Lu Ruiqi N0527827 MANGO Case Study Nottingham Trent University MA International Fashion Business January 16, 2014
Contents
1 2 3 4
Executive Summary Introduction Methodology Discussion Product Development The Supply Chain and Manufacturing Distribution Channels Branding, Marketing and Communications
5 6 7 8
Recommendations List of Illustrations Bibliography Appendix
1
Executive Summary
This case study evaluation examines key sectors and management strategies of Mango focusing on core and non-core activities including the brand’s product development, supply chain, distribution and marketing. Secondary research of academic literature was undertaken to support the case study evaluation. Primary research as well as consumer survey and store observation provided the insight for Mango’s brand communication. Some deficiencies within the growth and internationalisation of Mango emerge, which relates to the diversification of product and market, the supply chain management, and the effectiveness of their franchise strategy in long term.
2
Introduction
As one of the pioneers of fast fashion retailer, Spain-based Mango dedicated to establish an efficient business model which keep core activities in-house such as design, distribution and outsourced non-core activities such as manufacturing. The franchise system helps Mango expand to international market rapidly from Europe, Latin America, and Asia Pacific to the US. In recent years, Mango launched several product lines one after another including menswear, accessories, kids’ wear, sports and intimates. However, Mango is facing more and more challenges in global retail market from the uncertain business environment and the stronger competitors. Consumers become more demanding and change their attitude about fast fashion. The raised concerns of ethical fashion and expected transparency of supply chain also give Mango new threats and opportunities.
3
Methodology
A mixed of quantitative and qualitative methods were chosen including consumer survey and store observation. “The researchers need to be aware of the limitations of their studies and also to assess the weaknesses and strengths of each method.” (Kawamura, 2011, p.38) “Surveys are a method of collecting self-reported information from people about their characteristics, thoughts, feelings, perceptions, behaviours, or attitudes.” (Martin and Hanington, 2012, p.172) However, the weakness of survey is that it may not accurately reflect consumer’s opinion and there is a limited accessible participants. The observation of Mango store in Oxford Street, London complements the academic resource and consumer opinion.
4 Product Development
“
When brands are going to expand into international markets, whether to offer the
standardization or adaptation of the products to different markets is always the argument. The way that Mango addresses this issue is to have 80 per cent universal collections for all the countries, and 20 per cent of their collection adapted for specific locations (Perepu, 2013). Changing product strategy to identify the
Only
27% of
respondents agree that Mango have a strong presence in their country. When asked whether Mango is desirable or undesirable in terms of price, style design, band, product offer and product quality, the percentage of desirable
38%, 19%, 11%, and segments would be important components 14%, 35% respectively. to take advantage of growing global homogeneity while taking account of cultural difference (Lee, 62% of respondents similarities and/or differences of global markets answer is
2012).
Figure 1: Product line launched timeline
disagree that the most attractive aspect of Mango is their design.
�
Figure 2: The consumer opinion about the design of Mango
Mango design team develops several different
prices, and the difficult economic market with
product lines classified not only by product
low prices from the same brand. From the point
categories including Casual/Sportswear,
view of consumer, the product design of Mango
Suit/Evening, menswear H.E. BY MANGO,
are not desirable enough to attract consumers
accessories MANGO TOUCH, children’s
even though Mango states it is their core
wear MANGO KIDS and underwear, but also
activities (Figure 2).
by market levels such as Mng Jeans, MNG Exclusive Edition and high-end Limited Edition
The perceptual map (Figure 3) demonstrates
and low-cost ThinkUp (Perepu, 2013). This wide
the current brand positioning of Mango in
product portfolio enables Mango expands into
the retailing market. The competitors clearly
different market segments. For example, Mango
identified and differentiated their competitive
is going to launch a new product line this year
advantages which are difficult for Mango to
aimed at plus-size market, which may have a
compete with, such as the fashionability and
vast potential, such as the US where has 36%
the product variation of ZARA, the trendy but
of the population aged 15+ were considered
low-price of H&M, the product depth and high
obese (Euromonitor, 2013). Nevertheless, it also
quality of UNIQLO. The consumer survey
could make the brand positioning ambiguous.
also shows that most consumers would like to
The retailer’s image or uniqueness, which
choose ZARA or H&M (Figure 4).
reflects the degree of fashion leadership and market niche, should be clearly defined through merchandise and communication (Frings, 2008). It seems that an organisation is unlikely to serve the high-end consumer with premium
Figure 3 The perceptual map of Mango Source: http://zarafashion2013.wix.com/ zara#!perceptual-map/cr8v
Figure 4: Which brands you would be most likely to choose?
