Lessons Learned From Two Retailers - A case study by the WSJ

Photo credit: Reuters

I subscribe to a number of fashion blogs, including Business of Fashion, to keep up with the industry. On BoF, I came across this WSJ article, which compared the fates of Inditex (best known for the Zara chain), and French Connection. Inditex is doing incredibly well -

His 4,600 stores made a net profit of €1.31 billion for the year to Jan. 31.

While French Connection --

Mr. Marks, however, now sits atop a business that had a loss of €27.4 million for the same 12 month period and is being forced to cut back its ambitions. It is parting with its upmarket Nicole Farhi brand, closing stores in Japan and the U.S. and planning to focus on the 123 stores and concessions it operates in the U.K. and Ireland.

The bullet points:

- Inditex has maintained tight control over the business -- Zara is renowned (esp among business analysts) for quick response to customer demand (and lack thereof). On the other hand, French Connection has expanded via licensing (where you sell the use of your brand to others) and franchising (where you sell the right to open a store of your brand) -- diluting brand image and quality.

- French Connection has used shocking advertisements to market the brand whereas Zara/Inditex has used minimal advertising, instead using shop windows and store presence as a marketing tool.

- Inditex has had constant investment to its company, along with steady expansion.

The bottom line, according to the WSJ:

Get the right product in the right place and at the right price and customers will be induced to buy without the need of gimmicky advertising.