This section provides the results of the study that was undertaken the previous sections with reference to Zara and H&M in United Kingdom. As such, the section is organised in three portions, including brand loyalty, brand strategy, and financial brand equity. The summary section provides findings on the UK retail industry in relation to the findings project in this section.
Zara Brand Strategy
Zara is one of the most successful fashion retail brands having introduced the concept of “fast fashion” retailing in early 1975. The brand creates a responsible passion for fashion by inspiring a broad spectrum of consumers from different age groups and cultures. Many factors that can be accrued to the strengths, hence the success of Zara but one that stands out is being able to prioritize on customer needs before anything else. Zara could be termed as a brand that is obsessed with its clients, which also defines the culture of the brand. The brand is known to offer different fashion designs for children and women’s clothing, accessories and shoes. As of 2015, the company was ranked 30th when the Interbrand global brand consultancy list came out (Torun 2007, p. 39).
According to the report, Zara has been successful because is it largely driven by the capacity to align with trends in the fashion industry regardless of the different collections it has in its stores (Kumar and Steenkamp 2007, p. 61). Zara is one of those brands that were formed because of a significant gap in the market by becoming a fashion-clothing brand that kept the pace with latest fashion trends. Secondly, Zara has been known to provide its products at affordable prices despite being on the high-scale of fashion. Based on the latest trends and styles, Zara comes up with new designs and makes them available in their stores within a week. This is incomparable to other fashion brands that could take up to six months just to get new collections and designs in the market (Tungate 2012, p. 45). This has proven to become a competitive edge for Zara thereby making it the people’s favourite fashion brand. According to Amancio Ortega, one of the founders of Zara, fashion has always been perishable and so are clothes (Baines, Fill and Page 2010, p. 19). In his opinion, people only wear clothes to the extent that it is in fashion. After that, they would either throw or give them away. It is this kind of thinking that has made the media label Zara the hub of freshly baked clothes.
The brand strategy of the company revolves around three primary pillars. First, Zara ensures it has a shorter lead-time and provides more fashionable clothes in the market than any other competitor (Shen, Choi and Chow 2017, p. 175). For instance, if spring or autumn is approaching, the company would have relevant collections already stocked in all their stores. Another example could be the case of a cloth trend that was promoted by a celebrity who wore it. In this case, Zara takes this opportunity to design similar clothes and puts them up in their stores. Concisely, Zara moves in step with its customers thereby offering what they want just at the right time to buy.
Secondly, Zara has learned that the key to keeping its clothes unique is limiting the quantities manufactured or released to the market (Finskud 2009, p. 51). As such, the brand has been able to reduce exposure of any single product by balancing the aspects of demand versus supply. The brand strategy is also seen to work with the idea of making any fashion less availability, hence building on the desirability of that particular fashion. This flows well with the idea of producing lower quantities to maximize uniqueness thereby generating traction in any fashion in the stores. Unlike other brands, Zara has two time bound sales every year and not constant markdowns. In addition, only a small portion of the products are discounted, seemingly half in comparison to its competitors.
Lastly, instead of producing a higher number of products for every style, Zara has managed to increase the number of styles it designs every year. As of 2015, Zara had designed at least 12,000 new styles. This means that even when some styles sell quicker than others, customers can always rely on the brand to design newer ones within a short time. As a result, Zara designers have grown their expertise in choice and chance by learning the trends of target audiences, hence provide relevant styles that sell. In addition, most of the designs are only featured in the shop for three to four weeks, which means that if certain customers were interested in a design that is being featured, they will have to visit Zara’s stores within this timeframe. Failing to do so would mean losing the chance to get the desired style that would be replaced by a newly designed style and trend (Cook and Yurchisin 2017, p. 148).
H&M Brand Strategy
H&M was founded in 1947 by Hennes & Mauritz, also known as H&M. The brand has grown to be highly recognized in the fashion industry. According to a report published by Bloomberg, the company had close to 4,000 stores and plans to open another 7,000 all over the world as of 2015. Zara is considered the biggest competitor and rival to H&M. Just like Zara, H&M also uses the fast fashion model where they ensure a large volume of products moves from the designer table and gets to the consumers within the shortest time possible. As a result, the brand gains from this process through higher merchandise turnover apart from resupplying the brand’s stores with newer fashion trends every so often (Mosca and Gallo 2016, p. 145).
One of the elements that have assisted H&M to establish its brand identity in the market is delivering a memorable, credible and clear message that intends to connect with the emotional aspect of the audience (Kapferer and Bastien 2012, p. 162). As a result, buyers develop loyalty to the brand. For instance, the name of the brand is H&M, which is some sort of a shortened version of the full name. However, this version not only forms the name but also the logo of the company thereby sticking out as a significant trademark for the brand in the fashion industry (Ozuem and Azemi 2018, p. 71).