The Supply Chain and Manufacturing
In order to establish a competitive supply
Mango takes three or four months to bring out
chain, Mango outsources their manufacturing
garments from design to their store, whereas
completely and sourcing partly (Perepu,
Zara takes only four to five weeks (Perepu,
2013). Quayle (2006) cited that to implement
2013), which makes Mango less competitive
a Business Process Outsourcing (BPO) in
to satisfy the constant changing of consumer
a strategic way has potential advantages
needs.
include “cost-savings, acquiring third-party expertise, increased market flexibility, improved
Regarding to the apparel production, the most
scalability and reduced time to market”. Mango
typical feature is the labour intensity which
requires all the manufacturers have vertically
constitutes the large part of cost (Jones, 2006).
integrated manufacturing process and selects
The outsourcing may lower the cost but it should
supplier base on “production timeframe, price,
be conducted carefully because there is a list
technology, quality, capacity, professionalism,
of hidden costs which cannot be ignored such
and international exposure” (Perepu, 2013),
as the costs of co-ordination and maintaining
which enables Mango to achieve the speed of
offices overseas, export taxes, additional
market-responsiveness, the flexible change of
warehousing and transport, etc. (Jones, 2006).
product range, and meet the expectations of
Moreover, the constantly changing global pattern
their consumers.
of supply has been stated by Jones (2006) that “locations which were once the cheapest lose
While the international market is becoming
that competitive advantage as they become
unpredictable and the product life cycle is
more developed”. Specifically, Mango has
shorter than before, it is both relevant, and
completely outsourced the manufacturing, of
important to develop the “seamless flows of
which 42 per cent took place in China in 2012
supplies and replenishment” (Lee, 2012).
(Mango, 2012). But China is no longer the
However, the key concept of the supply chain
cheapest source for many products. Because
in fast fashion is mostly about the reduction of
there are many Chinese contract manufactures
the lead-time to respond quickly to consumer’s
intend to exploit domestic markets and develop
demands (Barnes and Lea-Greenwood, 2006).
their own brand. For example, the Daphne
move from a contract manufacturer of women’s shoes to an owned footwear brand which has a strong design capability and domestic retail network (Fisher and Keh, 2013). The ethical and environmental concerns of outsourced manufacturing have provoked more attention from consumer and government after a garment factory building collapsed in Rana Plaza, Bangladesh in May 2013, which killed more than 1,100 people (BBC, 2013). According to the Mango 2012 Annual Report, 5.81% of Mango outsourcing purchase from Bangladesh but they clarified that there are just planning to produce samples there and have not been started. Nevertheless, more social responsibility and more transparency of supply chain are required in the fashion industry.
Distribution Channels
According to the multi-brand and the multi-
The proportion of owned stores and franchised
product line strategies mentioned above, Mango
stores of Mango is 35% and 65% respectively
announced their entrepreneurial dream is “to be
(Perepu, 2013). Franchising is an important
present in every city in the world” which matches
entry strategy for international brands to achieve
their goals for market expansion (Mango, 2012).
effective and profitable expansion of foreign
The market strategy of Mango demonstrates
markets. Even though the brand has limited
a fast rate of growth in international markets
resources and knowledge, it could be “a more
which was identified as a market diversification
economic means of internationalization” and the
strategy (Sheth, 1989). The Figure 5 represents
business risk of franchisers reduces significantly
the relative changes in the long-term running in
due to the investment from franchisees (Lee,
which the market diversification is more likely
2012). The franchise system of Mango uses a
to enter unprofitable markets and will lead to a
series of policies regarding entry requirements,
reduction later (Sheth, 1989).
investment and support, which helps Mango make global expansion and achieve prime store
Figure 5 Alternative Market Expansion
locations rapidly (Perepu, 2013). It is more
Strategies Over Time
relevant that Mango forms alliances with leading
Source: Sheth, J.N., 1989. Global marketing
department store to accelerate their expansion
perspectives. Cincinnati: Cincinnati : South-
such as US retailer J C Penney (Perepu, 2013).
