Fast Fashion Companies Case Study

Topic: Company Analysis
Words: 2016 Pages: 7


Fast fashion is a term used by people in the fashion industry. It denotes a brand’s fast product range renewal; clothes are produced quickly and sold at a low price (Bonilla et al., 2019). Companies sell very cheap clothes, and instead of launching two or more collections at a particular time every year, they are constantly launching a massive number of new products on the market, which allows them to keep under control consumer tastes that are changing rapidly. People do not want to be photographed wearing the same outfit more than once. Adding fuel to the fire is constant advertising in sponsored posts and the social media feed (Bonilla et al., 2019). This direction can have a negative effect on the environment and social responsibility. However, this approach is profitable for companies constantly optimizing the supply chain in economic terms. The largest such companies include H&M, Zara, and Benetton. This paper assesses the approach of listed companies to managing their supply chains from production to distribution in the context of internationalization and digitalization.

Supply Chains


Fast fashion requires fast action at every stage of the supply chain. Modern trends require, in turn, compliance with the requirements of social and environmental responsibility. The reputation of big brands can suffer significantly if companies do not consider current trends. Therefore, the supply chains of big brands must be at a high level in terms of transparency, security, trust, and economic benefit. H&M works with over 700 clothing manufacturers, primarily from China and Bangladesh (H&M Supply Chain, 2022). However, designers are engaged in designing and constantly planning for almost a year. At the same time, the design stage can work in a fast response mode to fashion trends, according to the consumer-oriented approach in each region (Lu, 2020). The design team comes from all over the world to take into account the national characteristics of each country of sale. Approved designs are sewn by factories in over thirty countries around the world, where H&M manufacturers and factories are represented (H&M Supply Chain, 2022). Communication with manufacturers and designers is maintained through the additional office staff.

H&M is exceptionally dependent on its manufacturers, as well as directly on the designers, as there can be no one right solution in fashion, especially with such an international presence. However, fashion forecasting is often outsourced to companies like the Worth Global Styles Network (Lu, 2020). Despite the desire to follow fashion trends, H&M remains true to the traditional foundations of street fashion, with a line of classic clothing that varies minimally from season to season. This practicality is rooted in the company’s Scandinavian origins. By optimizing purchases from manufacturers, the company can maintain affordable prices. H&M owns only offices worldwide; each manufacturer is a partner and a completely independent enterprise.

With such high reliance on manufacturers and outsourcing, the company maintains solid sales and growth. There are obvious advantages in this approach: the company does not purchase consumables and fabrics, it is not obliged to support thousands of employees around the world with all political and legislative issues regarding labor. Production offices carry out quality control, purchasing, and distribution (Arrigo, 2018). Constraints associated with internationalization typically include issues of logistics, legislation, and the availability of the necessary space and profitability for stores. Another advantage of the company is technological equipment.

Efficient IT communication between departments, stores, and partners against the background of constantly introducing the latest technologies into the supply chain allows H&M to remain competitive and sell in the market. For example, artificial intelligence technologies and blockchain will help understand the environmental nuances for processing each type of raw material (Agrawal et al., 2021). In addition, the company uses artificial intelligence for expert systems development, sales analysis, and inventory management (Candeloro, 2020). Established communication allows such outsourcing to speed up the company’s supply chain significantly. Consequently, H&M’s main strengths are long-term planning while maintaining flexibility and adaptability, technological equipment, and continuous development of chain elements; outsourcing of trend planning and total production, which is essential for accelerating sales with increased dependence on manufacturers.


Another brand that belongs to the fast fashion industry is Zara. This company itself is engaged in the production of clothes, unlike H&M, and is more responsible in its approach to environmental responsibility, which has a better effect on its reputation. Diversification and vertical integration allow the company to keep the bar high. Speed ​​is achieved primarily through lightning-fast design: adaptation of haute couture models, production, and delivery to stores take only two weeks, against six months on average for the industry (Tradegecko, 2018). Such fast turnaround times are achieved through the redundancy of capacities in our factories, complete flexibility, and adaptation to any situation through the control of products at each production stage. Unlike H&M, which devotes more time to design, sending only finished orders to manufacturing plants, Zara can adjust production frequency, design, and quantity in real-time. In fact, Zara only depends on fabric suppliers.

Most Zara clothing is produced both in advance and during the season. The company constantly keeps abreast of customer reviews feedback to express their wishes (Patel, 2020). The proximity of factories and shops is also a key advantage of Zara. The complete cycle of sustainable material recycling also makes it possible to recycle the material without trying to dispose of unsold items (Patel, 2020). For large-scale production, sales analysis gives Zara information that stores receive a specific amount of clothing each shipment, optimizing inventory. In fact, this action contributes to brand exclusivity, the illusion of scarcity, as well as increased gross profit for each item: Zara earns 85% from each position against an industry average of 60-70% (Tradegecko, 2018). Deliveries are widespread, although some stores receive very few goods. Sufficiently high logistics costs, however, are beaten off by the speed of sales, a sense of exclusivity, and fashion trends.

