Fashion retailing - part 1 : Part 1 9781845443634, 9780861769902

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18/04/2005

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Volume 32 Numbers 8 2004

ISBN 0-86176-990-2

ISSN 0959-0552

International Journal of

Retail & Distribution Management Fashion retailing – part 1 Guest Editors: Grete Birtwistle and Christopher M. Moore

www.emeraldinsight.com

International Journal of Retail & Distribution Management Volume 32, Number 8, 2004

ISSN 0959-0552

Fashion retailing – part 1 Guest Editors: Grete Birtwistle and Christopher M. Moore

Contents 362 Access this journal online 363 Abstracts & keywords 365 Guest editorial 367 Creating agile supply chains in the fashion industry Martin Christopher, Robert Lowson and Helen Peck

403 The secret to a fashion advantage is brand orientation Kerrie Brı¨dson and Jody Evans 412 The Burberry business model: creating an international luxury fashion brand Christopher M. Moore and Grete Birtwistle

377 Internet apparel shopping behaviors: the influence of general innovativeness Young Ha and Leslie Stoel 386 Identification of UK fashion retailer use of Web sites Ruth Marciniak and Margaret Bruce 394 Fashion and commerce: a historical perspective on Australian fashion retailing 1880-1920 Dale Miller and Bill Merrilees

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general innovativeness on Internet apparel shopping. The results show that general innovativeness is related to Internet usage for information search, but not to actual purchase. Also, students’ gender is related to general innovativeness. Female students are more likely to use the Internet for information search for apparel products than male students.

Abstracts & keywords

Identification of UK fashion retailer use of Web sites Ruth Marciniak and Margaret Bruce Keywords Retailing, Fashion industry, Electronic commerce, United Kingdom

Creating agile supply chains in the fashion industry Martin Christopher, Robert Lowson and Helen Peck Keywords Supply chain management, Fashion industry, Agile production Fashion markets are synonymous with rapid change and, as a result, commercial success or failure is largely determined by the organisation’s flexibility and responsiveness. Responsiveness is characterised by short time-to-market, the ability to scale up (or down) quickly and the rapid incorporation of consumer preferences into the design process. In this paper it is argued that conventional organisational structures and forecast-driven supply chains are not adequate to meet the challenges of volatile and turbulent demand which typify fashion markets. Instead, the requirement is for the creation of an agile organisation embedded within an agile supply chain.

This exploratory study examines fashion retailer use of Web sites of retailers operating within the UK. A survey of 990 fashion retailers was undertaken, 780 of which have a registered domain name. A content analysis of their Web sites took place in order to examine: first, retailer characteristics in terms of product focus, marketing positioning, operational structure type and Web site functionality; and second, to establish whether a relationship exists between online levels of involvement and specific fashion retailer characteristics. Results indicate that a high number of those surveyed (78.7 per cent) had registered a domain name and over half of those who had registered, had a Web site that was transactional. Fashion designer retailers predominantly use their Web sites as an informational tool. Whereas transactional retailers were predominantly made up of product specialist retailers who were multiple, independent, mail order or pure play retailers. In conclusion it is product specialists who have greater levels of involvement in e-commerce.

Fashion and commerce: a historical perspective on Australian fashion retailing 1880-1920 Internet apparel shopping behaviors: the influence of general innovativeness Young Ha and Leslie Stoel Keywords Internet, Shopping, Consumer behaviour The purpose of this study is to understand how general innovativeness is related to Internet apparel shopping based on Rogers’ innovation decision process. Due to the newness of Internet apparel shopping, consumers’ general innovativeness may influence the adoption of Internet apparel shopping among young consumers. Using a convenience sample of 178 students in different majors at a large US university, this study examined the influence of

International Journal of Retail & Distribution Management Volume 32 · Number 8 · 2004 · Abstracts & keywords q Emerald Group Publishing Limited · ISSN 0959-0552

Dale Miller and Bill Merrilees Keywords Fashion, Retailing, Australia Fashion retailing has evolved in response to opportunities and market pressures. It has been both reactive and proactive. For example, Palmer, in 2001, analyses what might be called a partnership between Canadian department stores and European couture houses in the 1950s. Her work affords a rare overview of retailing’s fit with fashion design and commercial delivery systems, and is a point of departure for closely examining an earlier period (1880-1920) in Australia. The current paper studies the leading role that department stores played in shaping the Australian fashion scene and the marketing techniques they used. A context, period and country, where a set of major retailers formed the predominant influence on fashion trends, and styles and diffusion throughout the community have been identified. Findings suggest that for the 1880-1920 period the

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Abstracts & keywords

International Journal of Retail & Distribution Management Volume 32 · Number 8 · 2004 · 363-364

department store retailers were market-driving rather than simply market-driven, implying a more proactive and innovative role for the department stores.

The Burberry business model: creating an international luxury fashion brand Christopher M. Moore and Grete Birtwistle Keywords Premier brands, Brand management, Fashion

The secret to a fashion advantage is brand orientation Kerrie Brı¨dson and Jody Evans Keywords Brands, Fashion, Competitive advantage, Product differentiation The purpose of this research was to develop a comprehensive measure of brand orientation and empirically examine whether a fashion retailer’s brand orientation assists in explaining variations in its retail offer advantage over competitors. This study provides a conceptualisation and operationalisation of brand orientation within the context of fashion retailing. Four dimensions of brand orientation are introduced including distinctiveness, functionality, value adding and symbolic. The results suggest that the more brand oriented the fashion retailer, the greater its retail offer advantage over competitors. It concludes with new insights and suggestions for fashion retailers in driving greater differentiation and competitive advantage.

The performance of the British fashion brand Burberry has been determined largely by the adoption of business models which, on occasion, have been detrimental to the company’s performance. For the financial year ending 31 March 1998, Burberry saw its annual profits drop from £62m to £25m, leading financial analysts to describe it as “an outdated business with a fashion cachet of almost zero”. However, from 1997, at the instigation of a newly appointed chief executive, Rose Marie Bravo, Burberry has radically re-aligned its business model and has enjoyed, as a result, significant improvements in its business performance. Drawing from extensive documentation that was published by Burberry in support of their initial public offering (IPO), this paper will provide a review of the history of Burberry; evaluate Burberry’s re-positioning strategy as defined by the firm in their IPO prospectus; and critically delineate Burberry’s current business model.

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Special issue on fashion retailing – part 1

Guest editorial

About the Guest Editors Grete Birtwistle is the Head of Division of Marketing at the Caledonian Business School, Glasgow Caledonian University. She has extensive fashion retailing experience and her PhD investigated the area of store image and store positioning for fashion retailers. In particular, she highlighted the importance of retail staff perception of store image factors and that employees should be advocates of the company. She has published a number of papers and made contributions to books, mainly on areas of fashion marketing. Her current research explores ways of increasing the speed in the fashion supply chain and in order to achieve this she is interviewing both suppliers at different stages within the chain as well as buyers and logistics managers from retail companies. She is a member of the Glasgow Centre for Retailing and through this forum provides business with training courses and consultancy advice. Her main teaching areas are fashion marketing, integrated fashion logistics and integrated fashion communication. She has recently been a guest lecturer at Florida State University in Tallahassee, Monash University, Melbourne and Griffith University, Gold Coast, Australia. Christopher M. Moore, MA (Hons), MBA, PhD, is the Director for the Glasgow Centre for Retailing at Glasgow Caledonian University. A graduate of the Universities of Glasgow and Stirling, his doctoral thesis considered the internationalisation of foreign fashion retailers into the UK. His research interests include fashion buying and merchandising, fashion brand development and the internationalisation strategies of luxury brand retailers. His research activities have allowed him to work with many of the key international fashion retailers. He has recently co-authored with Professor John Fernie and Suzanne Fernie a major new textbook on retailing and marketing, Principles of Retailing. He is the assistant editor of the Journal of Customer Behaviour and sits on the editorial panels of a number of leading academic journals. Professor Moore currently holds the Scotmid chair in retailing. Scotmid is Scotland’s largest independent co-operative society. As part of his remit as director for the Glasgow Centre for Retailing, his duties include providing research and consultancy services for major retailers and consumer-facing organisations.

International Journal of Retail & Distribution Management Volume 32 · Number 8 · 2004 · pp. 365-366 q Emerald Group Publishing Limited · ISSN 0959-0552

Welcome to this first of two special issues centred on fashion retailing. The Guest Editors were delighted with the response to the call for papers and the quality of which was so high that it has led to two issues being published. The articles in this issue, although they all have an international perspective, fall into two main categories: (1) Those focusing on supply chain systems, (here we include papers on the Internet as being one of the channels retailers may choose to use). (2) Those that consider issues relevant to brand management. The first paper by Martin Christopher, Robert Lowson and Helen Peck, applies their work on agile supply chains to the fashion industry. The fashion sector is very dynamic and competitive and retailers wanting to compete in this market need to develop supply chain systems that are efficient and effective in their response to market turbulence with the speed of change. It has become increasingly important for supply chain members to implement flexible manufacturing systems to react to consumer demand. Furthermore, the necessity for “fast fashion” has led to the implementation of information based technologies and quick response systems, which have improved fashion retailer efficiency particularly with respect to stock availability and surplus stock management. The next two papers explore different aspects of the Internet. The paper by Young Ha and Leslie Stoel evaluates Internet shopping behaviour and explores the concept of innovation. Every year, Internet sales of fashion are increasing. However, it is not known how many shoppers use the Web information purely for information purposes and then purchase from a bricks and mortar outlet. The purpose of their research is to identify how the general innovativeness of young consumers is related to fashion shopping via the Internet in order for retailers to optimise their sales via this channel. The paper by Ruth Marciniak and Margaret Bruce explores UK fashion retailers’ use of Web sites. Fashion retailers are allocated to one of four sub-groups: (1) Product specialists. (2) Fashion designers. (3) General fashion. (4) General merchandise retailers. Based upon this categorisation, their study considers the strategies used by fashion retailers in terms of marketing communications and business development.

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Guest editorial

International Journal of Retail & Distribution Management Volume 32 · Number 8 · 2004 · 365-366

The final three papers each consider different dimensions of fashion brand management. The first is by Dale Miller and Bill Merrilees who investigate from a historical perspective the creation and development of a number of department stores, particularly the David Jones brand in Australia. The early reliance by the company of the English and French styles illustrates the fact that the cross-cultural fertilisation of fashion ideas is not solely a phenomenon of the Internet generation. The penultimate paper in this edition is presented by Kerrie Bridson and Jody Evans and focuses on brand orientation. Four dimensions are empirically tested as follows: (1) Distinctiveness. (2) Functionality. (3) Value adding. (4) Symbolic.

The paper provides interesting insights into how each can be exploited for differential advantage by fashion companies. The final paper is from Christopher Moore and Grete Birtwistle, who outline the Burberry business model which transformed the company from being a conservative and moribund label to become an international luxury brand. Their model delineates how Burberry’s effective control of their product portfolio, sourcing and manufacturing, retailing and distribution and marketing communications has paid off handsomely in terms of significantly improved profitability. The papers included in this first part of the special issue on fashion retailing, provide a distinctively international view of the salient trends and developments in this dynamic business area. Grete Birtwistle and Christopher M. Moore

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1. Introduction

Creating agile supply chains in the fashion industry Martin Christopher Robert Lowson and Helen Peck

The authors Martin Christopher is Professor of Management and Helen Peck is Senior Research Fellow, both at the Cranfield School of Management, Cranfield, UK. Robert Lowson is Director at the Strategic Operations Management Centre, School of Management, University of East Anglia, Norwich, UK.