Western Pub. Co.
Because J C Penney is one of the largest
Figure 6 Theories on relationship development across lifecycle Source: Blut, M., et al., 2011. What to Expect After the Honeymoon: Testing a Lifecycle Theory of Franchise Relationships. Journal of Retailing, 87 (3), 306-319.
apparel retailers in the US who runs about 1,000
identified as the stage which from routine to
stores (J C Penny, 2014).
crossroad continues to decline in franchise relationship. In this case, the franchisees
In spite of the benefits of entry into foreign
behaviour more independently with developed
markets, there could be challenges faced by
skills and expertise (Blut et al., 2011).
the brand to establish sustainable franchise relationships in long-term. From the perspective of their entry strategy, the characteristics of the franchise model have been evaluated as low involvement, cost and return whereas high dissemination risks (Park and Sternquist, 2008). From the perspective of long-term operations, when the franchisees achieve expertise in the business, they are more likely to behaviour as opportunists, reduce investment and even leave the system (Blut et al., 2011). Blut et al (2011) developed a theory of franchise relationship based on the traditional lifecycle which brings out the different stability level in four different stages. The rapid expansion of Mango in international market could be
Branding, Marketing and Communications
Figure 7: Does the collaboration with favourite fashion icon or celebrities of MANGO influences your purchase intention? Mango has interpreted their brand image
80%
through design collaboration, price strategy and merchandizing display. As the changing of fashion trends and consumer demand have taken place in the fast fashion market, consumers tend to actively looking for the key styles which appear in magazines, popular television, endorsed by celebrities and seen on the catwalks (Barnes and Lea-Greenwood, 2010). Mango institutes design competitions and collaborates with renowned fashion designers, models, and actresses to enhance the product design while and as a marketing strategy (Perepu, 2013). In that way Mango can improve their brand image to compete with the media driven retailing. However, these collaborations with specific designer or celebrities may only favoured by a specific group of people as the 80% of respondents in the survey stated that their purchase intension would not be influenced. Moreover, more and more design collaborations are conducted by fashion retailers, which make consumers lose the interest of Mango. For example, H&M continues to cooperate with high-end brand as well as Karl Lagerfeld, Stella McCartney, Sonia Rykiel, Lanvin and Jimmy
13% 7%
Relevant
Neutral
Irrelevant
Choo, etc., which is more impressive than Mango did. Mango identifies their product positioning relate to the “latest fashion trends, with quality design and good price” (Mango, 2012). Mango reduced their prices by 20% in 2012 achieving a “good price” among their competitors, and also achieving a 20% sales increase in the Spanish recession (Perepu, 2013). Analysts state that drop price would take a risk which customers will see Mango as an overvalued brand (Perepu, 2013). However, it largely depends on the market environment and the way to communicate the price change. From the perspective of consumer, it will be welcomed both in emerging market with increasing large
Figure 12: The campaign of Mango. Source: compiled from internet.
middle class and west market with price-seeking consumers (Euromonitor, 2013). Figure 8: How do you think the price of MANGO? 81%
Figure 9 Mango store, Oxford Street in London
19%
Source: Author owned 0%
Overvalued
Reasonable
Value added
As shown in Figure 9, the product display of Mango in store creates both impressive seasonal theme and intelligent shopping functional. For example, the one piece per size of each item displayed in the store looks like the last piece (Perepu, 2013); the clothes displayed on the mannequins will be available at the goods shelves nearby. The shopping experience of Mango establishes a path which firstly uses exciting window display to attract
Figure 10 Mango store, Oxford Street in London
visiting consumers, then using fashionable
Source: Author owned
mannequin displays to guide shopping, and lastly providing more basic and accessible styles with reasonable price (Figure 10).