Secondly, H&M is guided by certain values that ensure their day-to-day activities have followed certain policies and guidelines (Wiedmann and Hennigs 2010, p. 74). Some of the highest regarded values in H&M include believing in people, stressing the importance of being open-minded to constantly make improvements. In addition, H&M also encourages an entrepreneurial spirit and being straightforward. As a result, the workplace at H&M has provided a platform that allows its workers to make decisions in order to align with the fast pace of fashion trends. As such, H&M strives for respect and belief in all their employees thereby encouraging creativity and responsibility as well as ambition for the benefit of the company and the personnel. As a result, the brand has seen a constant growth in the business over the years (Cook and Yurchisin 2017, p. 146).
Just like Zara, H&M also has all its objectives focused on the customer. For H&M, the goal has always been exceeding the expectations of their clients regardless of age, style, dreams and fashion choices. In return, the company enjoys a sense of continued inspiration and attentiveness when they release new trends or styles to the market (Choi and Cheng 2015, p. 52). These processes have ensured that H&M gets the best combination of price, quality and fashion design for its clients. Another angle that H&M has taken is providing an unforgettable experience for its clients. As such, the brand dedicates a lot of time and resources to understand meet the needs of the consumers at every level. Therefore, H&M is able to deliver its products at the best quality in the market. The consumer effect is having the emotional feeling of confidence even as the brand develops strong loyalty and belief for a sustainable H&M brand. Even though H&M does not own any factories, it has several long-term independent suppliers that have worked towards improving the environment and expectations of the brand. As such, H&M has become active in managing the garment lifecycle and supply chain owned by some of its independent suppliers (Zhang, Onal, and Das 2017, p. 32).
The structure of H&M is designed to allow the company grows in an environmentally, socially and economically sustainable system. It is for this reason that the desire to have sustainable work is not considered to be a different process. Instead, it is integrated with all other existing processes so that every department works seamlessly towards this goal, sustainability. Lastly, flexible assortment planning and efficient decision-making have played a major role in building upon the product range of the brand. As a result, both customer expectations and latest trends are keenly observed (Mróz-Gorgoń 2016, p. 50).
Brand Loyalty
Over the years, brand loyalty has been inclined to establishing loyalty programs that are also becoming more digitalized with time. Torun (2007, p. 38) defined brand loyalty as the pattern that consumers tend to follow as a result of being accustomed to a particular product, hence making repetitive purchases. The common digital loyalty programs feature a member’s card that is scanned upon any purchase thereby awarding loyalty points to the buyer. Recently, it has been observed that most loyalty cards are also being connected with the client’s online account thereby providing demographic information of the client among other features. As such, loyalty cards serve the purpose of binding customers to their business.
Nonetheless, this mind set has been undergoing a shift of change as businesses seek to have more relevant information about their customers. This information helps in finding better ways of marketing the brand’s products to consumers. H&M is taking a different direction with this by approaching the subject in a more advanced manner. According to the brand, the loyalty program has been transformed into H&M Club that allows the client’s card integration to the brand’s application. In addition, registering on this club is free and the client gets a point for every euro spent. Consumers also receive an extra 50 points when signing up with the app. The advantage of H&M’s system is that loyalty points are redeemable at any time of the year. In addition, these points are redeemable for weekly changing discounts as well as access to exclusive designer events in Paris and New York. This has worked well for H&M because customers are expected to engage more with the business even as their demand for transparency is made available for public use (Kunkel, Hill and Funk 2013, p. 176).
With the existing H&M loyalty programs, the brand’s business model allows the clients to build on their engagement with the company. With the welcoming points giving a start to every client, it has become easier for to realize enough points for rewards. In addition, the points are redeemable, depending on the quantities prescribed by the client. Furthermore, H&M only offers events and discounts that are likely to treat their customers to the best experience without having to spend money. This way, the clients are more inclined to buy products from the brand more often. Other researchers have claimed this approach as the standard for the next level, when it comes to loyalty programs.
H&M has also initiated collaborations with renowned designers, such as Karl Lagerfield, Roberto Cavali, Jimmy Choo, Versace, and Lanvin. The idea behind this has been to realize the need for high media exposure. As a result, H&M has been able to sell whole collections of designs when they hold events. A good example is in the case of the H&M fashion event in March 2012 that saw all the collections sold out by lunchtime. The concept of collaborating with luxury designer and fashion brands has enabled H&M to create a brand equity and image incomparable to its competitors, including Zara (Lee and Lings 2008, p. 230).
Creating a marketing strategy that is appealing to current consumers has proven to be one of the ways to creating brand loyalists. Considering that the fashion industry grows with the concept of brand names, the key function of brand loyalty for H&M has been to make brand loyalty the driving force behind business operations and the relationship between H&M and other companies. Therefore, consumer loyalty with regard to luxury brands has created a strong social function such that social groups and personalities value the ideology they have of the brand.
Unlike H&M, Zara has built its brand loyalty on being fast and not necessarily fast. In its concept, Zara considers the idea of becoming a trendsetter as a result of being one of the early adopters of potential ideas. This has helped the brand to focus less on research and development and instead focus on becoming a fast fashion brand. Respectively, the company has developed a sense of ownership for its customers, hence brand loyalty. According to recent projects by Zara, the brand strategy has enabled the loyalty to grow by 50 percent in the last five years, as of 2017 (Finskud 2009).
