FastFashion:BusinessModelOverviewandResearchOpportunitiesFelipeCaro¤VictorMart¶³nez-de-Alb¶enizyApril25,2014ToappearinRetailSupplyChainManagement:QuantitativeModelsandEmpiricalStudies,2ndEdition,NarendraAgrawalandStephenA.Smith(Editors),Springer,NewYork,NY.(Pleasedonotdistributewithouttheauthors'permission)Fastfashionisabusinessmodelthato®ers(theperceptionof)fashionableclothesata®ordableprices.Fromanoperationsstandpoint,fastfashionrequiresahighlyresponsivesupplychainthatcansupportaproductassortmentthatisperiodicallychanging.Thoughtheunderlyingprinciplesaresimple,thesuccessfulexecutionofthefast-fashionbusinessmodelposesnumerouschallenges.Wepresentacarefulexaminationofthisbusinessmodelanddiscussitsexecutionbyanalyzingthemostprominent¯rmsintheindustry.Wethensurveytheacademicliteratureforresearchthatisspeci¯callyrelevantordirectlyrelatedtofastfashion.Ourgoalistoexposethemaincomponentsoffastfashionandtoidentifyuntappedresearchopportunities.1.IntroductionTheglobalapparelindustryhasexperiencedacompoundannualgrowthrateof4.3%since2000,reachingamarketsizeofUSD1.7trillionin2012(EuromonitorInternational2013).Thegrowthhasnotonlybeenintermsofrevenue.Thenumberofpiecesofclothingpur-chasedpercapitaincreasedfrom9.0in2000to13.9in2012worldwide,andincountriesliketheUnitedKingdomithasincreasedfrom18.7to29.5overthesameperiod(EuromonitorInternational2013).Partofthegrowthembeddedinthese¯gureshasbeenattributedtothe¤UCLAAndersonSchoolofManagement,LosAngeles,CA90095,fcaro@anderson.ucla.eduyIESEBusinessSchool,UniversityofNavarra,Barcelona,Spain,valbeniz@iese.edu.V.Mart¶³nez-de-Alb¶eniz'sresearchwassupportedinpartbytheEuropeanResearchCouncil-ref.ERC-2011-StG283300-REACTOPSandbytheSpanishMinistryofEconomicsandCompetitiveness(MinisteriodeEconom¶³ayCompetitividad,formerlyMinisteriodeCienciaeInnovaci¶on)-ref.ECO2011-29536.1emergenceofnewindustryplayers{collectivelyknownas\fast-fashionretailers{whichhaveseenanexplosiveexpansionsincetheturnofthecentury.Infact,storeslikeHennesandMauritz(H&M)fromSwedenandZara{the°agshipbrandofInditexfromSpain{haveestablishedthemselvesasrecognizedbrands(Interbrand2013)andhavegrowntobecomethelargestapparelretailersintheworld,seeFigure1.Figure1:Selectspecialtyapparelretailerrevenuesin2000-2012.Source:annualreports.Fastfashionbroughtfreshairintothetextileandapparelindustriesanditquicklystruckachordwiththeconsumer.Fromamanagementandeconomicsperspective,fastfashionhasbeenthelong-awaitedrealizationof\leanretailingwithitemsproducedinsmallbatchesandwithinshortleadtimes.Moreover,fastfashion'srelianceonnear-shoreproductionhasgivenalifelinetoanotherwisedyingindustryindevelopedcountries(Abernathyetal.2006,DoeringerandCrean2006).Ontheotherhand,fastfashionhasbeenassociatedwithadisposablecultureanditssocialresponsibilityisconstantlyunderscrutiny(Siegle2011,Cline2012).Fueledbythesuccessandgrowthoffast-fashionretailers,thetermfastfashionhasbecomeubiquitousandithasbeenusedindiscriminatelytodescribealmostanyspecialtyapparelretailerbelowacertainpricethreshold,spanningstoreslikeOldNavyandChico'sthathavealmostnothingincommonbesidesthefactthattheysellclothes.Hence,giventheprominentroleoffastfashioninthelastdecade,itisworthasking:whichretailersarefastfashionandhowdotheyoperate?To¯ndananswertothisquestion,insection1.1we¯rstfollowaqualitativeapproachbasedononlinesourcesandtheninsection1.2weprovideamorepreciseacademicde¯nitionandwepostulatemetricstomeasure\degreesoffast2fashion.1.1Which¯rmsarefastfashionandhowdotheyoperate?TheWikipediaentryforfastfashionlists21¯rms.1Thelistisquitediverse,butmostofthe¯rmshavethefollowingincommon.First,theyarespecialtyapparelretailerswithbrick&mortarstoresandsomeonlinepresence.Second,theyarenot\hautecoutureortrend-settersbutratherfashionfollowersthattargetthemid-to-lowpricerange.Toelaborateamorede¯nitelistof¯rms,weperformedafrequencycountusingtheFactivadatabase.We¯rstsearchedforallthemediapublicationsinthelasttwoyearsthatcontainedtheexactphrase\fastfashionandwelookedforbrandnamestoformapreliminarylist.Then,foreachbrand,wecountedinhowmanyofthesemediapublicationsthebrandwasmentioned.Arankingofthebrandsthatappearedinatleast20publicationsisshowninTable1andaword-cloudrepresentationisshowninFigure2.Asaformofvalidation,weperformedthesamefrequencycountusingallthePDFdocumentsavailablethroughGooglethatcontainedtheexactphrase\fastfashion.ThecorrespondingrankingusingthelatterisalsoreportedinTable1.numberofappearancesnumberofappearancesinFactivasearchinPDFonlinesearchSpecialtyapparelretailerrank%appearances%appearancesrankH&M131.7%41.0%2Zara/Inditex229.2%45.9%1Gap311.9%18.2%3Uniqlo/FastRetailing49.9%9.4%8Topshop59.3%13.7%4Forever2167.5%11.2%6Mango74.3%12.4%5WetSeal83.2%0.6%16Benetton93.1%10.1%7NewLook102.8%6.2%9Esprit112.8%4.7%10C&A121.9%4.7%11AmericanApparel131.2%2.6%13UrbanOut¯tters140.9%2.8%12Peacocks150.5%1.1%15CharlotteRusse160.5%0.2%17ArmaniExchange170.3%1.5%14Table1:Frequencycountofspecialtyapparelretailersinmediapublicationsthatmentionfastfashion(dataretrieved26-Aug-2013).ThesearchintheFactivadatabasewasamong7,5