Keywords Supply chain management, Fashion industry, Agile production

Fashion markets have long attracted the interest of researchers. More often the focus of their work was the psychology and sociology of fashion and with the process by which fashions were adopted across populations (e.g. Wills and Midgley, 1973). In parallel with this, a body of work has developed seeking to identify cycles in fashions (e.g. Carman, 1966). Much of this earlier work was intended to create insights and even tools to help improve the demand forecasting of fashion products. However, the reality that is now gradually being accepted both by those who work in the industry and those who study it, is that the demand for fashion products cannot be forecast. Instead, we need to recognise that fashion markets are complex open systems that frequently demonstrate high levels of “chaos”. In such conditions managerial effort may be better expended on devising strategies and structures that enable products to be created, manufactured and delivered on the basis of “realtime” demand. This is the context that has spawned the emerging domain of the agile supply chain (e.g. Harrison et al., 1999; Christopher and Towill, 2001) and the philosophy of quick response (Lowson et al., 1999).

Abstract Fashion markets are synonymous with rapid change and, as a result, commercial success or failure is largely determined by the organisation’s flexibility and responsiveness. Responsiveness is characterised by short time-to-market, the ability to scale up (or down) quickly and the rapid incorporation of consumer preferences into the design process. In this paper it is argued that conventional organisational structures and forecast-driven supply chains are not adequate to meet the challenges of volatile and turbulent demand which typify fashion markets. Instead, the requirement is for the creation of an agile organisation embedded within an agile supply chain.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0959-0552.htm

International Journal of Retail & Distribution Management Volume 32 · Number 8 · 2004 · pp. 367-376 q Emerald Group Publishing Limited · ISSN 0959-0552 DOI 10.1108/09590550410546188

2. The nature of fashion markets Fashion is a broad term that typically encompasses any product or market where there is an element of style that is likely to be short-lived. We have defined fashion markets as typically exhibiting the following characteristics: . Short life-cycles – the product is often ephemeral, designed to capture the mood of the moment: consequently, the period in which it will be saleable is likely to be very short and seasonal, measured in months or even weeks. . High volatility – demand for these products is rarely stable or linear. It may be influenced by the vagaries of weather, films, or even by pop stars and footballers. . Low predictability – because of the volatility of demand it is extremely difficult to forecast with any accuracy even total demand within a period, let alone week-by-week or item-byitem demand. . High impulse purchasing – many buying decisions by consumers for these products are made at the point of purchase. In other words, the shopper when confronted with the product is stimulated to buy it, hence the critical need for “availability”.

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Creating agile supply chains in the fashion industry

International Journal of Retail & Distribution Management

Martin Christopher, Robert Lowson and Helen Peck

Volume 32 · Number 8 · 2004 · 367-376

Today’s fashion market place is highly competitive and the constant need to “refresh” product ranges means that there is an inevitable move by many retailers to extend the number of “seasons”, i.e. the frequency with which the entire merchandise within a store is changed. In extreme cases, typified by the successful fashion retailer Zara, there might be 20 seasons in a year. The implications of this trend for supply chain management are clearly profound. The combined effect of these pressures clearly provides a challenge to logistics management. Traditional ways of responding to customer demand have been forecast-based, with the resultant risk of over-stocked or under-stocked situations. More recently there has emerged another trend that has added further complexity and difficulty to the management of fashion logistics. The growing tendency to source product and materials off-shore leading to significantly longer lead-times. While there is usually a substantial cost advantage to be gained, particularly in manufacturing, through sourcing in low labour cost areas, the effect on lead-times can be severe. It is not only distance that causes replenishment lead-times to lengthen in global sourcing. It is the delays and variability caused by internal processes at both ends of the chain as well as the import/export procedures in between. The end result is longer “pipelines” with more inventory in them with the consequent risks of obsolescence that arise. Much of the pressure for seeking low cost manufacturing solutions has come from retailers. At the same time there have been moves by many retailers in the apparel business to reduce significantly the number of suppliers with whom they do business. This supply-base rationalisation has been driven by a number of considerations, but in particular by the need to develop more responsive replenishment systems – something that is not possible when sourcing is spread over hundreds, if not thousands, of suppliers.

forecasting horizon is shorter – hence the risk of error is lower. In business the forecast period is determined by the time it takes to design, make and ship the product – lead-times in other words. There are three critical lead-times that must be managed by organisations that seek to compete successfully in fashion markets: (1) Time-to-market – how long does it take the business to recognise a market opportunity and to translate this into a product or service and to bring it to the market? (2) Time-to-serve – how long does it take to capture a customer’s order and to deliver the product to the retail customer’s satisfaction? (3) Time-to-react – how long does it take to adjust the output of the business in response to volatile demand? Can the “tap” be turned on or off quickly?

3.1 Time-to-market In these short life-cycle markets, being able to spot trends quickly and to translate them into products in the shop in the shortest possible time has become a pre-requisite for success. Companies that are slow to market can suffer in two ways. First, they miss a significant sales opportunity that probably will not be repeated. Second, the supplier is likely to find that when the product finally arrives in the market place, demand is starting to fall away leading to the likelihood of mark-downs. Figure 1 illustrates the double jeopardy confronting those organisations that are slow to market. New thinking in manufacturing strategy which has focused on flexibility and batch size reduction has clearly helped organisations reduce time-tomarket. The use of highly automated processes such as computer aided design (CAD) and computer aided manufacturing (CAM) have revolutionised the ability to make product changes as the season or the life cycle progresses. Figure 1 Shorter life-cycles making timing crucial

3. Managing the fashion logistics pipeline Conventional wisdom holds that the way to cope with uncertainty is to improve the quality of the forecast. Yet, by definition, the volatility of demand and the short life-cycles found in many fashion markets make it highly unlikely that forecasting methods will ever be developed that can consistently and accurately predict sales at the item level. Instead ways must be found of reducing the reliance that organisations place upon the forecast and instead to focus on lead-time reduction. Shorter lead-times mean, by definition that the

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Creating agile supply chains in the fashion industry

International Journal of Retail & Distribution Management

Martin Christopher, Robert Lowson and Helen Peck

Volume 32 · Number 8 · 2004 · 367-376

3.2 Time-to-serve Traditionally in fashion industries orders from retailers have had to be placed on suppliers many months ahead of the season. Nine months was not unusual as a typical lead-time. Clearly, in such an environment the risk of both obsolescence and stock-outs is high as well as the significant inventory carrying cost that inevitably is incurred somewhere in the supply chain as a result of the lengthy pipeline. Why should the order to delivery cycle be so long? It is not the time it takes to make or ship the product. More often the problem lies in the multiple steps that occur from the point at which a decision is taken to place an order, through the generation of the accompanying documentation (particularly in overseas transactions involving quota approvals, letters of credit and so forth), even before the order enters into the suppliers’ processes – which themselves are likely to be equally lengthy. Often the total time in manufacture is considerable because of the traditional, batch-based production methods. In other words each step in the total manufacturing cycle is managed separately from each other and the quantities processed at each step are determined by so-called economic batch quantities. Furthermore, when manufacture takes place off-shore, considerable time is consumed in preparing documentation, in consolidating full container loads and in-bound customs clearance after lengthy, surface transportation. The underpinning philosophy that has led to this way of doing things is cost-minimisation. Primarily the costs that are minimised are the costs of manufacture and secondly the costs of shipping. In fact, this view of cost is too narrow and ultimately self-defeating. The real issue is the total supply chain cost, the costs of obsolescence, forced mark-downs and inventory carrying costs.

driven by forecasts and inventory replenishment, individual parties in the chain will have no real visibility of the final market place. As Figure 2 suggests, inventory hides demand. In other words the fact that there will usually be multiple, independent decisions on re-ordering policies and inventory levels from the retail shelf back through wholesalers, to suppliers means that up-stream parties in the chain are unable to anticipate the changing needs of the customers other than through a forecast based as much upon judgment and guess-work as it is upon actual consumer demand. The fundamental problem that faces many companies (not just those in fashion industries) is that the time it takes to source materials, convert them into products and move them into the market place is invariably longer than the time the customer is prepared to wait. This difference between what might be called the “logistics pipeline” and the customers’ order cycle time is termed the “lead-time gap”. Conventionally, this gap was filled with a forecast-based inventory – there was no other way of attempting to ensure that there would be product available as and when customers demanded it. These lengthy supply pipelines often result in revenue losses in the final market. Table I provides an indication of the size of these losses and of note is the cost of carrying inventory. The biggest item is forced mark-downs (mainly at retail) with the total losses amounting to over 14 per cent of retail sales. A distinction is made between promotional mark-downs, e.g. special sales, and the markingdown that occurs out of necessity when a season ends and unwanted goods must be moved to make way for new merchandise – forced mark-downs. It is against this background that the quick response (QR) movement originated. Studies in 1984 revealed a clothing industry pipeline in which inventories and work-in-progress had reached alarming levels and it is a situation that can still be seen in many industries. The nature of quick response will be explored later. More information concerning its history can be found in Hunter (1990) and Gunston and Harding (1986).

3.3 Time-to-react Ideally, in any market, an organisation would want to be able to meet any customer requirement for the products on offer at the time and place the customer needs them. Clearly, some of the major barriers to this are those highlighted in the previous paragraphs, i.e. time-to-market and time-to-serve. However, a further problem that organisations face as they seek to become more responsive to demand is that they are typically slow to recognise changes in real demand in the final market place. The challenge to any business in a fashion market is to be able to see “real” demand. Real demand is what consumers are buying or requesting hour-by-hour, day-byday. Because most supply chains are driven by orders (i.e. batched demand) which themselves are

4. The agile supply chain In recent years there has been a growing interest in the design and implementation of agile supply chain strategies (Christopher, 2000). The idea of agility in the context of supply chain management focuses around “responsiveness”. Conventional supply chains have been lengthy with long lead-times and hence, of necessity, have been forecast-driven. By contrast, agile supply

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Creating agile supply chains in the fashion industry

International Journal of Retail & Distribution Management

Martin Christopher, Robert Lowson and Helen Peck

Volume 32 · Number 8 · 2004 · 367-376

Figure 2 Inventory hides demand

Table I Revenue losses in the apparel pipeline (percentage of retail sales)

Forced markdowns Stock-outs Inventory @ 15 per cent carrying cost Total

Fibre and textile (%)

Apparel (%)

Retail (%)

Total (%)

0.6 0.1 1.0 1.7

4.0 0.4 2.5 6.9

10.0 3.5 2.9 16.4

14.6 4.0 6.4 25.0

Source: All tables from Lowson et al. (1999)

chains are shorter and seek to be demand-driven. A further distinction is that because conventional supply chains are forecast-driven that implies that they are inventory-based. Agile supply chains are more likely to be information-based. By their very nature, fashion markets are volatile and difficult to predict. Hence the need for agility. It has been suggested (Harrison et al., 1999) that an agile supply chain has a number of characteristics. Specifically the agile supply chain is: . Market sensitive – it is closely connected to end-user trends. . Virtual – it relies on shared information across all supply chain partners. . Network-based – it gains flexibility by using the strengths of specialist players. . Process aligned – it has a high degree of process interconnectivity between the network members. Figure 3 suggests that there are a number of practical ways in which these four key dimensions can be brought into play to create an agile supply chain for organisations competing in fashion industries. Considering each of these four dimensions in turn, a number of observations can be made. 4.1 Market sensitivity Being close to the customer has always been a goal of any market-oriented business, but in fashion retailing it is vital. Successful fashion retailers capture trends as they emerge using a variety of means. Point-of-sale data is analysed daily and is used to determine replenishment requirements where the intention is to continue to make the product available. Often though the selling season

is only intended to be short and product will not be replenished, in such situations the data is used to analyse trends. Beyond point-of-sale data are real consumers and identifying their preferences and changing requirements should be a continuing priority. Zara, the Spanish-based fashion retailer, has teams of fashion “scouts” who seek out new ideas and trends across the markets in which they compete. They also use their own salespeople to identify customers’ likes and dislikes and to feed this information back to the design team. Using computer aided design and computer aided manufacturing (CAD/CAM), these ideas can quickly be converted into tangible products and be in the marketplace in a matter of weeks.

