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Improvement of Store Operations in the fast fashion industry

A case study of how a leading fashion retailer can adapt to transformations coming from growing efficiency requirements and rapidly changing technology

Written by S. Gómez, A. Korościk

Paper category

Master Thesis

Subject

Business Administration>Management

Year

2016

Abstract

Master Thesis: Fast fashion industry and store operations Due to the diversification of large-scale production, the increase in the number of fashion seasons each year, and the structural adjustment of the supply chain, the fashion clothing industry has undergone significant changes in the past 35 years (Doyle et al., 2006). ). The product-driven approach based on “quick response” used in the 1980s evolved into a market-based model in the late 1990s, today called “fast fashion” (Bhardwaj and Fairhurst, 2010). Due to this phenomenon, some authors such as Wheelright and Clark (1992), Jackson (2001) and Franks (2000) have identified rapid response and flexibility as the key factors for success in this highly competitive and dynamic industry. In addition, Bhardwaj and Fairhurst (2010) pointed out that failure to quickly sell clothes seen on the runway or failure to correctly predict future trends may lead to consumers who lose fashion awareness. In this case, fast fashion companies changed the latest trends in fashion and launched low-cost versions within a few weeks (Reinach, 2005). Therefore, the turnaround time from design to workshop is very fast (Barry, 2004). Traditionally, the purchasing strategy of fashion retailers is based on the season, but fast fashion retailers have adopted a more flexible model. This means that the buying process is divided into multiple stages, and the level of production depends on the consumer's response to current trends (Barry, 2004; Bhardwaj and Fairhurst, 2010). Compared with traditional players, fast fashion chains focus on low cost and low replenishment time (Lorentzen et al., 2015). This business model is adopted by the largest fast fashion retailers in Europe, the United States and Asia (Barnes and Lea-Greenwood 2006). The case company is one of the largest participants in the world, so it will be used as a tool to better understand the subject being analyzed. Fashion trend analysis, supply chain management and store operations are the core of the case company strategy (Yuntak, 2013). As defined by Martinez (2015), store operations are all activities and procedures that keep the store running. It includes classification planning, staffing, store layout, cash operations, inventory control, and store best practices. In order to stay at the forefront of the fashion industry, it is necessary to continuously improve in-store efficiency by implementing innovative solutions and introducing new technologies (Finch, 2014). Considering the growth rates of the case companies and other large companies in the fast fashion industry, it is important to analyze how their stores operate to remain competitive. 1.1.2. Transformation of store operations Although the textile industry is the protagonist of the industrial revolution, historically, it has been a late adopter of new technologies (Ziv, 2010; Egberg, 2011). Having said that, fashion retail experts pointed out that in the past few decades, new vertically integrated players have emerged in the industry, offering their customers lower prices (Gustafson et al., 2004; Roberti, 2006). In this context, new technologies and more efficient processes play a vital role in improving the store operations of such retailers. With the ultimate goal of improving efficiency and maintaining competitiveness, companies are paying more and more attention to their supply chains (Ketchen and Hult, 2006). This phenomenon is more prominent among clothing retailers, where on-time delivery to the right place can significantly affect sales (Oliver Wyman, 2015). Although the efficiency of the supply chain has contributed to the success of fast fashion, the centralized control structure means that these efficiencies and flexibility have not yet been translated into the retail store environment (Barnes and Lea-Greenwood, 2010). According to Broekmeulen et al. (2006) Product handling accounts for 38% of the store's total operating costs. Therefore, changes in this area will have an important impact on the financial sustainability of fast fashion companies. Most clothing processing (or clothing care) for fashion retailers is done in warehouses, so the activities that take place there constitute an important area of ​​investigation. The warehouse process includes the activities of unpacking garments from delivery boxes, attaching safety labels to these garments, and finally hanging them on a shelf to bring them to the workshop (Retail Minded, 2010). At the same time, working conditions have also been affected with the development of fast fashion concepts. There is evidence that a large amount of responsibility and the pressure to deliver a large amount of clothing to the workshop on time puts pressure on employees that directly affects their health and well-being (Babin and Boles, 1996; Broadbridge, 2002). In addition, research has shown that the repetitive nature of in-store activities can lead to employee dissatisfaction and long-term stress (Huber et al., 1985). In addition, Alden et al. (2013) claimed that the success of the retail business depends to a large extent on people, namely customers and employees, and the interaction between them. Therefore, according to the same author, in order to be successful, it is necessary to listen to the opinions of employees and customers at the same time. Read Less