5 Recommendations According to the recent economy trends, the
and social irresponsibility of fashion (Kondej,
emerging market keeps growing but not as fast
2014). The ethical and environmental concerns
as before, the Eurozone region is going to away
of fashion retailers’ sourcing push this
from the recession which led by Germany and
phenomenon forward. Mango should clearly
the recovery of US economy will accelerate
identified their brand personality to differentiate
(Abruzzese, 2013). In this case, the strategy
with other retailers and provide well selected
of marketing penetration from Ansoff’s Matrix
product offers with reasonable price. The case
could be applied for Mango, which suggests
of Debenhams lost in Christmas sales due to
strengthen the brand presence and increase
the discount-led promotion recently illustrates
the market share within existing markets. On
the truth that consumers not want only low
contrast, the diversification of product line and
prices, discounts but real good value products
market segmentation is the most risky strategy
(Saunders, 2014).
for Mango, which should be handled carefully. While the digital revolution continues to change Consumer behaved increasingly looking for
all aspects of our life and business, such as
slow fashion and tend to reject commercialism
the universal of smart devices and the coming
Figure 11: Ansoff’s Matrix
4G network, the integration of Omni-channel
and risk but it worth to transform the franchised
retailing, the multi-channel advertising approach.
store to owned store in the long-term. So
Some companies achieved impressive sales
that Mango can take the whole control of the
rise recently such as Next takes the advantage
operation to provide consumers same shopping
of online opportunities and focus on middle
experience in different store.
market, House of Fraser worked hard at building multichannel proposition, John Lewis excelled
Figure 12: Do you have the same shopping
with innovative and well selected products
experience at different MANGO stores you have
(Saunders, 2014). It is also important for Mango
been?
to combine the store network and online store to formulate a better Omni-channel integration.
49%
The existing of supply chain management 32%
theory suggested that the key factors of success in retailing are “just-in-time”, “quick 19%
response” and “agile supply chains” (Barnes and Lea-Greenwood, 2006). It implicates that the responsiveness of supply chains in the fast fashion industry should be improved and the supply chain of Mango should be selected
Disagree
Neutral
Agree
strategically. One consideration is to shift the sourcing and manufacturing from the far eastern to the place closer to the domestic market. Some large fashion retailers have moved their small orders to countries nearby such as Portugal, Romania and Turkey (Euromonitor, 2013). Another sourcing destination identified by Kondej (2014) is Ethiopian where H&M, Tesco, Primark source their clothing and government plans to reach US$1 billion textile export by 2016. The franchising development of Mango should be contemplated. Firstly, it is necessary for Mango to give more priority to the critical selection of franchisees than the rapid expansion. Secondly, sharing the realistic situation of business and encouraging the participation of franchisees to extend the enthusiasm. Lastly, it may take more investment Word count: 2415
6 List of Illustrations Figure 1: Product line launched timeline Figure 2: The consumer opinion about the design of Mango Figure3: The perceptual map of Mango, Source: http://zarafashion2013.wix.com/zara#!perceptualmap/cr8v Figure 4: Which brands you would be most likely to choose? Figure 5: Alternative Market Expansion Strategies Over Time, Source: Sheth, J.N., 1989. Global marketing perspectives. Cincinnati: Cincinnati : South-Western Pub. Co. Figure 6: Theories on relationship development across lifecycle, Source: Blut, M., et al., 2011. What to Expect After the Honeymoon: Testing a Lifecycle Theory of Franchise Relationships. Journal of Retailing, 87 (3), 306-319. Figure 7: Does the collaboration with favourite fashion icon or celebrities of MANGO influences your purchase intention? Figure 8: How do you think the price of MANGO? Figure 9: Mango store, Oxford Street in London Figure 10: Mango store, Oxford Street in London Figure 11: Ansoff’s Matrix Figure 12: The campaign of Mango. Source: compiled from internet. Figure 13: Back on top. Source: Economist Intelligence Unit Figure 14: Purchase Decision-making Factors: Price vs Quality Source: Economist Intelligence Unit
