H&M and Zara Case Study – Comparing the Fast Fashion Giants – 440 Industries (2023)

Introduction

Today, when we discuss fashion, we usually focus on clothes and other accessories. The days when people wore cloth for coverage are long gone. Fashion has taken clothing to a whole different level where it does more than cover our bare bodies.

Everyone now desires to stand out in what they wear. This is because many of us know what we wear can help us reveal a lot about our personality. This could be our style or affluence. When making outfit choices, several brands come to mind. These could be brands like H&M vs Zara.

These clothing brands are known for quality and style. Also, they are fast fashion brands, meaning a vast population is drawn to them for their quick offering of new trends, especially at cheaper rates. Therefore, let’s look at the H&M vs Zara case study in this article and compare these two fast fashion giants.

  • H&M Brand
  • Zara Brand
  • H&M vs Zara Case Study
  • Key Differences Between H&M vs Zara Brand

H&M Brand

Among similar brands like Uniqlo and Zara, “Hennes and Mauritz” is the oldest. Sweden was the birthplace of this retail brand. This was as far back as 1947. Hence, it’s amazing how this brand has become such a recognizable giant in fashion.

Besides Sweden, that’s native to them, this brand also operates in the United States. It was in 1974 that their public trade in Sweden began. Over the years, this brand has grown more prominent as it stretched out across the globe.

The H&M brand has established over 4000 stores in several countries globally; A number that’s way bigger than that of Zara.

This brand has gotten an edge over its competitors as they’ve been more productive in the US market. It’s just amazing how they got into this enormous market and gained so much success. In the US alone, they have up to 559 physical stores.

However, they haven’t stopped yet and are working towards expanding more throughout the globe. They aim to open more stores, about thousands of them, in the years to come.

Meanwhile, the brand made a broader shift to e-commerce sales from physical ones. This happened because they began receiving most of their purchases online. This also resulted in the brand closing down some physical stores.

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Interestingly, aside from the H&M brand, the H&M group has seven other brands under them. They are COS, H&M Home Weekday, Monki, ARKET, & other stories and Afound.

H&M also collaborates with known figures, like Versace, in the products they offer their customers. This is one of the sales-boosting strategies that has helped boost their reputation.

Zara Brand

The Zara brand is the latest compared to retail giants like H&M and Uniqlo. The year 1975 was when this brand started. The birthplace was Spain, and the founder, Amancio Ortega.

Zara is the largest brand under the Inditex group. It ranks number one in the apparel industry, particularly fast fashion. They deal in a wide range of products, including clothing, shoes, fragrances, and other accessories.

The brand has also stretched out over the world in about 96 countries, where they have a total of about 2200 stores. Just in the US, the brand has established up to 99 stores.

However, you’ll find most of their stores in their birth country, Spain, where it’s over 400.

The founder improved the brand’s design, production, and distribution process around the 1980s. This improvement led to a faster reaction to the new fashion that came up.

In fact, their distribution is remarkable. They can start selling a product a month after they’ve designed it. Their product turnover is impressively quick!

When they created their first store, they began making similar products as the more high-end fashion brands. As they did this, they offered them at low prices. Interestingly, they then influenced the term “fast fashion” due to this speedy feedback.

Zara offers a lot more products to their customers. In fact, it’s much bigger than the number that other competitors like H&M offer.

(Video) Fast fashion - The shady world of cheap clothing | DW Documentary

They can produce more than 10,000 pieces in a year, unlike the 2000-4000 pieces most other retail brands do. This is one of the brand’s exceptional strategies that have attracted customers with different tastes and styles, especially in the US.

H&M vs Zara Case Study

Looking at the H&M vs Zara fast-fashion business, it’s been very lucrative for them. No matter what these companies focus on, they have one thing in common as a competitive advantage: the customers’ preferences.

As people want what’s trending and at the same time desire to have it quick, these companies have to employ a speedy process. Both H&M and Zara seem to offer low-end market apparels that are alike with high fashion standards. They make these very fast and at a low price.

(Video) Agile Supply Chain | Zara Supply Chain Case Study | Fast Fashion | SCM | Supply Chain Analytics

It’s common with fast fashion for trends not to stay for long. New designs keep coming up, and many people want to try out what’s new. Therefore, these fast fashion brands have to keep making these products available to meet the customers’ continuous demands.

Zara, in particular, is at the top of the game when it comes to reducing the time between designing and production. In addition, both brands ensure that their supply chain effectively responds to demands quickly. When supply doesn’t come quick, it can badly affect sales.

A common one is when the customers lose interest in the apparel they waited so long for because of the new trends that might have come up. Therefore, the cost of the goods, buying cycle, and, more importantly, market timing build up the fast-fashion concept of H&M vs Zara brand.

