May 17, 2018 | By Cassandra Gagnon
May 03, 2018
For every fast-fashion retailer, delivering newness is a big source of concern.
Dropping new products regularly is seen as a vital measure to maintain market share in an instant-gratification driven, Millennial market. We analysed a few key fast-fashion retailers’ phasing and markdown strategy to understand how different retailers are tackling newness.
Newness has always been considered predominantly a product imperative – and retailers are fundamentally changing their approach to phasing so as to drop new products more frequently – a fact evident in flattening online phasing patterns for established retailers such as H&M and Topshop (see chart below). The move towards regular drops is a positive, as it indicates these retailers are attempting to be more reactive to consumers’ short-term needs and firefight volatile weather patterns.
However, it’s clear that H&M and Topshop’s current phasing strategy is fairly sporadic while on the other hand, Zara maintains a clear phasing pattern – evident in the ‘wave’ pattern of drops; and also keeps new-in volumes relatively low compared to peers.
By bringing in regular but low volumes of products (compared to peers), Zara not only maintains regular levels of newness but creates ‘perceived scarcity’, thereby creating demand for its newness.
Newness perception more vital than volumes
Zara amplifies the newness effect through both its instore and online merchandising. Instore merchandising (store fits and layouts, outfit building on mannequins and window displays) is updated very regularly, so walking into each store feels like a fresh experience each time.
Online, Zara recreates this experience though its frequently updated, beautifully shot editorials, which create a perception of newness by offering something fresh and engaging to shoppers every time they visit. By communicating new product regularly and appealingly, Zara not only ensures newness but also breeds desire for it and generates urgency among consumers to visit regularly.
Ensure consumer reactivity through through clear phasing and markdown strategy
But, the true value of Zara’s newness strategy lies in the manner in which it works in conjunction with its markdown phasing (i.e. when it discounts) – which works almost exactly opposite to new-in phasing.
When Zara discounts heavily, it doesn’t bring in huge volumes of new products, and when it brings in new products, it doesn’t discount heavily – thereby creating a clear signaling pattern to consumers that ensures reactivity.
As Zara discounts only strategically and for limited periods, Zara maintains price integrity, thereby imbuing its new-ins with more value. In addition, Zara’s sales benefit from pent-up demand.
Zara’s strategy demonstrates that there are several moving parts to newness – dropping regular products isn’t enough, retailers also have to create demand and desire for them; and to do so, they need to think beyond a product-driven newness strategy.
Note: All data is from WGSN’s proprietary retail analytics platform, WGSN Instock
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