Product turnover is the main difference between Zara’s supply chain and its competitors. A constant rhythm creates stability, in which every employee of the company is sure. Vast experience in distribution and logistics allows Zara to deliver things to its points in record time. It is a perfect sign in a pandemic that allows the company to maintain sales. Flexibility and agility are the company’s priority over affordable prices, dictated by fashion trends more than production costs. In this regard, Zara can make a high gross profit ratio, leaving competitors far behind in this indicator. However, there are certain restrictions on internationalization in this company. Zara spends almost no money on marketing, which in countries where the brand is not yet present, the rollout can generate short sales at first. In addition, Zara is already represented in many developed countries, while in developing countries, the company’s approach to pricing may not be relevant, and therefore the profitability of expensive and fast deliveries will drop significantly.

Zara’s technological approach to the reserves of forces in factories and the environmental recycling of materials allows increasing the life cycle of things and saving on labor time. The same high degree of communication between departments has the advantage of a high-speed logistics system. The company’s online sales are fully automated thanks to artificial intelligence, while machine learning tries to predict consumer behavior in this sales sector (Piedrahita Orozco et al., 2021). Otherwise, Zara uses AI for extensive data analysis (Shi et al., 2021). Digitalization, as a result, is used by the company mainly in online sales and for analytics, as well as for the continuous optimization of logistics. Further prospects for use may include including such technologies in offline sales to optimize the stocks of stores and warehouses.


Benetton has depended least of all on the clothing and fabric manufacturer in its supply chain: each item is sewn in one color and then painted. This approach allowed the production of much larger volumes of clothing due to the forgiveness of the production of each product. The work of designers in this chain comes after producing goods, which distinguishes Benetton from the companies discussed above. As a result, a company can both stock frugally and quickly respond to market changes (Gawas, 2021). The prediction error is minimized as after one batch of dyed items, it can be seen which colors sell best.

The company’s digitalization lies in painting technology, which uses sophisticated CAD systems. Computer-controlled machines can paint things in over 250 different colors (Gawas, 2021). Automation of this process allowed to save on labor. EDI technology dramatically accelerates the exchange between customers in more than five thousand outlets and the company to receive the fastest possible feedback for the next batch. In fact, the company cooperates with both material manufacturers and clothing manufacturers, ultimately dealing with only the coloring of things. An outsourced approach, like H&M’s, increases speed but also increases dependency on suppliers. Benetton’s speed is much faster than H&M’s due to the fact that it does not need to sew colored clothes according to complex design solutions. All decisions are made after production, practically minimizing the risk of error in inventory optimization.

Technology has also allowed Benetton to increase revenue significantly. For example, an omnichannel loyalty program launched in offline and online sales, based on machine learning and a recommendation system, brought a threefold increase in revenue in the control group (Burenichev, 2019). Prior to this development, in-store purchases were anonymous, and the company could not collect any information to better prepare product lines for consumers. Recommendation systems became possible after the introduction of such a loyalty program, as well as website personalization mailings through various communication channels, which also had personalized content (Burenichev, 2019). Loyalty programs exist at both Zara and H&M, but at Benetton, they bring the most profit (Burenichev, 2019). In addition, the company approaches the use of technology in the design of offline points of sale in the following way.

They are creating an ecological selling point that is not empty words for Benetton. Every detail of the interior, including the floor, shelves, and much more, is designed from ecological materials. Moreover, these materials are extracted from the waste of the textile industry, which increases the efficient and optimized use of materials (Pavarini, 2021). Everything is recycled: from textile fibers to buttons, and each material obtained has its purpose in the store’s interior. At the same time, boutiques are equipped with automatic temperature control technology depending on the number of people in the store, reducing energy consumption by 20% compared to a traditional offline point of sale. The cotton of unsold items is also recycled and used for the new collection, but no more than 20% (Pavarini, 2021). Consequently, Benetton has the most efficient supply chain, perhaps not exclusivity or speed.

The internationalization of a company is possible but extremely expensive. The machinery and technology capable of coloring things are too cumbersome and complex to deploy a similar design venture in any other country, reducing the ability to expedite logistical decisions. At the same time, Benetton cannot deliver things as quickly as Zara, even with a similar response mechanism. The company’s expansion is possible but requires market analysis and is limited in time. In this regard, Benetton cannot become the same exclusive brand as Zara, which negatively affects the gross profit ratio of this company, but the approach to saving on production balances the figure. Virtually no items are recycled with this approach. In summary, Benetton has developed a unique supply chain using technology and digitalization but still lags behind competitors in some respects.


All three of these fast fashion giants have unique approaches to the supply chain. Each approach highlights the different strengths of each company, highlighting speed, availability, and efficiency as key metrics. Thanks to its logistics system, Zara can supply its outlets with fantastic speed and optimization, creating a feeling of an exclusive brand. H&M keeps customers at affordable prices and constant supply chain optimization with unique technologies. Benetton uses an original approach in the production and painting of things, minimizing risks and increasing efficiency. With different strengths, companies continue to grow despite competition from brands around the world and between each other.


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