7 Bibliography Abruzzese, L., 2013. The west’s turn. (The Economist: The World in 2014), 24-24. Barnes, D.L. and Lea-Greenwood, M.G., 2006. Fast Fashion. Bradford, GBR: Emerald Group Publishing Ltd. Barnes, L. and Lea-Greenwood, G., 2010. Fast fashion in the retail store environment. International Journal of Retail & Distribution Management, 38 (10), 760-772. BBC News, 2013. China media: Xi's foreign policy2013. [online]. BBC News. Available at: http:// www.bbc.co.uk/news/world-asia-china-21855083[Accessed 1/12 2014]. BBC News, 2013. H&M and Zara to sign Bangladesh safety accord2013. [online]. BBC News. Available at: http://www.bbc.co.uk/news/business-22520415 [Accessed 1/8 2013]. Blut, M., et al., 2011. What to Expect After the Honeymoon: Testing a Lifecycle Theory of Franchise Relationships. Journal of Retailing, 87 (3), 306-319. Euromonitor International. Apparel in Spain. July 2013. Global Market Information Database. Euromonitor International. Global apparel (Part 1): shifting distribution landscape and market performance. May 2013. Global Market Information Database. Euromonitor International. Global apparel (Part 2): Category dynamics and competitive landscape. May 2013. Global Market Information Database. Fisher, M. and Keh, E., 2013. As China Changes, So Do Global Supply Chains [online]. Knowledge@Wharton. Available at:http://knowledge.wharton.upenn.edu/article/as-china-changesso-do-global-supply-chains/ [Accessed 1/8 2014]. Frings, G.S., 2008. Fashion : from concept to consumer. Upper Saddle River, NJ: Upper Saddle River, NJ : Prentice Hall. Haberberg, A., 2000. The strategic management of organisations. Hemel Hempstead: Hemel Hempstead : Prentice Hall. Holland, T., 2014. Jigsaw unveils plan to double online sales. Retail Week (January 10, 2014), 4-4.
J C Penny, 2014. About us. [online]. J C Penny.com. Available at: http://ir.jcpenney.com/phoenix. zhtml?c=70528&p=irol-homeprofile [Accessed 1/15 2014]. Kawamura, Y., 2011. Doing Research in Fashion and Dress. Oxford: Berg. Kondej, M., 2014. Key trends for the apparel industry in 2014. Euromonitor International. Global Market Information Database. Lee, K., 2012. Global marketing management : changes, new challenges, and strategies. Oxford: Oxford : Oxford University Press. Martin, B. and Hanington, B., 2012. Universal Methods of Design. Beverly: Rockpot. Micklethwait, J., 2013. Your Chance, Mr Obama. (The Economist: The World in 2014), 19-23. Miles, J., 2013. Pedalling uphill. (The Economist: The World in 2014), 76-76. Neilan, C., 2013/12/10. Mango confirms January for Violeta launch [online]. Drapers. Available at:http://www.lexisnexis.com/uk/nexis/results/docview/docview.do?docLinkInd=true&risb=21_ T18986253399&format=GNBFI&sort=BOOLEAN&startDocNo=1&resultsUrlKey=29_ T18986258203&cisb=22_T18986258202&treeMax=true&treeWidth=0&csi=355080&docNo=2[Acc essed 1/13 2014]. Park, Y. and Sternquist, B., 2008. The global retailer's strategic proposition and choice of entry mode. International Journal of Retail & Distribution Management, 36 (4), 281-299. Perepu, I., 2013. MANGO: OUTSOURCING OF NON-CORE ACTIVITIES TO KEEP UP WITH FASHION. India: IBS Center for Management Research. Quayle, M., 2006. Purchasing and Supply Chain Management : Strategies and Realities. Hershey, PA, USA: IGI Global. Ranatunga, N., 2014. Retailers should go mobile to increase footfall in stores. Retail Week (January 10, 2014), 27-27. Saunders, N., 2014. Consumers wanted value, not discounts. Retail Week (January 10, 2014), 2020. Sheth, J.N., 1989. Global marketing perspectives. Cincinnati: Cincinnati : South-Western Pub. Co. Taylor, L. and Wessing, T., 2014. Practical advice on the operational issues facing your business today. Retail Week (January 10, 2014), 42-42. The Economist Intelligence Unit, 2013. The world in figures countries. 2013/10/30. (The Economist: The World in 2014), 95-103. Thomson, R., 2014. Retail life comment. Retail Week (January 10, 2014), 23-26. Tremlett, G., 2013. Sink or swim? (The Economist: The World in 2014), 51-51. WGSN Newsteam, 2014. At least 16 dead in Chinese shoe factory fire. [online]. WGSN. Available at: http://www.wgsn.com.ezproxy.ntu.ac.uk/content/report/News/2014/Jan_Stories/Jan_14/News_ Story_Jan_14_31.html [Accessed 1/15 2014]. Yueh, L., 2013. Will China's Third Plenum be an economic turning point? [online]. BBC News. Available at:http://www.bbc.co.uk/news/business-24803431 [Accessed 1/12 2014].