4.2 Virtual integration The agile supply chain is virtual in the sense that it is connected and integrated through shared information on real demand so that all the players in the chain, from the fabric manufacturers to the garment makers to the retailer, are all working to the same set of numbers. Retailers and their suppliers need to be more closely connected through shared information than was the case in the past. Until very recently, few retailers in any sector would share point-ofsale data with their suppliers. Now, however, there is a growing realisation that shared information can enable higher levels of on-the-shelf availability to be achieved with less inventory. Simultaneously, transaction costs can be reduced particularly if the co-operating parties are prepared to move to comanaged inventory (CMI). CMI is a process through which the supplier collaborates with the retailer to manage the flow of

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Creating agile supply chains in the fashion industry

International Journal of Retail & Distribution Management

Martin Christopher, Robert Lowson and Helen Peck

Volume 32 · Number 8 · 2004 · 367-376

Figure 3 The foundations for agility in a fashion business

product into the customer’s distribution system. The supplier and the customer jointly agree the desired stock levels that need to be maintained in the retailer’s operation. The customer feedback sales data is sent on a regular basis to the supplier who then uses that information to plan replenishments. Typically such arrangements work best where the demand for the product is relatively stable and replenishments within the season are possible. 4.3 Network based A distinguishing feature of agile companies is their use of flexible arrangements with a wide supply base. Zara and Benetton are two fashion companies that have achieved high levels of customer responsiveness by working closely with specialist, often small, manufacturers. The strategy at Zara is that only those operations which enhance cost efficiency through economies of scale are conducted in-house (such as dyeing, cutting, labelling and packaging). All other manufacturing activities, including the labour-intensive finishing stages, are completed by networks of more than 300 small subcontractors, each specialising in one particular part of the production process or garment type. These subcontractors work exclusively for Zara’s parent, Inditex S.A. In return, they receive the necessary technological, financial and logistical support required to achieve

stringent time and quality targets. The system is flexible enough to cope with sudden changes in demand. Benetton, likewise, have long used a myriad of small manufacturers to give them additional capacity in activities such as knitting and final assembly. The principle behind an agile network in some ways runs counter to the prevailing idea that organisations should work with a smaller number of suppliers, but on a longer-term basis. Instead in an agile network there is a tendency for the focal firm to act as the “orchestrator” of the network, the membership of which will change according to requirements. There is a good analogy with the director of a theatre play. For the specific season during which the play is being performed, the director will work very closely with a relatively small group of actors and actresses. Probably he or she has chosen this team from a much bigger pool of players who he or she has also worked with in the past. However, for the next play or season, that team will be disbanded and a new one assembled from the pool. Even though these relationships are not permanent, they are close. 4.4 Process alignment Responsive supply chains require a high level of process alignment both within the company and externally with upstream and downstream

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Creating agile supply chains in the fashion industry

International Journal of Retail & Distribution Management

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Volume 32 · Number 8 · 2004 · 367-376

partners. By process alignment is meant the ability to create “seamless” or “boundaryless” connections, in other words there are no delays caused by hand-offs or buffers between the different stages in the chain and transactions are likely to be paperless. The underpinning processes will also probably be managed by “horizontal” and cross-functional teams. In an agile network, process alignment is critical and is enabled by the new generation of Web-based software that enables different entities to be connected even though their internal systems may be quite different. Now it is possible for organisations that are geographically dispersed and independent of each other in terms of ownership to act as if they were one business. In the fashion business there can often be many different entities involved in the process that begins with product design and ends with the physical movement of the product onto the retailer’s shelf. Co-ordinating and integrating the flow of information and material is critical if quick response to changing fashion is to be achieved. In conventional fashion supply chains, it can take 12 months from product design to the final sale. By contrast by creating “virtual teams” across the network where information is shared in realtime, a much higher degree of synchronisation can be achieved (e.g. Johnson, 2002). We now turn to a particular approach that has gained much popularity in fashion industries as a method by which to seek agility and speed of response. It is also a strategy that has begun to challenge the accepted wisdom of sourcing goods and other inputs from less well-developed economies.

segmented at the individual level; large numbers of products chasing a diminishing market share; are all evidence of the inexorable movement toward a “sea change” and mark the folly of firms expecting to operate as they have in the past. One of the most fundamental quick response philosophies is the ability to compress time in the supply system. If the pipeline is condensed to about one-third of its traditional length, not only does the design of goods better reflect more accurate consumer information, it is possible for the retailer to reassess the demand for products while the season is under way and receive small, frequent reorders from the supplier, provided reorder lead times are short enough (of the order of two to four weeks), Harding (1985). QR can be defined as:

5. The road to QR in fashion industries Today, QR is recognised as an operations strategy (Lowson, 2002) and as such, it attracts considerable interest for two additional, yet closely related reasons. First, the ability of this strategy to cope with the complexity of fashion logistics; and, second, as a method to combat the relentless shift toward offshore sourcing from low wage economies. In fast moving industries, demand is now more fragmented and the consumer more discerning about quality and choice. There is also an increasing fashion influence; no single style or fashion has dominated for any length of time. For many consumer sectors, demand is approaching the chaotic in its insatiable appetite for diverse services and goods. “Mass-customisation” and individualised products with shorter season lengths; micro merchandising and markets

A state of responsiveness and flexibility in which an organisation seeks to provide a highly diverse range of products and services to a customer in the exact quantity, variety and quality, and at the right time, place and price as dictated by real-time customer/ consumer demand. QR provides the ability to make demand-information driven decisions at the last possible moment in time ensuring that diversity of offering is maximised and lead-times, expenditure, cost and inventory minimised. QR places an emphasis upon flexibility and product velocity in order to meet the changing requirements of a highly competitive, volatile and dynamic marketplace (Lowson et al., 1999).

QR has a number of strategic implications for the organisation. Research has shown that mere implementation of technology or particular procedures without the strategic underpinning leads to sub-optimal performance (Lowson, 2002): . The alignment of organisational activity to demand. This is a fundamental principle of QR. All activities within an enterprise should be paced to demand and customer behaviour. Products and services are produced and delivered in the variety and volume that match demand. The activity within a company moves to the beat of this drum. . Linkages between demand and supply. Given the importance of the alignment activity above, a strategic understanding of the drivers of demand and its synchronised connection with supply is imperative for QR. . Demand relationships. QR recognises that both customers/consumers and products are dynamic and place unique demands on the organisation. Identical products will have unique product flows depending upon customer/consumer buying behaviour and QR needs. . Resource configuration. In the QR world, this strategic architecture is inter-organisational. Strategy and strategic thinking are at a

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network level, encompassing many external interconnections. Time. Time as a strategic weapon is vital to QR operation, but like any weapon its effectiveness depends upon the circumstances of its use. As with demand, time-based competition requires careful assessment as to where best it can serve customers/consumers. Fast and accurate adaptation to market change is perhaps the most important element of the QR strategy. Primacy of information. Data and information are the foundation of QR – every business is an information business. Timely and accurate flows will enable fast and accurate responses. Partnerships and alliances. Perhaps one of the most significant developments in recent management and business thinking has been externalisation; the recognition that performance relies increasingly upon a series of alliances and relationships with other enterprises as an effective way to deal with constantly changing market conditions.

Apart from the strategic implications, quick response also requires a number of operational building blocks that have to be integrated and aligned for efficient and effective reaction to “real”-time demand (see Lowson et al., 1999). Mere possession, however, of the various technologies, processes and activities will be insufficient for an agile response; close linkages are required across the whole supply system in order to provide a QR capability. 5.1 Quick response and offshore sourcing The fashion industry is, perhaps, one of the most demanding challenges for logistics management with hundreds of colours, thousands of styles and millions of SKU’s on the retail shelves at any one time. Further, the average shelf lives of these merchandise items shortens with each passing year. A key factor in the value of QR is its ability to deal with uncertainty or variance. There are numerous sources of uncertainty in a fashion supply pipeline starting with demand through to the reliability on the part of suppliers and shippers, etc., and quick response offers the ability to counter the negative impacts of uncertainty. Speed and flexibility are the key, but it is important to realise that the level of uncertainty associated with the product dictates the optimal level of speed and flexibility required. The type of supply chain needs to fit the characteristics of the product as well as the uncertainty associated with it. Many fashion goods sell in distinct seasons (for example nine weeks) and are on the shelf for just that season and almost totally replaced in the following season. Figure 4 represents sales of a

Figure 4 Seasonality profile

typical product subject to pronounced seasonal fluctuation. The normal practice is to manufacture as much as possible of the finished goods inventory required before the season starts and then deliver half to twothirds of the necessary products before the beginning of the season (point A) and ship the balance of the inventory at pre-agreed times (e.g. point B), or await re-orders (points B to C). QR takes a different route. Although it may pose manufacturing capacity problems, as little as possible is made or shipped before the season. From day one, point-of-sale (PoS) data are gathered, analysed, and then used to understand demand preferences. Manufacturing is then guided by the continuing (daily or weekly) PoS data. Re-order and re-estimation and replenishment approaches are then used for frequent re-orders (points A to B). This QR approach can be better appreciated when applied to a particular demand situation such as global or offshore sourcing. 5.2 Quick response and the costs of offshore sourcing Quick response operations strategy offers a high degree of speed, flexibility and responsiveness in supply pipelines. This has substantial implications for sourcing decisions; particularly offshore sourcing. Empirical research has established that sourcing offshore to secure lower cost inputs (typically from low wage, underdeveloped regions) can have negative consequences; once the hidden and inflexibility costs are quantified, Lowson (2001). Hidden costs are those that are not typically anticipated by the buying organisation, but almost always occur. Some examples include: . the various initial investments to establish the new source of supply, control of quality and delivery variables; . high initial training costs, coupled with a high staff turnover affecting both throughput and quality;

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significantly lower operator efficiency offshore; irrevocable letters of credit charges; delays at the port of entry, last minute use of air freight and other logistics costs; expensive administrative travel to correct problems; process inefficiencies and quality problems; long lead times and the need for large buffer inventories; and the not insubstantial human cost involved in the conditions endured in many foreign factory environments often employing child labour and over-using natural resources.

