request you to fill up the following
short survey that would not take you more than 2-3 minutes.
Fast Fashion change is the immediate arrival of the product that the customer desire to
be in the store.
* Required
SECTION A
PERSONAL INFORMATION
1. You are *Ms.
2. Occupation*
3. Age *
SECTION B
1. How often do you buy branded fashion apparel product?
Twice in a month
Once in a month
Once in a two month
More than two months
Uncertain
2. What is the quantity of garment per purchase?
1-3
3-6
More than 6
3. How much would you spend on branded fashion apparel per visit to a store ?
1500-3000 Rs
3000-4500 Rs
4500-6000 Rs
6000-7500Rs
More than 7500 Rs
4. Which Retail format do you prefer to buy the branded fashion apparel products?
MBO (Multiple Brand Outlet)
EBO (Exclusive Brand Outlet)
Online
Others. Please specify
Are you aware of fast fashion change in fashion apparel sector?
Yes
No
If yes please then go to Section C
SECTION C
What do you mean by fast fashion change in fashion apparel sector?(You may select
more than one option
Varied Apparel Products available at the store
Change of style and products frequently at the store
Same type of Products available at varied price range
Other, Please specify
According to you which brand follows FAST FASHION CHANGE ?
Zara
H&M
Others
7. Please mark whether you agree--disagree with the following statements based on
how you feel.
Strongly
Agree
Agree Uncertain Disagree Strongly
Disagree
Due to fast fashion change my
buying frequency for branded
apparel has increased
Fast fashion change has
increased my product & brand
satisfaction
Fast Fashion change is the
need of the hour for the
brands to keep continuously
fulfilling customer needs
According to you what are the reasons for adopting the fast fashion change?
Social need
Culture diversity
Fashion conscious
Boredom
Status symbol
Other, Please specify
8. Do you prefer to buy for the same brand for most of the time ?
Yes
No
If Yes,
“My needs most of the time gets fulfilled by the brand.”
Strongly disagree Disagree Uncertain Agree Strongly Agree
(1) (2) (3) (4) (5)
If No,
A) How often do you shift preference of your brand ?
Monthly
Quarterly
Half yearly
Yearly
Uncertain
B) What would be the reasons for shift of brand preference over another? (rank
accordingly)
E-commerce
New brand entrance
Fast fashion change
Decrease in product life cycle
Boredom with the same brand
Easy multiple options availability
Varied price range
10. Would you prefer and accept FAST FASHION CHANGE brands over other brands that
have not adopted this concept?
Yes
No
11. What do you think would be the reason that inspite of Fast Fashion Change a hit
in the market most brands till date are not following it ?
Unawareness
Cost effectiveness
Strategical & business challenge
Doesnt create any difference for them
No Idea
Others, Please specify
SURVEY ON FAST FASHION CHANGE(for brand managers)
We, the students of NIFT Gandhinagar are conducting a research on the FAST FASHION
CHANGE and want you to be part of our research. Your answers are very valuable for us
and will help us a great deal in our study. So, we request you to fill up the following
short survey that would not take you more than 2-3 minutes.
* Required
SECTION A
PERSONAL INFORMATION
1. Company Name* :
2. Designation* :
3. E-mail Id :
4. Contact No. :
SECTION B
1. Are you aware of the concept of FAST FASHION CHANGE ?
Yes
No
2. What is your opinion regarding the statement- “For a brand , its compulsory to adopt
FAST FASHION CHANGE for the survival or sustainance in the market” ?
Strongly disagree Disagree Uncertain Agree Strongly Agree
(1) (2) (3) (4) (5)
3. Are the brands following FAST FASHION CHANGE fulfilling the customer needs or
desires comparatively in a better way ?
Yes
No
4. What do you think would be the major reason that inspite of FAST FASHION CHANGE
a hit in the market most brands till date are not following it ?
Cost effectiveness
Strategical challenge
Vendor management
Central distribution management
5. Do you think FAST FASHION CHANGE is the next future trend of the market ?
Yes
No
If No,
What could be the possible new trends if any,
6. Do you think life span of a brand maturity has decreased over the period ?
Strongly disagree Disagree Uncertain Agree Strongly Agree
(1) (2) (3) (4) (5)
What would be the possible reasons for the decrease in life span of a brand maturity?
E-commerce
New brand entrance
Fast fashion change
Decrease in product life cycle
Boredom with the constant brand
Easy multiple options availability
Varied price range
Others, please specify……………………………….
What a brand should do to adopt fast fashion change as their business model?
Vendor management Inventory
Central distribution management
Vertical Integration
Technological Advancement
Proper Communication among different departments at varied location.
Quick forecasting and response time
SAMPLE SIZE CALCUILATION
CONFIDENCE LEVEL, z = 95% = 1.96 VARIABILITY, p = 0.5 (MAXIMUM)PRECESION LEVEL, e = 5% = 0.05FORMULA: (z*z)*(p*p)/ (e*e) = (1.96*1.96)* (0.5*0.5)/ (0.05*0.05) = 384Therefore sample size is 384
HYPOTHESIS QUANTIFICATION
H = Customers are not ready to accept fast fashion change.P H = 0.47 (According to pilot testing) PHo < 0.47