8
Appendix
PESTEL Analysis
P According to Mango Annual report 2010 and 2012, the most important and concentrated market of countries including United States, Spain, China and the Europe.
liberalization of interest rates and the exchange rate, reforming of state-owned enterprises and fiscal system (BBC, 2013). After Xi Jinping took over the Chinese fifth generation of party chiefs, the oversea tour as president consolidated a strategic partnership with Russia and put on economic relationship with the US (BBC, 2013).
ragged after three years of austerity and the
E
senior figures was threatened by a series of
Even the China and India still keep faster
scandals including the Prime Minister, Mariano
growing than the developed countries, there is
Rajoy (The Economist, 2013). It cannot be
economy recovery and will become sprightlier
predicted that whether Spain will recover from
in 2014 in three big regions, the US, Japan and
the five-year, double-dip recession because the
Europe (Figure 13). The recovery of US will
idle workforce and the national finances still rely
accelerate in 2014 due to creating 4.3m jobs in
on international support (Tremlett, 2013).
the past two years, making manufacturing more
The partisan position of US make Congress
competitive by cheap shale gas and providing
stay at policy gridlock and the president Barack
long-term interest rate (Abruzzese, 2013).
Obama called on the cooperation of Democrats
In Europe, the cracks from euro zone crisis
The People’s Party government of Spain is
and Republicans in his speech in January 2013 to recover the fragile economic (Micklethwait, 2013). By the housing rebound, repowering factories with shale gas and the monetary policy of bond-buying programme, there will be a modest economic recovery (Micklethwait, 2013). In china, the Communist Party plenum in late 2013 proposed a range of reforms such as the Figure 13
still exist but the productivity improved and
a strong design capability and domestic retail
government deficits fell by half while the once-
network (Fisher and Keh, 2013).
large deficits are disappearing in Italy, Spain
The Middle East and Africa region shows fast
and Portugal (Abruzzese, 2013). The Germany
growth for apparel retailers in recent years
leads the out of recession (Abruzzese, 2013).
and their economic stability and attractive
In order to compensate the decrease of
tourism industry demand for more global
domestic apparel sales, Spanish companies
brands (Euromonitor, 2013). As far as sourcing
are investing in international expansion. While
destination was concerned, the Ethiopian
the growth of exports to Europe remains slow,
government plans to reach US$1 billion textile
the Spain fashion industry explores the market
export by 2016 where H&M, Tesco and Primark
of Asia and the US which present more than
source their clothing (Kondej, 2014).
20% growth rate in value terms such as Mexico, Brazil, Morocco, United Arab Emirates, Russia, China, India and the US (Euromonitor, 2013). Parallel to the decreased volume sales, some large fashion retailers cannot purchase a large number of fabric and clothing from Chinese factories so that move some orders to countries close by such as Portugal, Romania and Turkey (Euromonitor, 2013). It was predicted that China still will have more than 7% of growth in 2014 to build a $10 trillion middle-income economy but it was claimed that some of the recent growth of China was a conjured by easy loans (Abruzzese, 2013). With the rising wages and a strong RMB, China is no longer the cheapest outsourcing destination for many products (Fisher and Keh, 2013). Two major shifts were identified by Fisher and Keh (2013). On the one hand, many prominent manufacturers and suppliers relocated and expanded to cheaper locations in interior China, India or Indonesia. On the other hand, many Chinese contract manufactures intend to exploit domestic markets and develop their own brand. For example, the Daphne move from a contract manufacturer of women’s shoes to an owned footwear brand which has
S The global retail sales are drove by the increasingly urbanisation and a growing middle class in developing-world. Asia and Australasia provide 40% of global retail business and shows the steepest rise of 5.1% in demand (The Economist, 2013). The Spain population appears the increasing trend of polarisation which divided into two classes, with the price-seeking consumer is a population segment afflicted by the taxation increments and unemployment rates (Euromonitor, 2013). Euromonitor International conducted a consumer survey across eight countries to reveal the opinions of either quality or price matter most to consumers (Figure 14). To balance between price and quality, two main
business models becomes competitive in the
example, 44% of consumers shopping on
apparel landscape which are fast fashion and
the high street with a voucher code and 51%
affordable luxury (Euromonitor, 2013).