Inflexibility costs are the costs of using suppliers that are inflexible and unresponsive to changes in demand (before, during and after a product selling season), leading to disproportionate levels of demand amplification across a longer supply network and a number of considerable cost implications. It is only when these two cost categories can be properly quantified that the advantages and disadvantages of low wage, foreign purchasing can be fully understood and a method for their true representation becomes apparent. Once the hidden costs are categorised, sourcing on the basis of low cost alone becomes far less attractive. Further, when the costs of inflexibility are added, it becomes clear that using a domestic quick response supplier may be a far better option due to the added velocity and flexibility that is provided. Collapsing the product pipeline can reduce time and provide a more efficient response to rapidly changing consumer demand. In this way, a QR operations strategy will encourage the crossenterprise re-engineering of business processes, from product development to replenishment, with resulting improved stocking points, lower inventory, lower cost and increased sales. The value chain is reconfigured to reflect speed of response, flexibility and differentiation. Table II compares two different sourcing alternatives: the QR domestic supplier and the offshore counterpart. In this initial scenario two possible buying decisions are reviewed using QR and then offshore

sources of supply. First, end-consumer purchases, whether bought from a retailer or manufacturer, are assumed to be £100,000. It is then assumed that the customer (a manufacturer or retailer) has bought the goods for the same price (£60,000). An averaged gross margin is also assumed of 40 per cent on these sales. The only difference between the two sourcing alternatives is the flexibility and speed of response. The ability of the QR supplier to rapidly replenish the stock of the customer (manufacturer or retailer) to real-time consumer demand allows the customer to turn inventory of the product six as opposed to two-and-a-half times a year. This faster turnover rapidly increases the customer’s gross margin return[1] on each pound invested in inventory from £1.67 to £4.00, more than twice that of the offshore competition. Because of this inventory turnover advantage the manufacturer or retailer could afford to pay a premium for the product and still get a better return (Table III). In the table the price paid for goods by the customer has increased by almost one-third, but because of the flexibility and responsiveness of the supplier, the return on inventory has increased by 1.2 per cent or from 167 per cent to 169 per cent. Table IV views the sourcing decision from another perspective. The decision to move sourcing offshore to a competitor with lower unit cost but a slower response.

Table III QR and a higher cost of goods

Consumer purchase price (£) Customer purchase price (£) Gross margin (£) Average inventory (£) Gross margin (%) Inventory turns (pa) GMROI (%)

QR supplier

Offshore supplier

100,000 78,000 22,000 13,033 22.00 6.02 169

100,000 60,000 40,000 24,000 40.00 2.5 167

Consumer purchase price (£) Customer purchase price (£) Gross margin (£) Average inventory (£) Gross margin (%) Inventory turns (pa) GMROI (%)

Offshore supplier

100,000 60,000 40,000 10,000 40.00 6.02 400

100,000 60,000 40,000 24,000 40.00 2.5 167

Consumer purchase price (£) Customer purchase price (£) Gross margin (£) Average inventory (£) Gross margin (%) Inventory turns (pa) GMROI (%)

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Table IV A move to offshore supply

Table II QR and faster turnover QR supplier

Cost advantage applicable (%)

QR supplier

Offshore supplier

100,000 60,000 40,000 10,000 40.00 6.02 400

100,000 38,448 61,552 15,379 61.55 2.5 400

Cost reduction applicable (%) 35.92

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In this situation the foreign supplier would need to reduce the purchase price by nearly 35 per cent to retain a comparative gross margin return on investment (GMROI) to that of the QR supplier. The more flexible and higher velocity supplier proves more competitive than the lower-cost; even without taking into account the other hidden and inflexibility costs. Product velocity also produces other benefits. Replenishing stock in response to real-time demand ensures that the right goods are available reflecting what is being demanded. Revenue will rise as products in demand are sold at the expected price rather than marked down as unwanted. Table V shows the combined effect of velocity, faster inventory turns and reduced markdowns. As product velocity increases so too will revenue as there is less need to sell goods below optimum price points. The customer’s (manufacturer or retailer) return on investment grows to over threetimes that of a competitor. Finally, quick response also has an impact upon strategic pricing decisions. Velocity and flexibility in the supply system will allow an original equipment manufacturer (OEM) or retailer to reduce the price of the finished good below that of the competition and capture greater market share (Table VI). Because of QR flexibility and responsiveness, the retailer or manufacturer can reduce the purchase price to the consumer by 32 per cent and still earn a slightly better return in terms of GMROI than competitors. Table V The effect of QR velocity

Consumer purchase price (£) Customer purchase price (£) Gross margin (£) Average inventory (£) Gross margin (%) Inventory turns (pa) GMROI (%)

QR supplier

Offshore supplier

113,000 60,000 53,000 10,000 40.00 6.02 530

100,000 60,000 40,000 24,000 40.00 2.5 167

This paper has provided a conceptual focus upon the main logistical issues involved in fashion retailing. The peculiar nature of the industry was discussed in terms of its volatility, complexity and dynamism. It is with these factors in mind, that the need for agility and responsiveness in the logistics pipeline has been identified. Fashion supply systems are characterised by three critical lead-times: time-to-market, time-toserve and time-to-react. All three of these factors stress the importance of agility in fashion supply networks. Agility does, however, necessitate radical changes in organisational structures and strategies and a move away from forecast-driven supply. Market sensitivity, virtual integration, networked logistical systems and process alignment all become fundamental prerequisites to achieving the ultimate agility, a quick response capability. QR offers a new dimension in fashion retailing. For both retailers and manufacturing suppliers it provides a new operational approach, one that is alien to many firms still operating with structures designed for a mass production era. The paper provided a review of QR, the agility it provides, its strategic implications and the building blocks necessary for its implementation. The final section of this work demonstrated how a quick response operations strategy provides a more viable and attractive sourcing option compared to the use of low cost inputs from under-developed economies. Once the various costs (hidden and inflexibility) are properly understood and computed, the impact of agility, flexibility and responsiveness in fashion supply systems becomes paramount.

Note 1 GMROI is calculated as gross margin/average inventory.

References

Table VI QR and strategic pricing

Consumer purchase price (£) Customer purchase price (£) Gross margin (£) Average inventory (£) Gross margin (%) Inventory turns (pa) GMROI (%)

6. Conclusion

QR supplier

Offshore supplier

76,840 60,000 16,840 10,000 21.91 6.0 168

100,000 60,000 40,000 24,000 40.00 2.5 167

Note: a Based on purchase price of £113,000 as seen in Table V

Possible price reduction (%)a 2 32.00

Carman, J. (1966), “The fate of fashion cycles in our modern society”, Science, Technology and Society, American Marketing Association, Chicago, IL. Christopher, M. (2000), “The agile supply chain: competing in volatile markets”, Industrial Marketing Management, Vol. 29 No. 1, pp. 37-44. Christopher, M. and Towill, D. (2001), “An integrated model for the design of agile supply chains”, International Journal of Physical Distribution & Logistics Management, Vol. 13 No. 4, pp. 235-46. Gunston, R. and Harding, P. (1986), “Quick response: US and UK experiences”, Textile Outlook International, Vol. 10, pp. 43-51.

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Harrison, A., Christopher, M. and van Hoek, R. (1999), Creating the Agile Supply Chain, Institute of Logistics & Transport, London. Hunter, N.A. (1990), Quick Response for Apparel Manufacturing, Textile Institute, Manchester. Johnson, E. (2002), “Product design collaboration: capturing cost supply chain value in the apparel industry”, Achieving Supply Chain Excellence through Technology, Montgomery Research Inc., San Francisco, CA.

Lowson, R.H. (2001), “Retail sourcing strategies: are they costeffective?”, International Journal of Logistics, Vol. 4 No. 3, pp. 271-96. Lowson, R.H. (2002), Strategic Operations Management: The New Competitive Advantage, Routledge, London. Lowson, R.H., King, R. and Hunter, N.A. (1999), Quick Response: Managing the Supply Chain to Meet Consumer Demand, John Wiley & Sons, Chichester. Wills, G. and Midgley, D. (1973), Fashion Marketing, Allen & Unwin, London.

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Introduction

Internet apparel shopping behaviors: the influence of general innovativeness Young Ha and Leslie Stoel

The authors Young Ha is a Doctoral Student and Leslie Stoel is Assistant Professor, both in the Department of Consumer and Textile Sciences, The Ohio State University, Columbus, Ohio, USA.

Keywords Internet, Shopping, Consumer behaviour

Abstract The purpose of this study is to understand how general innovativeness is related to Internet apparel shopping based on Rogers’ innovation decision process. Due to the newness of Internet apparel shopping, consumers’ general innovativeness may influence the adoption of Internet apparel shopping among young consumers. Using a convenience sample of 178 students in different majors at a large US university, this study examined the influence of general innovativeness on Internet apparel shopping. The results show that general innovativeness is related to Internet usage for information search, but not to actual purchase. Also, students’ gender is related to general innovativeness. Female students are more likely to use the Internet for information search for apparel products than male students.

In 1999, US apparel retailers experienced an estimated $3.3 billion in lost revenues simply because shoppers were hesitant to buy online (Beck, 2001). One reason for this may be that many people have not accepted the Internet as a way to make an actual purchase, especially for something requiring such “hands-on” examination as apparel products (Beck, 2001). This may be due to the relative “newness” of Internet shopping. Because the Internet is a relatively new medium by which to make purchases, some people may be hesitant to use it (Bhatnagar et al., 2000). This reluctance may be due to a low level of innovativeness of the consumer. Innovativeness is defined as how willing a person is to adopt a new product or service, and how quickly he or she does so (Goldsmith et al., 1995). An innovative person will adopt and utilize a new product or service before others do (Goldsmith et al., 1995). Because the Internet can certainly be classified as a “new” or “innovative” shopping format, companies with online stores might be very interested to learn how innovative their customers are. The present research might help retailers to better understand their customers, in terms of general innovativeness and its relationship to Internet apparel shopping behaviors. Thus, the purpose of this study is to learn how general innovativeness of consumers is related to Internet apparel shopping. Understanding the relationship between consumer innovativeness and shopping behaviors may help online retailers learn how to convert browsers to purchasers to capture revenues lost to abandoned shopping carts.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0959-0552.htm

International Journal of Retail & Distribution Management Volume 32 · Number 8 · 2004 · pp. 377-385 q Emerald Group Publishing Limited · ISSN 0959-0552 DOI 10.1108/09590550410546197

General innovativeness Innovativeness is defined as “the degree to which an individual . . . is relatively earlier in adopting new ideas than the other members of a system” (Rogers, 1995, p. 22). Some research has found that certain characteristics of people are associated with high innovativeness. Highly innovative people tend to: . have higher incomes (Leung, 1998; Pepermans et al., 1996; Summers, 1972); . have higher levels of education (Leung, 1998; Pepermans et al., 1996; Rogers, 1995); . be younger in age (Chau and Hui, 1998; Darden and Reynolds, 1974; Hirschman and Adcock, 1978; Leung, 1998); . have greater social mobility (Darden and Reynolds, 1974; Robertson and Kennedy, 1968);

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be more risk taking (venturesome) (Darden and Reynolds, 1974; Leung, 1998; Robertson and Kennedy, 1968; Rogers, 1995); have greater social participation (Hirschman and Adcock, 1978; Rogers, 1995); have higher occupational status (Rogers, 1995); have higher opinion leadership scores (Chau and Hui, 1998; Darden and Reynolds, 1974; Rogers, 1995); and be women (Goldsmith et al., 1987).