Let’s compare these two brands with different marketing categories. This way, we can know what makes them different, especially in their strategies to boost sales.

Key Differences Between H&M vs Zara Brand

Pricing System for H&M vs Zara

The H&M brand emphasizes offering their quality products cheaper as a means to keep customers trooping into their shops. They are known to offer huge discounts very often, unlike most of their competitors.

On the other hand, Zara offers their products at a reasonable price as long as they match the quality. They don’t underprice to keep people trooping in. Similarly, they give discounts but not as much as the H&M brand. Instead, they focus more on the quality of what they offer.

They create value around their product,s which stirs the feeling that what you’re buying is worth the price.

Target Market for H&M vs Zara

These two fashion giants create their target market based on psychographics and demographics. Focusing on an individual’s lifestyle, interests, and social status falls under the psychographic segment. However, considering their customers’ gender, age, income, class, etc., is a demographic way of segmenting their market.

H&M’s brand targets primarily women, particularly those aged between 20-34 years.

These are the younger, working females that still have so much love for what’s trending. On the other hand, Zara still targets the younger population but expands more demographically.

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They offer clothing and accessories for both genders, particularly about 18-40 years of age. However, this is just their target market, and this brand offers both articles of clothing for younger kids.

Promotion for H&M vs Zara

H&M is always making regular promotions for their products. Their advertising is quite versatile. They reveal a lot about their products through various means including, TV commercials, prints, billboards, banners, social media, and many more. The brand puts a lot of emphasis on promotion.

A common thing about the Zara brand is that they don’t fancy advertising. You’ll see no banners, no billboards, and no form of promotion. They consider investing in building more stores far more important than advertising their goods.

However, the company employs the system they call evangelism. So, instead of taking their brand to their consumers as advertisements, they bring their consumers into their brand. They nurture their customers as brand influencers, allowing them to boost operations and, more importantly, do the storytelling.

Product Distribution for H&M vs Zara

Zara gets goods on its shelves much faster than H&M. The brand doesn’t have any factory of its own. Instead, they buy from other distributors. About 60% of H&M products come from places like Cambodia or Bangladesh, which are cheaper.

However, these places are far from them, so leading times are always longer. This makes this brand have several orders from customers pending. This situation creates problems for the brand, especially in sales.

This also makes them have more unsold goods in stock, unlike Zara. These goods’ value is more than $4 billion. This could also be why the H&M company focuses more on giving discounts as one of their pricing strategies. Interestingly, the gross profit made by both brands is almost the same, despite H&M making cheaper purchases. So, in essence, they lose the advantage that comes with buying from cheaper places.

Also, the distribution system has made them famous in the fast-fashion world as they can control the number of goods they produce and the supply. Therefore, they don’t have issues with numerous unsold goods in stock. It takes about a day to distribute to their stores in Europe due to their robust distribution network. Moreover, it will take about 40 hours to deliver to the US branches.

Conclusion

Both brands, H&M vs Zara, have grown successfully over the years more than other fast fashion brands. The progress of the Zara brand explains why price isn’t everything. Unlike H&M, they tend to focus more on the value they can place on their products. H&M has still suffered many losses despite its underpricing strategies.

However, in fast fashion, the constant change in trends keeps the demand alive, but what’s more important is that these fast fashion brands make these products available.

(Video) Zara: How a Spaniard Invented Fast Fashion

FAQs

How does Zara's approach differ from its competitor H&M case study? ›

A key differentiator between the retailers is their approach to sales. Zara has traditionally taken a subtler approach to reductions, only discounting during key sales periods while H&M takes more frequent and aggressive markdowns.

What competitive strategy does H&M use? ›

The key competitive strategy of H&M in the global market can be characterised as a combination of cost leadership and the elements of differentiation (Varley et al., 2018). The fast-fashion business model of the company is built upon the outsourcing of new designs to multiple independent suppliers.

Does H&M support fast fashion? ›

H&M is the second largest fashion retailer in the world after Inditex and definitely makes a tremendous contribution to the fast fashion market with its more than 5,000 stores worldwide.

What does Zara do differ from its competitors? ›

Zara's strategy is to offer a higher number of available products than its competitors. While most clothing retailers manufacture and offer to the public for sale 2,000 to 4,000 different articles of clothing, Zara's production has been markedly higher, at over 10,000 pieces produced per year.

What competitive advantage do you think Zara is pursuing How does it exploit that competitive advantage? ›

3. What competitive advantage do you think Zara is pursuing? How does it exploit thatcompetitive advantage? The competitive advantage Zara is pursuing is lower prices thanhis competitors with better speed and flexibility in getting the product to market.

What is the difference between Zara and H&M? ›

The H&M brand emphasizes offering their quality products cheaper as a means to keep customers trooping into their shops. They are known to offer huge discounts very often, unlike most of their competitors. On the other hand, Zara offers their products at a reasonable price as long as they match the quality.

