March. 27th - Is off-shore production the most effective strategy for apparel retailers?
Andy Giersher Reporting
European apparel chains are bucking the trend and gaining market-share in the US.
Swedish fashion giant H&M, one of the world's largest apparel retailers, is bucking the bearish trend surrounding the retail sector by reporting a jump in profits and its strongest sales growth in months. H&M's strong results maybe the latest sign that a fast fashion business strategy with local apparel production could fare better in the current economic climate then strategies currently used by U-S retailers.
Howard Davidowitz, Chairman and Chief Investment Officer with Davidowitz & Associates, a national retail consulting and investment banking firm in New York, says "Unlike many American retailers, H&M's has more factories in Europe as opposed to Asia. If you look at U-S apparel chains they have virtually no local apparel factories. H&M has retained sources in Europe locally so they can respond instantly when something happens on the floor, they pay a little more but make it back fast..They have a different strategy then U-S retailers and it's working."
The average American retailer has a ninety day lead time, H&M's lead time is less than a month. They are able to react to changes in customers demands much quicker than most U-S apparel chains. Other European apparel chains like Mango and Zara are also using this fast fashion concept and are coming to U-S markets.
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