Goldsmith et al.’s study (1987) focused on the effects of race and gender on innovativeness and showed that women in both race groups (middle class blacks and whites) were more likely to have higher innovativeness than men in both race groups. Several studies show that innovativeness is related to the adoption of new products (Chau and Hui, 1998; Leung, 1998; Pepermans et al., 1996). People high in innovativeness use ATM machines more than people with lower innovativeness (Pepermans et al., 1996). Innovativeness was also related to lifestyles and acceptance of new media (Leung, 1998). Higher innovativeness in using a specific product (e.g. the World Wide Web) can influence the use of the Internet for shopping (Citrin et al., 2000). Goldsmith et al. (1995) also found that consumer innovativeness was significantly related to new clothing purchase. According to Scarborough Research, Internet shoppers were more likely to adopt and use new products and services such as ATM cards, cellular phones, and television shopping than Internet non-purchasers (Pastore, 1999). Thus, Internet shoppers may have higher innovativeness than Internet users inexperienced in Internet shopping. In other words, Internet users with high innovativeness may use the Internet for actual purchasing more than Internet users with low innovativeness. Nature of apparel shopping Purchasing over the Internet is one of the most rapidly expanding channels of shopping, and online shopping is the fastest growing application of the Internet (“Internet usage, commerce statistics and demographics”, 2001; Shim et al., 2001). Online apparel sales are estimated to total $12 billion in 2002 (Beck, 2001). However, this figure is dwarfed by apparel sales from other distribution channels, totaling around $200 billion, and total US online sales, estimated at about $2.5 trillion (“Internet usage, commerce statistics and demographics”, 2001; Retail apparel sales statistics and trends 1999-2000, 2000). Growth in online apparel sales lags far behind other online product sales, such as books or CDs,

and online apparel sales figures currently stand at only 27 percent of all online sales (Beck, 2001; “Internet usage, commerce statistics and demographics”, 2001). One key reason for this is the nature of apparel shopping. When consumers are shopping for apparel, they like to physically examine the products to assess color, size, design, and fabric. Also, for apparel products, fit is very important. Due to the sensory and interactive nature of the apparel purchase process, apparel products are categorized as high-risk items (Bhatnagar et al., 2000) and apparel shopping has been associated with high perceived risk (Hawes and Lumpkin, 1986). Several studies found that the inability to examine apparel products contributes to the high risk associated with the in-home shopping channel (Bhatnagar et al., 2000; Kwon et al., 1991). Kwon et al. (1991) found that non-catalog shoppers tended to have higher risk perceptions related to catalog apparel purchases than catalog shoppers. For Internet shopping, consumers consider apparel products to be risky to purchase on the Internet because of uncertainty about color, fabrics, and fit (Bhatnagar et al., 2000). However, highly innovative people, who tend to have higher incomes (Leung, 1998; Pepermans et al., 1996; Summers, 1972), higher levels of education (Leung, 1998; Pepermans et al., 1996; Rogers, 1995), greater risk propensity (venturesome) (Darden and Reynolds, 1974; Leung, 1998; Robertson and Kennedy, 1968; Rogers, 1995), and higher occupational status (Rogers, 1995), are more likely to adopt new products and services than people with low general innovativeness (Pastore, 1999). Research shows, for example, that innovators are frequent catalog apparel shoppers, despite the higher risk (Seitz and Massey, 1990). Therefore, an innovative person might adopt and utilize the Internet for apparel shopping even though high risk is associated with purchasing apparel on the Internet. We might also expect gender differences in Internet apparel shopping behaviors. Previous research has shown that women tend to be more innovative than men (Goldsmith et al., 1987). In addition, research has shown that women are still the primary shoppers for personal clothing in married households (Dholakia et al., 1995). And, among students, gender stereotypes exist relative to shopping formats and product types with both males and females perceiving the typical shopper to be a woman (Dholakia and Chiang, 2003). Thus, men and women might exhibit different adopting intentions and utilization behaviors about using the Internet for apparel shopping.

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regarding the innovation he adopted. This stage may continue until the innovation loses its distinctive quality (Rogers, 1995). In the confirmation stage, based on satisfaction with the previous decision, the individual reconsiders the innovation and makes a new decision regarding whether or not he will continue to adopt the innovation (Rogers, 1995).

Theoretical framework The innovation-decision process (Rogers, 1995) shows how an individual adopts an innovation. This process consists of five stages: (1) Knowledge. (2) Persuasion. (3) Decision. (4) Implementation. (5) Confirmation. In the knowledge stage, based on prior conditions such as previous practice, recognition of the problem, innovativeness, norms of the social system, and characteristics of the decision-making unit, an individual recognizes the existence of an innovation and develops an understanding of its functions. In the persuasion stage, the individual develops positive or negative attitudes of the innovation based on perceptions of characteristics of the innovation acquired in the knowledge stage. Five perceived characteristics (Rogers, 1995) of the innovation influence its adoption: (1) Relative advantage – if consumers perceive the innovation to be relatively advantageous, then the rate of adoption of the innovation may increase rapidly. (2) Compatibility – if consumers consider the innovation compatible with their lifestyles, then they are likely to adopt the innovation. (3) Complexity – if consumers think that the innovation is easy to use (not complex), then they may rapidly adopt the innovation. (4) Trialability – if consumers can try out the innovation, then they may be more comfortable using the innovation. (5) Observability – if consumers observe the results of adopting the innovation, they may rapidly adopt the innovation. Robertson (1971) found that relative advantage, compatibility, trialability, and observability are positively related to adoption of an innovation and complexity is negatively related to adoption of an innovation. In the decision stage, the individual makes a decision to adopt or reject the innovation based on his or her attitude developed at the persuasion stage (Rogers, 1995). Adoption is a decision to use the innovation and rejection is a decision not to adopt the innovation. The first three stages of the decision process are a mental exercise, but the implementation stage involves obvious behavior change. In the implementation stage, the individual puts his decision to adopt or reject the innovation into actual practice. However, the individual still has a degree of uncertainty about the consequences of the innovation, so he will keep seeking information

Internet apparel shopping and the innovation-decision process In adopting the innovation-decision process, this study assumes that each stage of the innovationdecision process applies to Internet apparel shopping. In the current study, Internet shopping refers to online information search for apparel products and online purchase of apparel products. In the knowledge stage, consumers become aware of and understand Internet apparel shopping in terms of information search and actual purchasing based on previous conditions such as prior Internet usage, previous in-home shopping experiences, and personal characteristics of the shopper such as general innovativeness and demographic characteristics (e.g. gender). To reduce uncertainty about Internet apparel shopping, consumers seek information about Internet information search and Internet purchasing for apparel products. In the persuasion stage, based on their knowledge about Internet apparel shopping in terms of information search and actual purchasing, consumers develop favorable or unfavorable attitudes and beliefs about Internet apparel shopping. These attitudes and beliefs are influenced by the five perceived characteristics of Internet apparel shopping as an innovation. For example, in terms of relative advantage, if consumers perceive Internet apparel shopping to save time and money compared to traditional retail shopping, then the adoption of Internet information search and purchasing for apparel products may increase rapidly. In terms of compatibility, if consumers perceive Internet apparel shopping to be compatible with their lifestyles, then they may rapidly adopt the Internet for information search and purchasing of apparel products. In the case of complexity, if consumers think that the Internet is easy to use for information search and actual purchasing for apparel products, then they may rapidly adopt the Internet for apparel shopping. For trialability, if consumers can try out the Internet, then they may be more comfortable using the Internet for information search and purchasing for apparel products. And for observability, if consumers observe the results of adopting the Internet for information search and actual purchasing for apparel products, they may rapidly adopt the Internet for apparel shopping. During the decision

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stage, consumers will decide whether or not to adopt the Internet for information search or/and actual purchasing for apparel products based on their attitudes and beliefs developed in the persuasion stage. In the implementation stage, consumers who decide to adopt Internet apparel shopping actually engage in Internet shopping behaviors (e.g. information search and actual purchasing). For example, if consumers decided to adopt the Internet to search for information about apparel products, then they would use the Internet for apparel information search and if consumers decided to adopt the Internet for actual apparel purchasing, then they would purchase some apparel products online during this stage. In the confirmation stage, based on satisfaction with the actual shopping experience during the implementation stage and new information about Internet apparel shopping, consumers will reconsider whether or not to continue to use the Internet for information search and actual purchasing for apparel products.

information search can be directly linked to purchasing behaviors. In fact, it is crucial to purchasing behaviors. Shim et al. (2001) proposed that intention to search for information online is a predictor of intention to buy online.

Internet apparel shopping behavior From the shopping process, people derive several different outcomes such as products, information, and pleasure (Lee and Johnson, 2002). In other words, shopping includes both information searching behavior and purchasing behavior. Lee and Johnson (2002) investigated differences among Internet apparel purchasers, browsers, and non-purchasers. They found that purchasers were significantly different from browsers and nonpurchasers in terms of perceptions of relative advantages and ease of Internet shopping. In addition, compared to browsers and nonpurchasers, Internet apparel purchasers tended to perceive Internet shopping as safe for using credit cards. Browsers and non-purchasers showed similar attitudes toward Internet apparel shopping. Researchers have studied how and why consumers use the Internet to make purchases. They have discovered two basic consumer usage patterns: information search and purchase. Online information search Information search is the process by which consumers gather information about goods or services before a purchase is made (Shim et al., 2001). Due to the ease of viewing the vast amount of information available and to the interactive nature of the Internet, information search on the web (a.k.a. browsing or “exploratory behavior”) is a crucial element in online consumer decisionmaking (Shim et al., 2001). When a consumer has enough information about a product’s price, size, color, function, etc., he/she will make a decision as to the purchase of that product. Therefore,

Online purchasing behavior Online purchasing behavior is the act in which consumers actually pay for goods over the Internet. Many consumers are hesitant to buy online, and more than half abandon their selections before payment occurs (Shim et al., 2001). For apparel purchases, this fear of purchasing may be related to many factors, including perceived financial or product risk (Beck, 2001). However, due to convenience, (“Internet shopping”, 1998; Beaudry, 1999), good price (“Internet shopping”, 1998; Beaudry, 1999), and product variety (“Internet shopping”, 1998), consumers used the Internet for product purchasing as well as information search. The present research intends to discover how innovativeness of the consumer is related to information search and purchasing behavior.

Hypotheses Applying Rogers’ (1995) theoretical framework, general innovativeness is one consumer characteristic that may influence the adoption of Internet apparel shopping. In addition, consumers’ demographic characteristics such as gender may also influence the adoption of Internet apparel shopping. As shown in previous studies related to general innovativeness, more innovative people have different characteristics than less innovative people and they tend to adopt new products more readily than people with lower innovativeness. Therefore, consumers with high innovativeness may adopt and use the Internet for apparel shopping more often than consumers with lower innovativeness. Based on Rogers’ (1995) theoretical framework and previous studies, the present study developed three hypotheses: H1. General innovativeness is positively related to frequency of Internet apparel information search. H2. General innovativeness is positively related to actual Internet apparel purchasing. H3. There are significant differences between females and males in terms of general innovativeness, information search, and actual purchase for apparel products.

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Methodology

Table I Demographic information

Sample and data collection A convenience sample of 178 students, 73 in the family resource management major (FRM) and 105 in the textiles and clothing major (T&C) at a large US university, was used for this research. According to previous studies (Lee and Johnson, 2002), about 32 percent of Internet apparel shoppers were under 30. Thus, undergraduate students are likely to be Internet shoppers and are an appropriate sample on which to investigate Internet apparel shopping behavior. Because the hypotheses were developed from an established framework (Rogers, 1995) and validated scales were available for the hypothesized constructs, survey methodology was used to see if patterns among the key constructs existed in a specific sample of the population. Survey questionnaires were distributed and completed in two different FRM classes and three different T&C classes (at the beginning of the classes). All students received chocolate bars as incentives. The questionnaire was three pages long and contained three different sections. Section A measured general innovativeness, section B measured frequency of Internet apparel shopping, and section C measured demographic information. The range of general innovativeness scores for our sample was 54 to 114, with a mean of 85 (possible range was 24 to 120, with a midpoint of 72). Approximately, 93 percent of respondents scored 70 or higher on general innovativeness. About 77 percent of the sample was female, about 98 percent was undergraduate level (about 70 percent were seniors), approximately 88 percent was white, the mean age was about 22 years, and about 60 percent were T&C majors. Specific demographic information is shown in Table I.

