Blog: Leonie BarrieFast fashion: good or bad?

Leonie Barrie | 25 January 2010

The fast fashion sourcing model hit the headlines on both sides of the Atlantic last week.

On the one hand, US researchers found that firms who combine trendy product designs with short production and distribution lead times often achieve higher profit margins than those who follow more traditional outsourcing models.

On the other though, a parliamentary report in the UK wants the government to tackle the so-called ‘Primark’ effect, which has seen cheap, throwaway fashions clogging up landfill sites across the country. MPs are calling for retailers and manufacturers to use greener textiles in their garments arguing that cheap clothing is often made from man-made materials that cannot easily be recycled.

One of the biggest proponents of fast fashion is Primark, which has been the focus of persistent criticism of worker welfare in its supply chain. But the value clothing retailer has taken steps to silence its critics by tightening up its ethical trading policies over the past year. And progress on its ethical trade action plan has just been praised by the Ethical Trading Initiative.

The biggest problem facing US accessories specialist Coach, meanwhile, is tapping into new growth opportunities – particularly in China, where current performance is outstripping even the company's own strong expectations.

Its overseas ambitions have helped soften concerns from investors closer to home. For even though the business posted an 11% rise in second quarter profit to US$241m as it returned to comps growth in North America, analysts are concerned by falling wholesale shipments and the fact the firm is still scaling back its inventories.

Value retailer Target Corporation is also focusing on new strategies to generate growth over the next five to ten years. Store revamps, smaller outlets and international expansion are all set to come under the spotlight, with US$1bn being spent this year alone on 340 revamps across the US. The company is also developing a new, smaller store format aimed at densely populated urban markets. And it will expand outside the US, with its first international forays likely to feature Canada, Mexico or Latin America from about 2013 onwards.

And Liz Claiborne Inc is continuing its plans to counter declining sales by selling its retail chain in Canada to women's wear retailer Laura Canada, a privately held firm based in Montreal. The Canadian company says it intends to convert the 38 stores to its Laura or Melanie Lyne nameplates by October.

Liz Claiborne is paying the price for past strategies of aggressive expansion and acquisition, built on an unwieldy and high-cost sourcing and distribution model. And it recently admitted it could be another year before its eponymous brand returns to the black.


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