What gives H&M competitive advantage? ›

H&M has become one of the leading fast fashion companies using its supply chain and techonology as core competitive advantages. H&M's business model consists of creating value for customers by offering fashion and quality at the best price. H&M offers products for women, men, teenagers and children.

How H&M satisfy their customers? ›

Actually, customers are drawn to H&M primarily because of its products' affordability and quality. The website offers high quality products and services that are charged accordingly.

How H&M can be more sustainable? ›

Today, as H&M Group's global sustainability steering and development manager, Rothschild and her colleagues work to define and achieve the company's sustainability goals, which include using only sustainable materials by 2030 and having a “climate positive” value chain—one that reduces more greenhouse gases than it ...

Is Zara considered fast fashion? ›

In fact, Zara is known as the original fast fashion brand. The term “fast fashion” was coined by the New York Times in the 1990s to describe the way Zara could take a garment from design to stores in under 15 days.

What is H&M doing about fast fashion? ›

H&M is the world's second largest fast-fashion business, meaning it offers thousands of new items every week which encourages waste that ends up in landfill. The business model encourages the rotation of fashion trends and new garments, which in turn encourages the public to always want more.

How does H&M pollute the environment? ›

An increasing amount of cheap clothing ends up in landfill after a few wears due to these reasons. The clothing manufacturing process regularly involves the use of toxic dyes, solvents, and pesticides, is responsible for significant carbon emissions, and uses much of the world's fresh water and land resources.

Which are Zara's competitive advantages and what are they based on? ›

Strategy Goals

Zara's generic strategy is cost leadership. The brand holds a competitive advantage in the market by offering products similar to high-end fashion and designer brands' styles at modest prices.

What strategy does Zara use? ›

Vertical Integration Strategy

Vertical integration is also a notable strategy of Zara. Its in-house production is a prime example. Aside from this, however, the company also has extensive control over raw material sourcing, design or product development, marketing and sales, and shipment or distribution.

How Zara uses data science to gain a competitive niche in the fashion industry? ›

ZARA captures data from e-commerce sales, PDA devices and RFID tags on the clothing, POS terminals, and customer surveys. Customer preferences are captured by store employees in their PDAs in details: cut, colour, buttons, zippers, and more. Zara has constructed its business on RFID tags as per the Wall Street Journal.

Which element of Zara's strategy do you believe best explains its success? ›

I. Which element of Zara's strategy do you believe best explains its success? logistics, unlike other clothing brands, Zara can provide everything to their customers in under two weeks timeframe, ensuing in earlier return of income.

How is strategic management illustrated by this case story Zara? ›

Strategic management is illustrated in this case story when Zara clothing store planned to do “fast fashion” which means getting designs to customers quickly. Strategic management is when Zara's employees look at the computers to scrutinize sales at every store.

What makes Zara different from other specialty apparel retailers? ›

Zara uses its distribution facilities as a place to send the goods not a facility tostore costly inventory.As said in the Case, Zara has low advertising cost compared to other specialty apparelretailers who spend millions of dollars in advertising every year. Zara also does not use outside production or design.

Why is Zara more popular than H&M? ›

Zara is popular because people love that the products are fairly high quality at a lower price than luxury brands. People are able to achieve those trendy and professional looks with pieces from Zara without completely breaking the bank. Zara quality is slightly higher than H&M, which is reflected in the price.

Are Zara and H&M owned by the same company? ›

H&M is the largest international clothing retailer only behind Spain-based Inditex (parent company of Zara). H&M was founded by Erling Persson and its current CEO is Helena Helmersson.

Who is H&M target audience? ›

Most firms target customers within the high-income category, particularly firms dealing in fashionable and luxury products. However, H&M is targeting both low and high-income customers. In other words, the firm's products directly appeal to low and high-income consumers.

What is H&M best known for? ›

H & M Hennes & Mauritz AB (H&M) is a Swedish multinational retail-clothing company, known for its fast-fashion clothing for men, women, teenagers, and children.

Why is fast fashion so successful? ›

Fast fashion became common because of cheaper, speedier manufacturing and shipping methods, an increase in consumers' appetite for up-to-the-minute styles, and the increase in consumer purchasing power—especially among young people—to indulge these instant-gratification desires.

Who is H&M biggest competitor? ›

The other five competitors in the top 10 list are forever21.com (9.8M visits in August 2022), gap.com (71.4M visits in August 2022), uniqlo.com (55.3M visits in August 2022), abercrombie.com (14.7M visits in August 2022), and net-a-porter.com (8.3M visits in August 2022).