Characteristics

F

%

Age (n 5 176) 18 to 20 21 to 29 Over 29

28 142 6

15.9 80.7 3.4

Sex (n 5 178) Female Male

136 42

76.4 23.6

Years at university (n 5 178) Freshman Sophomore Junior Senior Graduate

5 14 31 125 3

2.8 7.9 17.4 70.2 1.7

Ethnicity (n 5 176) White African-American Hispanic Asian Other

155 9 2 7 3

88.1 5.1 1.1 4 1.7

Major (n 5 178) Family resource management Female Male Textiles and clothing Female Male

73 40 33 105 98 7

41

.

Measures Innovativeness To measure general innovativeness, Leavitt and Walton (1988) developed two scales – form A and B – each with acceptable reliability, 0.74 and 0.72 respectively. Each form has 24 questions and the questions on both forms are very similar. Form B seemed most relevant for a study on apparel shopping because it includes one question that relates specifically to clothing, “I like new styles in clothes, especially those that are really different” (Leavitt and Walton, p. 52, 1988). Other questions measured general innovativeness related to other products and different situations. For example, “I like to spend money on unusual gifts and toys,” “I like to try new products to see what they are like,” “I am the kind of person who is always looking for an exciting, stimulating, active life,” “I can enjoy

59

being with people whose values are very different from mine,” and “I generally like to try new ideas at work and in my life” (Leavitt and Walton, p. 52, 1988). The questions were answered on a fivepoint Likert type scale (1 ¼ strongly disagree, 3 ¼ neutral, 5 ¼ strongly agree). Cronbach’s alpha was 0.83 in this study, suggesting that the scale is reliable. Scores from the 24 items were summed and used as an independent variable. Higher scores indicated that respondents had higher general innovativeness. Lower scores indicated that respondents had low general innovativeness. The mean value of general innovativeness was 85 with total scores ranging from 54 to 114, suggesting that the sample is slightly innovative. Frequency of Internet apparel information search One question was used to measure frequency of Internet apparel information search. For the question asking “during the past six months, how often have you used the Internet to search information for apparel related products (e.g. shoes, accessories, handbags, clothing, hats etc.)?”, respondents were asked to select one of five options – 1 ¼ never, 2 ¼ once or twice a year, 3 ¼ every few months, 4 ¼ every month, 5 ¼ at least once a week.

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Internet apparel purchasing behavior One question was used to measure Internet apparel purchasing behavior. For the question asking “during the past six months, how often have you used the Internet to purchase apparel related products (e.g. shoes, accessories, handbags, clothing, hats etc.)?”, respondents were asked to select one of five options – 1 ¼ never, 2 ¼ once or twice a year, 3 ¼ every few months, 4 ¼ every month, 5 ¼ at least once a week.

H3 To test H3, univariate analysis of variance was used. The independent variable was gender and dependent variables were general innovativeness, information search for apparel products on the Internet and actual purchasing of apparel products on the Internet. Females showed higher mean scores for general innovativeness – female: 86.63 and male: 79.95 (F(1, 169) ¼ 15.062, p , 0.000). Female students were more likely to have higher general innovativeness than male students. Means for use of the Internet for information search for apparel products were 3.88 for female and 2.93 for male (F(1, 176) ¼ 21.687, p , 0.000). Female students showed higher mean scores for frequency to use the Internet for information search for apparel products. Means for the use of the Internet for the actual purchase of apparel products – female: 2.13 and male: 1.83 – but this was not a statistically significant difference. This means that there was no difference in terms of actual purchase of apparel products on the Internet between females and males. Therefore, H3 was partially supported. Specific statistics are shown in Table III.

Analysis and results Data were analyzed using SPSS. The descriptive statistics function was used for describing demographic information, and simple regression and univariate variance of analysis was used for hypotheses testing. Hypotheses testing H1 Simple regression analysis was used to test H1. The independent variable was general innovativeness and the dependent variable was frequency of Internet apparel information search. A significant positive relationship between general innovativeness and frequency of Internet apparel information search was found, F (1, 169) ¼ 2.263, p , 0.05. The positive beta value indicates the nature of the relationship between general innovativeness and frequency of Internet apparel information search, b ¼ 0.171, p , 0.05. Higher scores on general innovativeness are related to higher scores on frequency of Internet apparel information search. This means that people who are more innovative are more likely to use the Internet for apparel information search. Therefore, H1 was supported. Specific statistics are shown in Table II. H2 Simple regression analysis was used to test H2. The independent variable was general innovativeness and the dependent variable was frequency of actual Internet apparel purchasing. No significant relationship between general innovativeness and frequency of actual Internet apparel purchasing was found. Specific statistics are shown in Table II.

Discussion and implications The results of this study suggest that, for apparel products, general innovativeness is related to Internet usage for information search, but not to actual purchase. The latter is contradictory to the relationship proposed in Rogers’ (1995) theoretical framework. However, the finding that general innovativeness is related to adoption of the Internet for apparel shopping in terms of information search, supports the relationship proposed in the theoretical framework. The fact that innovativeness is related to information search could mean that, while innovators are likely to adopt the Internet for information search, the perceived financial and Table III Univariate analysis of variance for gender on dependent variables for H3 df

F-value

p-value

R2

(1,169) (1,176) (1,175)

15.062 21.687 2.207

0.000 0.000 0.139

0.082 0.110 0.012

Variables General innovativeness Information search Actual purchase

Table II Regressions for H1 and H2 Variables General innovativeness and frequency of apparel information search General innovativeness and frequency of Internet apparel purchase

R2

Std. b

F-value

p-value

0.029

0.171

2.263

0.025

H1 was supported

0.005

0.068

0.784

0.337

H2 was not supported

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Hypotheses results

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Young Ha and Leslie Stoel

Volume 32 · Number 8 · 2004 · 377-385

product risk of actual online purchasing is so great that even innovative consumers become lost sales (Beck, 2001). This notion is supported by online shopping statistics showing that more than half of all information searches are dropped before purchases are made (Beck, 2001; Shim et al., 2001). However, this finding may also relate to consumer preference for multi-channel access. Industry research shows that consumers prefer to search for information online at times that are convenient, but prefer to visit stores for comparison of a final choice set (Greenspan, 2003) or to experience the emotional aspects of a store visit (Rush, 2003b). The relationship between innovativeness and information search has important implications for e-tailers because according to previous studies, frequent information searchers tend to be more likely to be purchasers in the future (Jarboe and McDaniel, 1987; Pastore, 2000b). This means current information searchers are good targets for converting to purchasers. Therefore, Internet apparel retailers who want to increase sales of apparel products should strive to turn innovative information searchers into actual purchasers. Other interesting findings showed that women were more innovative and used the Internet more frequently for information search for apparel products than men. The findings regarding women are supported by previous research in the area of innovativeness (Goldsmith et al., 1987), and statistics regarding online apparel sales: women’s clothing sales account for more than half of all apparel sales (“Retail apparel sales statistics and trends”, 2000), but men’s clothing sales are currently experiencing a rate of growth that is higher than the rate of growth of all other market segments (“Retail apparel sales statistics and trends”, 2000). Even though there was no difference between male and female students for actual apparel purchasing on the Internet, in terms of information search, female students tended to search for information more frequently than male students. Frequent information searchers tend to be more likely to be purchasers in the future (Jarboe and McDaniel, 1987). This suggests that there may exist more possibility for women to be actual purchasers in the future. This result also suggests that Internet apparel retailers could consider developing different Web site designs for men and women because of the difference of their innovativeness and frequency of information search. In the case of men, although men are potential Internet shoppers for other products such as CDs, electronics, and software, they may hesitate to use the Internet for purchasing apparel products more than women do because of the

unfamiliarity and uncertainty about apparel shopping (Dholakia, 1999). Thus, to entice men to browse more frequently for apparel, Internet retailers should take steps to ease perceptions of unfamiliarity such as providing return policy information and increasing convenience factors important to men. Return policy and convenience can motivate people to buy products on specific Web sites (Then and Delong, 1999), and the provision of some product-related information, such as sizing, color, and fabric has been found to increase purchase intention (Kim and Lennon, 2000).

Limitations and future research The use of a convenience sample of relatively young college students might have limited the range of responses received. By limiting the sample to college students characterized as young with high levels of education, our respondents had higher innovativeness than the general population. General innovativeness ranged from medium to high scores with a high mean, and approximately 93 percent of respondents scored higher than the midpoint on general innovativeness. Therefore, a wider sample of subjects with different socioeconomic backgrounds, education levels, ages, ethnic identities, and interests might have produced different results. Using a bigger sample size as well as a wider sample of subjects would be advised for future research. In addition, the relatively small sample of male students may have influenced the results of this study. Future research should consider an equal sample size of both male and female respondents. Also, the survey relied on self-reported answers, so the results may not necessarily reflect actual consumer behavior. Although the current study only investigated the effect of gender difference on innovativeness and Internet apparel shopping, there are additional factors that may have an effect on innovativeness and Internet apparel shopping behavior. Future research examining the relationship between innovativeness and Internet shopping for apparel might consider the effect of consumers’ economic status on innovativeness. Highly innovative people tend to have higher incomes (Leung, 1998; Pepermans et al., 1996; Summers, 1972). Internet users who have high incomes tend to use the Internet for actual purchasing (Rush, 2003a; Pastore, 2000b) and Internet apparel shoppers have even higher incomes than catalog apparel shoppers and retail store shoppers (Pastore, 2000a). Therefore, future studies should examine consumers’ innovativeness as a characteristic that

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may be substantively influenced by consumers’ economic status. It might be interesting to see if innovativeness is, in fact, related to all non-purchasing behavior on the Internet such as visiting an Internet community, chatting, and using e-mail. More research into perceived risks associated with online purchases is necessary, as risk so deeply impacts lost sales. In addition, the interaction of characteristics of the innovation (e.g. usability, usefulness) with characteristics of consumers may also provide additional understanding of online shopping behaviors. It might also behoove marketing managers to determine why female consumers are more innovative than male consumers. Future research could delve more deeply into the subject of gender differences and innovativeness. The result of the current study showed that gender differences existed in terms of general innovativeness and information search for apparel products. However, the current study did not consider the effect of prior shopping experiences related to gender differences on Internet apparel shopping. According to Dholakia (1999), shopping is still a gendered activity. Especially for grocery and personal clothing shopping, women tend to have the primary responsibility in the household (Dholakia, 1999). In addition, prior use of catalog and television shopping influenced perceptions of Internet shopping (Dholakia and Uusitalo, 2002). Future studies might be conducted to investigate gender differences regarding the adoption of Internet apparel shopping in terms of prior shopping experiences that influence consumers’ confidence in using the Internet for apparel shopping. The current study showed that general innovativeness was related to Internet information search but not actual Internet purchasing. Future research might also be conducted to examine what kind of variables influence consumers’ hesitation or intention to purchase apparel products online. For apparel products, those variables may be related to size information (Then and Delong, 1999), color information (Kim and Lennon, 2000), and fabric details (Kim and Lennon, 2000). Kim and Lennon (2000) found that the amount of product and service information provided for apparel products was positively related to purchase intention. Thus, more research might be conducted to examine the effect of product and service information, including verbal and pictorial information on consumers’ purchase behavior in Internet apparel shopping.

