STRATEGI BISNIS SHEIN VS ZARA | KOMPETISI BISNIS FAST FASHION | INDUSTRI FASHION | INSIGHT BISNIS

Summary

This video explores the evolving dynamics of the fast fashion industry, contrasting the strategies of Zara and Shin. Zara is celebrated for its agile production process, using data and RFID technology to meet changing consumer demands swiftly, making it a leader in the market. In contrast, Shin, a China-based competitor, utilizes big data, AI, and on-demand production models to outpace traditional companies. Shin’s ability to rapidly produce millions of designs and its reliance on small batch production gives it a competitive edge, while Zara’s global distribution center and store locations continue to define its success. The video discusses how agility, digitalization, and rapid response to trends are key to maintaining relevance in the ever-changing fashion industry.

Takeaways

• 😀 Zara and H&M, once dominant in the fashion industry, are facing challenges from new competitors, particularly from China-based companies like Shein.
• 😀 The fast fashion business model, pioneered by brands like Zara and H&M, emphasizes quick production at low costs, but new competitors are reshaping the market dynamics.
• 😀 Zara's success is attributed to its integrated merchandising process, which includes utilizing sales data from over 2,200 stores worldwide to drive product design, production, and distribution.
• 😀 Unlike traditional fashion retailers, Zara relies on minimal advertising, instead utilizing store locations as primary marketing tools and achieving high turnover rates for its products.
• 😀 Zara is highly agile in responding to changing fashion trends, enabling them to produce and distribute products in just 2 to 4 weeks, avoiding the risks of overproduction and inventory loss.
• 😀 Shein, founded in 2008, uses big data, AI, and customer feedback to inform its production, offering a highly responsive, on-demand fashion model that outpaces traditional fashion companies in design output and speed.
• 😀 Shein’s ability to produce up to 1.5 million designs annually, 37 times more than Zara, allows for a greater variety of choices for customers and a more targeted approach to trends.
• 😀 Unlike Zara, Shein relies on small batch production with flexible payment terms for contractors, enabling rapid production adjustments based on real-time consumer data.
• 😀 Shein's marketing strategy leverages social media influencers and interactive campaigns like the Shein X program, creating a strong online presence and community engagement.
• 😀 In 2021, Shein surpassed Amazon as the most downloaded shopping app, highlighting its growing dominance in the global fashion market, especially in America, where it controls a significant market share.

Q & A

How has the global fashion industry changed in recent years?

The fashion industry has seen significant shifts, with new competitors from China challenging the dominance of traditional brands like Zara and H&M. Research from STF Vision highlights that, in 2022, new companies such as Shin surpassed Inditex, Zara's parent company, in market share.

How does Shin manage to stay competitive despite not fully understanding customer desires?

Shin’s strength lies in its openness to not fully understanding customer preferences but rapidly responding to them. By leveraging fast production scaling and utilizing big data and AI, they can quickly adapt to trends and customer demands.

What is the 'fast fashion' business model, and how do Zara and H&M implement it?

The fast fashion business model focuses on quickly producing and distributing fashion items at low costs. Zara and H&M implement it by using streamlined processes in merchandising, design, sourcing, and production, with Zara integrating these steps in its global distribution center known as 'the cube.'

What role does technology play in Zara's business operations?

Zara uses advanced technology like RFID to track inventory, monitor sales data, and adjust production according to consumer demand. This allows them to respond quickly to market changes and maintain high product turnover rates.

How does Zara's marketing strategy differ from conventional fashion retailers?

Unlike many retailers that spend heavily on advertising, Zara only spends 0.3% of its budget on ads. Instead, it relies on strategically located stores to act as its primary form of marketing, encouraging customers to discover new products directly.

Why is business agility important for Zara?

Business agility is crucial for Zara as it allows the company to quickly adapt to shifting trends and market demands. By keeping production flexible and minimizing excess inventory, Zara can maintain high sales and avoid losses from unsold goods.

How does Shin's approach to production differ from traditional fashion retailers like Zara?

Shin operates a more on-demand production model, where it produces small batches of new designs initially (100-200 pieces) and then scales production based on market success. This reduces the risk of unsold inventory and allows for quicker market feedback.

What is Shin's main competitive advantage in the fashion industry?

Shin's competitive advantage lies in its use of big data, AI, and its highly responsive, digital production system. By closely monitoring consumer preferences through its app and website, Shin can rapidly adjust designs and production, offering a massive variety of affordable products.

How has Shin's growth affected the traditional fashion market?

Shin has significantly outpaced traditional fashion giants like Zara and H&M. In 2022, Shin surpassed Zara and H&M in U.S. market share, and in 2023, it controlled nearly 1/5 of the global fast fashion market, with revenue estimates surpassing those of both Zara and H&M.

What challenges does Shin face despite its rapid growth?

Shin faces several challenges, including potential trade restrictions due to its operations in China, criticisms over its environmental impact, and the controversy surrounding its labor practices in the Xinjiang region. Despite these challenges, Shin continues to grow rapidly and innovate.