How does H&M position itself in the minds of target customers around the world? ›

H&M positions itself by emphasizing a uniform global brand so that customers worldwide have similar shopping experiences. H&M designs its stores in a fun & colorful way to attract their target consumers. They also use print advertisements, social media, and celebrities to attract customers.

What are the objectives of H&M? ›

At H&M Group, we consider the needs of present and future generations, and are aware that our entire business must be conducted in a way that is economically, socially and environmentally sustainable. This is why we set clear ambitions and bold goals.

How much money does H&M spend on marketing? ›

Summary. H&M is part of H & M Hennes & Mauritz AB. They spent over $100 million on advertising in digital, print, and national TV in the last year. They invest in premium ad units and advertised on over 250 different Media Properties in the last year across multiple Media formats.

Is Zara becoming sustainable? ›

Zara has recently publicized a list of environmental commitments. These goals span the next five years and include everything from water conservation to reducing waste in landfills. They've also worked to ban some harmful chemicals in production.

Is H&M socially responsible? ›

H&M has set a strong example in the industry with the corporate social responsibility (CSR) initiatives it has put in place, and the way it has raised awareness of environmental issues among its suppliers, employees and customers.

When did H&M start being sustainable? ›

Rewind back to 2010 when H&M first launched its Conscious Collection of clothing made from organic cotton, recycled polyester and other sustainable materials.

Who is H&M target audience? ›

Most firms target customers within the high-income category, particularly firms dealing in fashionable and luxury products. However, H&M is targeting both low and high-income customers. In other words, the firm's products directly appeal to low and high-income consumers.

Is Zara becoming sustainable? ›

Zara has recently publicized a list of environmental commitments. These goals span the next five years and include everything from water conservation to reducing waste in landfills. They've also worked to ban some harmful chemicals in production.

What is Zara brand identity? ›

Zara's brand identity refers to the identity of the brand Zara created from Inditex group. Zara´s identity represents how Inditex group wants Zara to be seen, Zara´s differentiation from competitors and what the brand promises.

Is Mango the same as Zara? ›

They also wonder if Zara and Mango are owned by the same company (they're not). But it is Zara's largest competitor. You'll often find Mango and Zara next to each other in shopping plazas and Mango also carries men, women's and children's fashion.

How H&M satisfy their customers? ›

Actually, customers are drawn to H&M primarily because of its products' affordability and quality. The website offers high quality products and services that are charged accordingly.

What are the objectives of H&M? ›

At H&M Group, we consider the needs of present and future generations, and are aware that our entire business must be conducted in a way that is economically, socially and environmentally sustainable. This is why we set clear ambitions and bold goals.

What is H&M slogan? ›

To make everyone look and feel good.

Is Zara considered fast fashion? ›

In fact, Zara is known as the original fast fashion brand. The term “fast fashion” was coined by the New York Times in the 1990s to describe the way Zara could take a garment from design to stores in under 15 days.

How does Zara affect the environment? ›

For example, Zara uses viscose in its production: a material made of wood pulp from sometimes endangered trees. It has been found that viscose production in countries like India has led to water contamination from untreated waste and air pollution.

How can Zara improve its sustainability? ›

Environmental impact

Zara's parent company, Inditex, has started a repair and reuse program called Closing the Loop. The program offers customers the opportunity to drop off their used garments in-store or through the post in order for their clothes to gain a second life—which is a good initiative.

What makes Zara so successful? ›

The Zara brand strategy

Its core values are found in four simple terms: beauty, clarity, functionality and sustainability. The secret to Zara's success has largely being driven by its ability to keep up with rapidly changing fashion trends and showcase it in its collections with very little delay.

Which element of Zara's strategy do you believe best explains its success? ›

I. Which element of Zara's strategy do you believe best explains its success? logistics, unlike other clothing brands, Zara can provide everything to their customers in under two weeks timeframe, ensuing in earlier return of income.

What is Zara's competitive advantage? ›

Zara's generic strategy is cost leadership. The brand holds a competitive advantage in the market by offering products similar to high-end fashion and designer brands' styles at modest prices.

How fast is fast fashion? ›

It was coined by the New York Times to describe Zara's mission to take only 15 days for a garment to go from the design stage to being sold in stores. Other big names in fast fashion today include UNIQLO, GAP, Primark, and TopShop.

What brands Zara copy? ›

Whether it's Gucci, Prada, Céline, Alexander Wang, Tom Ford or Sibling, Spanish high-street giants Zara are frequently at the centre of copy-cat battles. Unquestionably the most notorious culprits for mimicking high-end designers, the brand claim that they don't copy, but instead modify.

Is Zara more expensive in America? ›

Interestingly enough, the country where shopping at Zara is more expensive than elsewhere is South Korea (96 percent more expensive than in Spain) followed by the USA (92 percent) and China (78 percent).

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