The Double Edged Sword for Fast Fashion Brands

May 30 2016, 4:55 AM4 min read

The impact of fast fashion can be seen on the high street and in the newspapers. But the trend may be about to take down one of the world’s most recognisable brands.

There are few people in the world who wouldn’t recognise Gap’s brands on the high street, in shopping malls, or on the Internet. However, the fashion and retail giant is facing up to major issues thanks to the ever-growing fast fashion trends.

With consumers moving their shopping habits away from in-store purchasing, Gap may seek bankruptcy in order to help it transform its business model and organisational set up.

Sinking Sales

All three of Gap’s major brands – Gap, Old Navy and Banana Republic – have seen sales decrease again in the first quarter of 2016. In April 2016, Gap sales dropped by 4 per cent, Old Navy by 10 per cent, and Banana Republic by 7 per cent.

The company is now on a run of 24 straight quarters without a growth in comparable sales, and 13 straight months of declining sales. In the face of this, Gap’s shares are down by 9 per cent since the start of the year, leading many analysts to suggest that these brands still aren’t learning lessons from fast fashion retailers such as H&M, Uniqlo and Zara.

Gap is yet to successfully match the design-to-shelf timelines of fast fashion, with many of its products still taking up to nine months to hit the shops. This is roughly double the length of time that it takes fast fashion trends to reach consumers on average.

Wider Impact

It’s not just Gap who are suffering from the fast fashion spread. Other US-based brands, including J. Crew, Abercrombie & Fitch, have experienced a sales downturn, while traditional retail icons, such as Sears and Macy’s, have both closed a number of stores this year.

In Australia, Wesfarmers Ltd, the country’s biggest company by sales value, announced its worst yearly profit in two years, and looks set for its first net loss in almost 20 years. The organisation puts its decreasing sales down to the impact of fast fashion brands on its in-country discount stores.

Double-Edged Sword

However, not all is rosy in the garden for the fast fashion retailers. Uniqlo appear to be struggling to gain a foothold in the US market, opening fewer stores than anticipated, and with slower than anticipated sales.

Chief Executive, Tadashi Yanai, has gone to the USA to assess the company’s strategy and to work out how to raise the brand’s profile outside of major cities. The company has consistently lost money in its US operations since expanding there five years ago, but still maintains a plan to open over 100 stores in the country in the coming years.

Could this be a turning point for retail brands? Or is it just the natural progression of a business’ rise and fall, just sped up in line with the increasing pace of change in trends and demands? Whichever it is, it will be interesting to see how the fashion industry changes in the coming years.

We’ve been keeping track of the major stories making the procurement and supply chain news this week…

Procurement “Underpaid and Unrecognised”

A new salary survey report from Next Level Purchasing Association (NLPA) has suggested that procurement professionals are being underpaid.
The Purchasing & Supply Management Salaries 2016 report has shown that average global salaries for the profession have decreased by 7.5 per cent.
This leaves the average global salary around $53,000 USD, although the average covers professionals at all organisational levels, and across six continents.
The NLPA has suggested the best way for professionals to combat this is to get themselves recognised for value contributions to their organisation.