of mobile shoppers search for a discount
During the Christmas festive period this year,
voucher for a product they have seen in store
some companies achieved impressive sales
(Ranatunga, 2013).
rise such as Next takes the advantage of online
Aggregated social media will bring retailers
opportunities and focus on middle market,
information which is quicker, more accurate and
House of Fraser worked hard at building
accessible earlier than market research or the
multichannel proposition, John Lewis excelled
press (Thomson, 2014). Topshop is inspiring
with innovative and well selected products
people to buy through the partnership with
(Saunders, 2014). Whereas Debenhams issued
Pinterest and retailers could build relationships
profit warnings by a discount-led promotional
with local consumers in store by using PayPal’s
sales (Saunders, 2014). These cases illustrate a
check-in app (Thomson, 2014).
truth is that consumers are seeking good value
Despite the tough economy, the premium
product but not just low prices and discounts
fashion retailer Jigsaw increases 21% net profit
(Saunders, 2014).
by and 7% sales in the year to September 2013
The phenomenon of slow fashion is emerging
by investing the click-and-collect and full-price
whilst there are more pro-social consumers
strategy (Holland, 2014). “One of the key trends
reject commercialism and social irresponsibility
is more and better Omni-channel integration.
of fast fashion and prefer locally manufactured
Done right, the combination of a store network
clothing (Kondej, 2014).
and online is a winning formula that pure-
T The digital revolution of smartphone and tablet
players cannot match,” says UK Google managing director Dan Cobley (Thomson, 2014).
business. There is a fast pace growth of Mobile
L
use on retailing for the past few years. The
A new consumer contract regulations were
45% of consumers use the in-store shopping
enacted in UK by the end of 2013 which
process by their phone and 20% will change the
extends the cooling off period to 14 days, gives
product they are going to buy (Thomson, 2014).
refunds within 14 days and retailer’s premises
During the Christmas this year, the mobile
have to give certain information prior to sale to
traffic rocketed as it accounted for 75% of traffic
consumer (Taylor and Wessing, 2013).
at John Lewis on Christmas Day (Thomson,
Currently, an agreement called the Accord
2014). Recently, the news of coming universal
on Fire and Building Safety in Bangladesh
4G network will bring a different shopping
has been introduced and some European
experience which is more immersive, instant
retailers, including H&M, Zara and Primark,
and intimate than ever before (Thomson, 2014).
have signed on it to improve safety conditions
M o r e o v e r, t h e r e t a i l e r s a r e a d o p t i n g a
(BBC, 2013). The government, the retailers
multichannel advertising approach. For
and the consumers are going to expect more
continues to change all aspects of our life and
SWOT Analysis
transparency of supply chain of fashion brands. In November 2012, the government of Madrid announced that the retailers have the liberalisation of sales periods to decide the period, duration, quantity and modalities of discounts, which paves the way of all kinds of promotions and sales during the economic crisis in Spain (Euromonitor, 2013).
