Fashion is one of the unifying elements of the world. It means different things to different people. People have different liking and financial capabilities, hence the diversity in this field. Majority of the world’s fashion trends can find their roots in Europe. The luxury fashion industry is based here, as well. Recently, there is a fashion trend that has emerged in Europe, threatening the luxury industry. This is the fast fashion industry. The market structure of this industry allows for low prices and mass production of commodities. This paper seeks to analyze the literature review on the effects of fast fashion industry to European luxury market. This topic has raised a lot of speculation in the fashion circles. Whether this trend is beneficial or detrimental to luxury fashion, the markets are yet to know.
The luxury market in Europe has not been affected by the Euro zone economic crisis. This market has survived, even when the European economies were tumbling. The biggest players in the European luxury markets include Louis Vuitton, Prada and Giorgio Armani. There are prospects that the industry will grow by an additional 75 during this financial year. This is an impressive statistic, especially since the whole world is still reeling from the effects of the recession is 2008. However, just like in any other market, there are some factors that affect this industry, both on the economic and marketing fronts.
One of the latest phenomenon that is affecting luxury brands in the fast fashion. This is a trend that customers are picking at a sprawling rate. It entails the purchase of cheaper products that are being marketed in the mainstream as being of high quality. Some of the stores that have pushed this trend into the limelight include Zara and Peacocks. This market operates on the principle of quick and cheap production. According to Ethical Fashion Forum, (2012), this fashion is addictive and insatiable. They are hence able to offer the latest fashion trends to customers at a relatively cheaper price.
In the hardening economic times, some of the luxury market customers are unwilling to spend a lot of money in these products (Bruce, Daly, 2006). Hence, they turn to these fast fashion products to purchase goods that are relatively of the same quality but with a wide price difference. This tactic of lower price differs from that of the luxury market. Whereas luxury markets use high quality materials, the emerging markets use low quality materials. The luxury markets incur more expense in the production stages, and hence cannot afford to charge a low price. The luxury market also does not compromise on the quality of their products hence have to compensate their cost of production through charging a higher price.
Another tactic that the fast fashion industry uses involves engaging the services of foreign labor since it is cheap and readily available. This helps to keep the cost of production at a minimum. The luxury industry, on the other hand, cannot reduce their price significantly. There is a market conception that if it is cheap, then the commodity is of low quality, as well. In the spirit of retaining their integrity, the luxury market chooses to charge a higher price and ensure quality.
The luxury market is known for situating their stores in high end parts of cities where rich folks frequent. This is done in order to target the clientele, who are usually rich people. The fast market, on the other hand, knows that their products are for everybody who wants to look fashionable and spend a little money. Their retail stores are hence found in almost all parts of the cities.
Just recently, the luxury market started focusing their efforts on male clientele. In the past, this was predominantly a women’s market. Since this diversification, the industry has thrived on an even larger scale. The fast market base is, however, larger than the luxury market base. This is because of economic class disparities in the two markets. While the luxury market targets the few rich people in Europe, the fast market targets the masses of middle and low income earners. This new turn by the luxury market will be responsible for propelling this market into its next era.
There is, however, a growth prospect for the European luxury market. According to Alison, (2011), the market base for these products in Japan and china has risen significantly over the past few years. These two countries, together the USA forms a large market base for luxury products from Europe. Even with the intrusion from the fast market, this industry is still thriving.
Marketing strategies in the two markets also differ significantly. According to Sheridan, et al (2006), the fast market, a lot of effort is put into advertising since the goods have to move fast. Marketers hence promote the goods for a short time then move to other emerging trends. According to Emanuella (2012), fashion marketing has progressed to other mediums of marketing such as the internet and social platforms. The luxury market, on the other hand, uses marketing efforts as a means of building their brand name. This market relies heavily on reputation, letting their name and quality speak for them. However, lately they have increased their marketing presence in emerging markets. These markets purchase over half of global luxury sales. Even with these increased efforts, they still cover a lesser market than the fast markets. This is a trend that management in the luxury market should analyze and respond appropriately.
The approach taken by management in the two markets is also different. In the fast market, management aims at maximizing sales revenue, and customer satisfaction at the same time. They maximize their market deliveries and take into account the needs of the customers. The luxury market takes steady strides in their market operations. They rely on the name created for them by public perception and are hence careful on any crucial decision to be made. While the fast fashion industry is geared towards creating fashion trends all over the world, the luxury market is focused on creating couture. They both fulfill their objectives, since they target different clientele.
Taking into consideration the research that has been done on this topic, the emergence of fast fashion has made the luxury market more vigorous. There is a notion in the market that fast fashion is gearing towards dominating the market base in fashion. This has forced the luxury market to embark on strategies that will ensure continuity of their line of business for years to come. Since the rich keep getting richer, and more people are entering this economic group, there will always be market for these products. Also, the luxury market has an advantage of a wider portfolio. Since this market is well established, they have diversified their production to other things apart from clothes. These include accessories, shoes, watches and perfumes, among others. The fast fashion industry, on the other hand, specializes in cheap and quick productions, hence has not ventured into other production lines. This leaves the other commodities exclusive to the luxury market.
However, this industry should not ignore the fact that fast fashion is rapidly expanding its reach in the market due to the sophistication of the products and lower prices. As earlier said, this industry has managed to amass an impressive customer base in a short while. As time goes by, these statistics will continue growing. There is a lot of potential in this market hence the luxury market should be on constant watch. Both of these markets are winners in their own way. The luxury market gets to retain their reputation and customers, while the fast fashion industry gets to venture into more markets and increase their revenue. As long as they both target different market segments, none will push the other out of the market.