In fashion, sometimes it’s best to not be a first-mover
Spanish fast fashion giant Inditex is well known for getting the drop on its competitors. The clue is in its business model’s name – fast fashion. The company was first in pioneering this approach, and the approach itself banks on being “first” to market. It works like this: A sophisticated feedback monitoring system reacts to shopper preferences in real time, as expressed in-store, and new designs are turned around in double-speed. Local designers and factories conspire to quickly tailor generic garments to be up-to-the-minute on-trend.
It’s worked very well indeed for Inditex, which has become one of the world’s biggest fashion retailers, dominating the high street with brands like Zara, Massimo Dutti, and Pull & Bear. So, it might come as a surprise to find out that the man at the company’s helm, CEO Pablo Isla, recently highlighted the benefits of not being a first mover!
At time of writing, Inditex shares have appreciated by 11% year to date
Source: Yahoo Finance
Speaking earlier this month at the CEO Council event organised by the Wall Street Journal, Isla pointed out that Inditex had no ecommerce business until 2010. This, he said, was a good thing: it allowed the business time to develop a stronger model and meant that the pathway to ecommerce success was already well developed by the time Inditex emerged on the scene.
The result is an ecommerce business that emerged fully realised, positioning it strongly from the outset. Isla said that, had the brand tried to go online five years earlier, it would have been a different story: “It's much more difficult later on to try to move to an integrated business than from the very beginning.”
So, there you have it, from one of fashion’s market-leaders: sometimes, it pays to not be first.
Dominion holds Inditex in its Global Trends Luxury Fund. Share price as-at 23 May 2019.
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