References Beaudry, L.M. (1999), “Consumer catalog shopping survey”, Catalog Age, Vol. 16 No. 6, pp. a5-a18. Beck, B. (2001), “Key strategic issues in online apparel retailing: the need for an online fitting solution”, available at: www.techexchange.com Bhatnagar, A., Misra, S. and Rao, H.R. (2000), “On risk, convenience, and Internet shopping behavior”, Communications of the ACM, Vol. 43 No. 11, pp. 98-105. Chau, P.Y.K. and Hui, K.L. (1998), “Identifying early adopters of new IT products: a case of Windows 95”, Information & Management, Vol. 33 No. 5, pp. 225-30. Citrin, A.V., Sprott, D.E., Silverman, S.N. and Stem, D.E. (2000), “Adoption of Internet shopping: the role of consumer innovativeness”, Industrial Management & Data Systems, Vol. 100 No. 7, pp. 294-300. Darden, W.R. and Reynolds, F.D. (1974), “Backward profiling of male innovators”, Journal of Marketing Research, Vol. 11, pp. 79-85. Dholakia, R. (1999), “Going shopping: key determinatnts of shopping behaviors and motivations”, International Journal of Retail & Distribution Management, Vol. 27 No. 4, pp. 154-65. Dholakia, R.R. and Chiang, K.P. (2003), “Shoppers in cyberspace: are they from Venus or Mars and does it matter?”, Journal of Consumer Psychology, Vol. 13 No. 1/2, pp. 171-6. Dholakia, R.R. and Uusitalo, O. (2002), “Switching to electronic stores: consumer characteristics and the perception of shopping benefits”, International Journal of Retail & Distribution Management, Vol. 30 No. 10, pp. 459-69. Dholakia, R.R., Pedersen, B. and Hikmet, N. (1995), “Married males and shopping: are they sleeping partners?”, International Journal of Retail & Distribution Management, Vol. 23 No. 3, pp. 27-33. Goldsmith, R.E., Freiden, J.B. and Eastman, J.K. (1995), “The generality/specificity issue in consumer innovativeness research”, Technovation, Vol. 15 No. 10, pp. 601-12. Goldsmith, R.E., Stith, M.T. and White, J.D. (1987), “Race and sex differences in self-identified innovativeness and opinion leadership”, Journal of Retailing, Vol. 63 No. 4, pp. 411-25. Greenspan, R. (2003), “Net-driven sales to surge”, available at: http://cyberatlas.internet.com (accessed 29 May). Hawes, J. and Lumpkin, J. (1986), “Perceived risk and the selection of a retail patronage mode”, Journal of the Academy of Marketing Science, Vol. 14 No. 4, pp. 37-42. Hirschman, E.C. and Adcock, W.O. (1978), “An examination of innovative communicators, opinion leaders and innovators for men’s fashion apparel”, Advances in Consumer Research, Vol. 5, pp. 308-13. “Internet shopping” (1998), Stores, special report, Ernst & Young, London, January, pp. 1-28. “Internet usage, commerce statistics and demographics” (2001), available at: www.7designavenue.com Jarboe, G.R. and McDaniel, C.D. (1987), “A profile of browsers in regional shopping malls”, Journal of Academy of Marketing Science, Vol. 15 No. 1, pp. 46-53. Kim, M. and Lennon, S.J. (2000), “Television shopping for apparel in the United States: effects of perceived amount of information on perceived risks and purchase intention”, Family and Consumer Sciences Research Journal, Vol. 28 No. 3, pp. 301-30. Kwon, Y., Paek, S.L. and Arzeni, M. (1991), “Catalog vs noncatalog shoppers of apparel: perceived risks, shopping

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orientations, demographics, and motivations”, Clothing and Textiles Research Journal, Vol. 10 No. 1, pp. 13-19. Leavitt, C. and Walton, J. (1988), “Individual traits”, in Bearden, W.O., Netemeyer, R.G. and Mobley, M.F. (Eds), Handbook of Marketing Scales, Sage Publications, Newbury Park, CA, pp. 50-2. Lee, M. and Johnson, K.P. (2002), “Exploring differences between Internet apparel purchasers, browsers, and non-purchasers”, Journal of Fashion Marketing and Management, Vol. 6 No. 2, pp. 146-57. Leung, L. (1998), “Lifestyles and the use of new media technology in urban China”, Telecommunications Policy, Vol. 22 No. 9, pp. 781-90. Pastore, M. (1999), “The lifestyle of the online shoppers”, available at: http://cyberatlas.internet.com (accessed 8 December). Pastore, M. (2000a), “Online clothing sales continue climbing e-commerce ladder”, available: http://cyberatlas.internet. com (accessed 10 March). Pastore, M. (2000b), “Women use Web to change social landscape”, available at: http://cyberatlas.internet.com (accessed 12 May). Pepermans, R., Verleye, G. and Cappellen, S.V. (1996), “‘Wallbanking’, innovativeness and computer attitudes: 25-40-year-old ATM-users on the spot”, Journal of Economic Psychology, Vol. 17, pp. 731-48.

“Retail apparel sales statistics and trends 1999-2000” (2000), available at: http://retailindustry.about.com Robertson, T.S. (1971), Innovative Behavior and Communication, Holt, Rinehart and Winston, Inc., New York, NY. Robertson, T.S. and Kennedy, J.N. (1968), “Prediction of consumer innovators: application of multiple discriminant analysis”, Journal of Marketing Research, Vol. 5 No. 1, pp. 64-9. Rogers, E.M. (1995), Diffusion of Innovation, 4th ed., The Free Press, New York, NY. Rush, L. (2003a), “US e-commerce to see significant growth by 2008”, available at: http://cyberatlas.internet.com (accessed 7 August). Rush, L. (2003b), “Hottest items for the holidays”, available at: http://cyberatlas.internet.com (accessed 23 October). Seitz, V.A. and Massey, T.K. (1990), “The acceptability of catalogs for apparel purchases”, Clothing and Textiles Research Journal, Vol. 8 No. 4, pp. 28-33. Shim, S., Eastlick, M.A., Lotz, S.L. and Warrington, P. (2001), “An online prepurchase intentions model: the role of intention to search”, Journal of Retailing, Vol. 77 No. 3, pp. 397-416. Summers, J.O. (1972), “Media exposure patterns of consumer innovators”, Journal of Marketing, Vol. 36, pp. 43-9. Then, N. and Delong, M. (1999), “Apparel shopping on the Web”, Journal of Family and Consumer Sciences, Vol. 91 No. 3, pp. 65-9.

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Introduction

Identification of UK fashion retailer use of Web sites Ruth Marciniak and Margaret Bruce The authors Ruth Marciniak is Senior Lecturer in Retail Marketing at London Metropolitan University, London, UK. Margaret Bruce is Chair of Design Management and Marketing, at the Manchester Business School, Manchester, UK, and International Chair in Design Management at ICN Ecole de Management, University of Nancy, Nancy, France.

Keywords Retailing, Fashion industry, Electronic commerce, United Kingdom

Abstract This exploratory study examines fashion retailer use of Web sites of retailers operating within the UK. A survey of 990 fashion retailers was undertaken, 780 of which have a registered domain name. A content analysis of their Web sites took place in order to examine: first, retailer characteristics in terms of product focus, marketing positioning, operational structure type and Web site functionality; and second, to establish whether a relationship exists between online levels of involvement and specific fashion retailer characteristics. Results indicate that a high number of those surveyed (78.7 per cent) had registered a domain name and over half of those who had registered, had a Web site that was transactional. Fashion designer retailers predominantly use their Web sites as an informational tool. Whereas transactional retailers were predominantly made up of product specialist retailers who were multiple, independent, mail order or pure play retailers. In conclusion it is product specialists who have greater levels of involvement in e-commerce.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0959-0552.htm

International Journal of Retail & Distribution Management Volume 32 · Number 8 · 2004 · pp. 386-393 q Emerald Group Publishing Limited · ISSN 0959-0552 DOI 10.1108/09590550410546205

Until recently the traditional UK bricks and mortar retailers had been reluctant to embrace Internet technologies. Rather it has been the new entrants or pure plays that have engaged in such with the encouragement from enthusiastic investors (Alba et al., 1997, Reynolds, 2000). Whilst not all have been successful, for example Boo.com, they have helped to stimulate awareness of the Internet’s potential for marketing and selling goods online. For instance, UK clothing retailers such as Marks and Spencer and the Arcadia Group, whilst in recent years, have undergone cost cutting, rationalisation and management changes in order to revive their business (Keynote, 2002), despite this, have chosen to adopt a multi-channel strategy selling clothing via their high street stores and via the Internet. Further to this, not only have some high street retailers added the Internet to function as a marketing and selling channel, so too have catalogue retailers such as General Universal Stores and Empire Stores. Yet whilst Schoenbachler and Gordon (2002) report that there is now competitive pressure on retailers to add an online presence, there is to date little known of the full extent of fashion retail involvement in the Internet. Rectifying this is problematic, as no formal database of online fashion retailers exists. Without such a database, academics have no foundation on which to form sector specific insights. Hence the aim of this exploratory research is to build a database of online fashion retailers operating within the UK marketplace who have an established web presence and also acquire some insight into the characteristics of these retailers.

Product focus and market positioning in UK fashion retailing Features of the UK fashion retail sector include a prevalence for the development of own brands, market concentration, strong competitive activity, polarity in the marketplace, products with short life cycles and unpredictability of consumer demand (Siddiqui et al., 2003). The market is characterised by goods that have little generic differentiation (Moore, 1995; Birtwhistle and Freathy, 1998), rather as Moore (1995) points out, fashion retailers typically create differentiation through having either exclusively or predominately own-brand goods. In all, own-brand has emerged as the basis of the market positioning strategies of the major retail fashion players within the UK as branding has become an increasingly important selling feature of fashion garments (Jackson and Shaw, 2000).

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Identification of UK fashion retailer use of Web sites

International Journal of Retail & Distribution Management

Ruth Marciniak and Margaret Bruce

Volume 32 · Number 8 · 2004 · 386-393

In terms of classifying fashion retailers, typically, within market intelligence reports, they are divided by product, for example womens’ wear, mens’ wear, childrens’ wear (Keynote, 2002). Such a classification can be criticised for offering a limited perspective given that firstly, many prominent clothing retailers offer products across age ranges and genders, for example, Next who sell womens’, mens’ and childrenswear, and both Monsoon and Jigsaw, who sell to both women and children. Alternatively, a categorisation based upon product focus together with market position and target customer group, as offered by Moore and Burt (2001) may proffer more meaningful insights. In all, they identify four fashion retailer types, these being designer, general merchandise, general fashion or product specialists. Definitions of these and examples of such are offered in Table I.

and distributed between a small number of publicly owned multiple retailing groups (Easey, 2001; Mintel, 2003). Indeed the sector has the largest number of national chains compared to other retail sectors including companies such as Next plc and the Arcadia group. Burt and Sparks (2003) indicate that the competitive structure of the UK clothing retailing market is difficult to map as clothing specialists are not the only channel to market, rather several channels are involved including department stores, grocery retailers, mail order and online retailers. Further competition to clothing specialists comes from department and variety stores, sports goods retailers and mail order houses. According to Mintel (2003), department stores are the second most important channel of distribution for clothing in the UK behind specialist clothing retailers. Their success can be attributed to their use of concessions of the high street chains within their store, making them a convenient place to shop. In terms of shopping via mail order, home shopping via agency catalogues now has an outdated image; rather established high street retailers have launched their own home shopping catalogues over the years. With regards to the Independents, Mintel (2003) suggest they have 9.6 per cent share of the clothing, footwear and accessories markets. These retailers are able to be very successful at a local level as in some instances they may have no direct competition from the