S Mango has made great effort to build a strong design department by investing workplace “The Hangar”, design facilities and around 600 designers (Perepu, 2013). As a core
E
activity, Mango’s design developed multi-bands
The ethical and environmental concerns of
and operated multi-line products including
outsourced manufacturing have been under
Casual/Sport, Suit/Evening, Mng Jeans, MNG
increasing pressure after a garment factory
Exclusive Edition and high-end Limited Edition,
building collapsed in Rana Plaza, Bangladesh
which helps Mango targeting a wider market
in May 2013, in which killed more than 1,100
(Perepu, 2013).
people (BBC, 2013). Mango has clarified that
Mango conducted design competition Mango
they were planning to produce samples in
F a s h i o n Aw a r d s a n d c o l l a b o r a t e d w i t h
one of the collapsed factories called Phantom
renowned fashion designer or celebrities, which
but still had not been started (BBC, 2013).
brings out new product concepts whilst arouse
However, according to the Mango 2012 Annual
the attention from media and consumer (Perepu,
Report, 5.81% of Mango outsourcing purchase
2013).
from Bangladesh.
The completely outsourced manufacturing and
Another industry accident is a fire disaster at a
partly outsourced sourcing of supply chain
shoe factory in eastern China in January 2014
allows Mango to focus on the design sector and
which killed more than 16 people (WGSN,
operate business efficiently (Perepu, 2013). It
2013).
has potential advantages include “cost-savings,
The smog whether lies semi-permanently over
acquiring third-party expertise, increased market
many parts of China and its carbon emissions
flexibility, improved scalability and reduced time
are going to become twice the level of America’s
to market” (Quayle, 2006).
(Miles, 2013).
Mango expanded to global market rapidly due
strategies including MANGO, H.E. BY MANGO, TOUCH, MANGO KIDS and low-cost ThinkUp
to the franchise system which there are 65% of franchised stores (Perepu, 2013). The benefits would be more relevant that Mango alliances with leading department store to accelerate the expansion such as US retailer J C Penney (Perepu, 2013).
W
Even Mango states that design is one of their core activities, but their product offer are seems not enough to attract consumers, compared with other trend-oriented brands such as Zara and H&M. It is especially true since H&M pioneered limited collections cooperate with designers from high-end brand from Karl Lagerfeld, Stella McCartney and Viktor & Rolf to Matthew Williamson, Roberto Cavalli, Versace, Sonia Rykiel, Lanvin, Jimmy Choo and Marni. As far as the price was concerned, there are many value brands that Mango cannot compete with such as M&S, Primark, even though Mango has dropped their price by about 20% in 2012 (Perepu, 2013). For product quality, Mango may not as good as Uniqlo who also provides both exclusive collections by renowned designers and low-cost apparel (Perepu, 2013). As a fast fashion brand, Mango takes three or four months to bring out garments from design to store which is much slower than the four to five weeks of Zara (Perepu, 2013).
considered obese.
T Mango faces new competitive scenario in domestic market since numerous international fashion brands expanded to Spain in 2012 among the worsening economy such as H&M, Primark, Liu Jo, Superdry, G-Star and Max Mara (Euromonitor, 2013). The competition among international market is also fierce. Both the fast fashion leading companies Inditex and H&M use multi-brand approach to occupied wider audience and expanded market rapidly. Each of their sub-brand creating clear brand personality and targeting different product category or price point, which make Inditex and H&M more competitive in the respects of either product offer, price or quality compare with Mango. In spite of the benefits of outsourcing, the outsourced manufacturing and product may also bring negative impacts and potential risks. On
O
the one hand, the constantly changing of global
A better Omni-channel integration which
that competitive advantage as they become
combines the offline and online store sales
more developed�. On the other hand, the
is an important opportunity for fashion retail
concerns of ethical fashion and transparency of
to maximise sale performance. For Mango,
supply chain has been increasingly arouse the
they could improve the shopping experience
attention among government and consumers,
in store, provide the click-and-collect at online
especially after the industry disaster happened
shop, establish the m-commerce facilities and
in Bangladesh.
enhance the communication with consumers at
While the franchise system takes Mango into
social media.
international market effectively, there are
Mango is going to launch a plus size fascia
challenges that Mango is going to face including
Violeta in 2014 which targets young women
maintaining relationship with franchisees,
sized 12-24 and plan to open 50 stores in
keeping business in control and raising the
the first half of 2014 (Drapers, 2013). The
profits.
Euromonitor (2013) reported that there is a vast potential in the plus-size market in the US with 36% of the population aged 15+ were
pattern has been stated by Jones (2006) that “locations which were once the cheapest lose