The other way that Zara uses to make sure the company not only retains its current stores and clients but also realized more potential by responding to customer feedback. While H&M could be focused on observing trends then relating it to the upcoming trends, Zara takes a further initiative by communicating with its in-house designers regarding the latest customer feedback. Even though Zara has not invested a ton of money in research and development, the brand has been keen to employ experts in analysis and fashion concepts by paying them well. As such, Zara has been able to retain most of its think tanks, hence the ability to compete with H&M in good measure. It is common that consistency is a critical pillar for a company to grow its brand loyalty. Again, including the feedback received directly from customers has tremendously changed how Zara designs its products as well as communication with clients.
In fact, Zara only spends up to 0.3 percent of its sales income on advertising. This is exceptional considering the current industry average stands at 3.5 percent. However, the secret has been on the appealing nature of the process that Zara employs when interacting with its clients. For Zara, every client is treated with exclusivity thereby realized the perception that each one of them is exceptional. Shoppers tend to feel like celebrities and buying products from a high-end shop by the way they are treated and how the stores have been designed. The concept of having fast-moving designs over a period of four weeks has ensured the company has a manageable inventory all the time thereby giving more time for attendants to focus on the aspect of exclusivity.
Whereas H&M could be earning most of the extra profit and not reinvesting it, Zara focuses this money to make their stores more appealing and changing locations for better ones. Currently, Zara has more than 6,500 stores in 88 countries. In addition, ensuring that their stores are located in streets with high traffic within metropolises has been a significant factor in ensuring the fashion trendsetter gets the best out of the investment. This has in return created massive brand loyalty both locally and abroad. Nonetheless, Zara has been considering taking it slow when it comes to opening new stores in 2018 and instead, increasing their focus on online sales. As a result, Zara is expected to transform its business from physical locations to virtual platforms that allow home delivery.
Financial Brand Equity
According to Finskud (2009), financial brand equity can be defined as a set of liabilities and assets linked to a symbol, name or brand with the intention of adding or subtracting from the value of products or services that a company offers to its clients. These factors are both tangible and intangible. In the case of Zara and H&M, we will consider Aaker’s model on elements that encompass financial brand equity, including brand awareness, brand loyalty, brand associations and perceived quality.
With reference to brand awareness, the last five years have seen Zara become a top fast-fashion firm thereby boosting the brand equity of the company. As such, there are several proposed strategies in place that build on the dominance of the brand. Secondly, Zara consumers also possess a high-perceived quality when they think of the brand. One of the primary perspectives that Zara considers critical in their strategy is providing high-quality products at reasonable prices. When it comes to brand associations, Zara has been working with other luxury fashion designers to create designs from the design table to the store floor within a week or two.
Correspondingly, Zara has experienced growth and a high number of consumers who love to be at par with fashion trends. In the end, Zara has increased brand loyalty as a result of treating its clients exclusively. In addition, the brand also offers competitive store locations and environments that change the experience of the customers when they visit the store. With reference to their online audience, Zara has more than 19 million fans on Facebook and Instagram (Kapferer 2014, p. 56).
On the other hand, H&M has been focusing its brand awareness based on a segmentation strategy. In this case, the brand has been able to market its products based on age, class and marital status. In addition, the company has also featured different cultural and social factors when coming up with designs. As such, H&M brand loyalists have grown to make more visits to their stores. As for brand association, H&M does not necessarily employ the best designers in the market but it works with a model that ensures the brand is favoured in terms of replicating the designs back to the market in good time. H&M has over 12 million followers on Twitter only (King and Newman 2015, p. 26).
Figure one shows that the financial brand equity of Zara was $3.7 million as of 2005 and has consistently grown to $18.5 million in 2017. As for H&M, the brand had a value of $13.8 million in 2008. In comparison to Zara’s $5.9 million in the same year, H&M had steadily grown up until 2017, when its value had a slight negative turn valuing the brand at $20.4 million. Of the two brands, H&M is observed to lead the fast fashion industry when it comes to financial brand equity.
Summary
Zara and H&M are highly competitive brands in the fashion industry and their capacity to explore the “fast fashion” aspect has enabled them to constantly grow in the market. As a result, they have been able to realize a significant brand loyalty because of providing high-end designs to their customers within a period of a week or so. They have also been able to price their products more reasonably in comparison to other high-end fashion brands. With reference to brand strategy, these two companies have worked on a system that ensures they not only work with the best fashion experts in the market for design but more so to study the trends and adjust accordingly. As a result, Zara and H&M have been able to not only bring new designs but also clear the store floors for newer designs every three to four weeks. Lastly, both companies have worked on their financial brand equity by combining the brand awareness, brand loyalty, perceived quality and brand associations. As a result, both companies have consistently grown their brand equity value over the last decade.
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