Operational structures of UK fashion retailers The UK clothing retail sector is relatively fragmented. For instance, the numbers of businesses involved in the sector, amounted to 12,625 in 2001 (Keynote, 2002). With regards to operational structures, whilst the sector is predominantly composed of independent, family owned businesses, market share is concentrated Table I Four types of fashion retailer Type of fashion retailer

Description

Fashion retail example

Product specialists fashion retailer

Niche retailers, focusing on a narrow product range with a clearly defined customer group. Basis of group may, for example, be lifestyle, age or gender

Fashion designer retailer

Have an international profile evidenced by their international fashion shows. They market their own label merchandise

General merchandise retailer

Sell a mix of fashion and non-fashion goods within their merchandise offer

General fashion retailer

Offer a broad range of typically mid-priced fashion merchandise and accessories, to either a broad target market or a clearly defined target group

Adams Children’s Wear Evans Outsize Rigby & Peller Thomas Pink JJB Sports Ellis Brigham Outdoor Paul Smith Vivienne Westwood Agnes B Prada Armani Marks & Spencer BhS Selfridges & Co. Asda Miss Selfridge Kookai New Look Diesel River Island Gap FCUK

Source: Moore and Burt (2001)

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Volume 32 · Number 8 · 2004 · 386-393

major players, offer a high quality of service and, although are not often found in prime locations, still may be accessible to their target market. Whilst increasingly retailers sell via their outlet such as a department store and also via an alternative channel to market such as the Internet and or mail order, hence making them a multichannel retailer, it is still useful to categorise retailers on the basis of their core operational structure as this gives an indication of the retailers’ key competences. Identification and definition of operational structure types identified within retail literature (Cox and Brittain, 2000; Berman and Evans, 2001; Schneider and Perry, 2000) are offered in Table II.

entry for technology has dropped and this therefore may have prompted high street retailers to take an interest in the Internet. In all, there exists much speculation about the ability to be able to sell clothes online as for example Mintel (2003) suggests individuals like to feel and see garments before purchasing. Nevertheless the volume of sales of clothing and footwear sold via e-commerce was estimated at £5 million in 1999, 0.01 per cent of the total market and future projections are estimated to be 1,843 million in 2005, 4.0 per cent of the total market (Burt and Sparks, 2003). Mintel (2003) report that penetration of clothing shopping, by all adults in May 2003 for mail order, Internet and TV was 15 per cent, with the figure slightly higher for women (19 per cent) than men (11 per cent). Figures were not available for penetration via the Internet only. However, Marketing Week in 2003 reported that the clothing, footwear and accessories retail sector performed well online over the previous year, with sales 173 per cent higher in April 2003 than for April 2002 (Marketing Week, 2003). Reportedly Next Plc is probably the most successful example to date within the UK of fashion retailers who have made efforts to penetrate e-commerce (Mintel, 2003; Hargrave, 2003). Indeed according to Hargrave (2003) the bulk of online fashion traffic is for Next plc, second is Argos Additions and thirdly is La Redoute. Along with Matalan and Peacocks, who also have established web sites, this indicates that retailers positioned at various points in the marketplace all have an interest in the Internet, even leading international designers (Mintel, 2002b). With regards to transactional Web sites, the success of any e-commerce venture is typically measured by a firm’s performance in terms of sales. Such successes are often reported in the media, for example Rees (2002) reports that the luxury lingerie brand Agent Provocateur achieved a 164 per cent rise in overall sales from January 2001 to January 2002, which the firm considers has mainly been due to their Web site as 84 per cent of their mail order sales now originate online. Likewise, the success of Annsummers.com is reported to have been 67 per cent year on year rise in sales in December 2001 (Rees, 2002). However other than reports in the media it is difficult to access figures with regards to sales and profitability ratios of multi-channel retailers who have engaged in e-commerce for selling. Indeed whilst a firm’s overall sales will be reported, it may be difficult to identify how much sales were made specifically from the company’s Web site. The reason for this being, company financial reports may not clearly delineate performance regarding the retailer’s e-commerce activities (see Next plc’s results for the half year ended July 2003 as an example of this, www.next.co.uk).

Level of e-commerce involvement of UK fashion retailers There is the general view that the Internet is changing home shopping (Mintel, 2002a), however there is also the belief that standalone Internet shopping will never be the way forward (Reynolds, 2002). Whilst it is similar to mail order catalogue shopping, the fundamental difference is that in every form of retailing developed so far, the retailer can present the offer to the customer, however with the Internet, customers must seek out the offer. For this reason Internet shopping may work best in conjunction with mail order and or high street shopping. Further to this, the cost of Table II Classification of retailers based on operational structure Retailer

Operational structure

Multiple

A retail organisation with more than ten branches (Cox and Brittain, 2000) A retail organisation with fewer than ten branches (Cox and Brittain, 2000) A retail store with physically separate departments with four or more different classes of consumer goods, one of which is women’s clothing (Cox and Brittain, 2000) A departmentalised food store with a wide range of food-related products and limited general merchandise (Berman and Evans, 2001) Retail luxury goods, stores typically located in cosmopolitan centres such as capital cities, e.g. London, Paris and New York (Hollander, 1970) Either general merchandise or specialist catalogue selling goods via a network of agents or directly to the consumer, delivered to their home (Cox and Brittain, 2000) A retail organisation which uses electronic data transmission as a sole means to sell directly to a consumer (Schneider and Perry, 2000)

Independent Department store

Supermarket

Fashion designer

Mail order

Pure play

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Identification of UK fashion retailer use of Web sites

International Journal of Retail & Distribution Management

Ruth Marciniak and Margaret Bruce

Volume 32 · Number 8 · 2004 · 386-393

Research aim and objectives The aim of this study was to identify fashion retailers operating within the UK marketplace who have an established Web presence. In order to achieve this the following research objectives were developed: . to establish the current number of fashion retailers operating in the UK who have a registered domain name; . to examine the characteristics of fashion retailers in terms of product focus, marketing positioning, operational structure type and Web site functionality; and . to investigate whether there is a relationship between Web site functionality and specific characteristics of fashion retailers.

Methodology The identification of fashion retailer use of Web sites involved firstly the detection of fashion retailers who had a Web site presence on the Internet and secondly, a direct examination of retailers’ Web sites. The examination of the Web sites took place during March 2003.

The sample Although other surveys such as Ellis-Chadwick et al. (2002) surveyed only UK’s largest retailers in their longitudinal study of Internet adoption in the UK retail sector and Feinberg et al.’s (2002) study focussed upon 100 top speciality stores, it was considered in order to gain a full understanding of fashion retailer use of Web sites a wide cross section of retailers should be drawn upon for the sample, regardless of size. Whilst Ellis-Chadwick et al.’s justification for using only the largest retailers was that they “were likely to be most influential in terms of uptake and application of the Internet” (p. 74), such a sample dismisses pure play retailers and, significant in fashion retailing, fashion designers who despite a high profile may in fact be small companies. Nor would this include independent fashion retailers, who although small, are also a significant force in UK fashion retailing. However, identifying the sample for this research proved to be difficult as no formal database exists of online retailers and fashion directories that do exist, focus on the most successful, larger retailers. Rather a number of sources were drawn upon, which included the Retail Knowledge Bank’s (2002) directory of fashion retailers in the UK (2002), London Fashion Week’s list of top independent UK fashion retailers sourced via their Web site (www.londonfashionweek.co.uk), plus various Web portals such as www.britishcompanies .co.uk, www.uknetguide.co.uk, www.uklinks.org, www.talkingcities.co.uk and www.ukexperience.

co.uk. All these portals offer links to fashion retailers’ Web sites serving the UK market. In all a sample of 990 retailers were identified, which the researchers deemed was a manageable number and representative of the fashion retailers operating in the UK market.

The research instrument In order to classify retailers and to examine online retail characteristics, a pro forma was devised. This also helped to assist in obtaining a consistent capture of data. Within the proforma, retailers were classified on the basis of whether or not they had an online presence, and if so, the nature of the presence. Drawing upon Moore and Burt’s (2001) classification of fashion retailers, fashion retailers were classified as being either designer, general merchandise, general fashion or product specialists. It was established whether these retailers were multi-channel. That is, whether they operated via the high street and or mail order or were only pure play and if they operated via the high street, the type of retail organisation was identified as being either a multiple, independent, department store, supermarket or a fashion designer.

Data collection In terms of Internet protocol, each Web site has a unique address or domain name, which consists of names and/or abbreviations of companies or individuals such as www.marksandspencer.co.uk. As no two Web sites can share the same address, identification of whether a retailer had registered a domain name was relatively simple. This was achieved by visiting the Web site www.easy.co.uk, wherein the researchers were able to undertaken searches to identify whether a retailer had a registered Web site. Alternatively, Web sites were sourced via the portals identified above, which offered direct links to the various retailers. All sites identified were subsequently book marked. Each web site was then examined and data recorded using the proforma previously described. In the analysis of the data, cross tabulations in the form of chi-square tests were undertaken in order to identify whether associations between variables exists.

Research results Fashion retail Web site functionality Table III informs us that the 990 fashion retailers surveyed consisted of general fashion retailers (37.7 per cent), product specialist retailers (38.4 per cent), fashion designers (15.9 per cent) and general merchandisers (8 per cent).

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Identification of UK fashion retailer use of Web sites

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Ruth Marciniak and Margaret Bruce

Volume 32 · Number 8 · 2004 · 386-393

Table III Fashion retailer by product focus, market position and Web site functionality

n Product specialist Fashion designer General fashion General merchandise Total

No Web site %

34 35 131 10 210

21.2

Transactional n % 235 4 124 37 400

Informational n % 102 115 101 33 351

40.4

Of the total sample of 990 fashion retailers, 780 (78.7 per cent) had a registered a domain name and therefore had a Web site. With the majority of retailers having registered, this indicates that this sector sees some relevance of the Internet to the organisation. This is echoed by the study undertaken by Ellis-Chadwick et al. (2002) whose findings indicated that the clothing sector was one sector that has been quick to adopt the Internet. Of the 780 who had registered a domain name, the number of retailers whose Web site was used for selling purposes (transactional) was 400 (40.4 per cent), marketing purposes (informational) was 351 (35.5 per cent), or as a holding page was 29 (2.9 per cent). In all, just over one fifth of the survey, 210 retailers, (21.2 per cent) did not have a Web site.

Product focus and market positioning As well as indicating the high numbers of fashion retailers who had an interest in the Internet, Table III also indicates that this interest is representative of the various fashion retailers regardless of their product focus or market position. For instance, 346 (91 per cent) of product specialists, 122 (77.7 per cent) fashion designers and 70 (87.5 per cent) general merchandise retailers have registered a domain name. However, in comparison, a lesser percentage, 64.8 per cent, of a total of 242 general fashion retailers have registered. The smallest retail group in the survey the general merchandisers, have Web sites that are roughly an equal mixture of transactional and informational (46.3 per cent and 41.3 per cent respectively), with only ten (12.5 per cent) of these retailers selecting not to have a Web site. Alternatively, the product specialists have clearly embraced the Internet more fully in terms of offering consumers the opportunity to buy goods online as 235 (61.8 per cent) of these retailers had a Web site that was transactional, as oppose to fashion designers, which was four (2.5 per cent) and general fashion retailers, which was 124 (33.2 per cent). Undertaking a chi square test informs us that an association exists between retailer type and web site functionality (chi square ¼ 156.074; df ¼ 3; p , 0.001). The high number of product specialists supports the view that by the very fact that these retailers are specialists, makes it easier

35.5

Holding page n % 9 3 17 0 29

2.9

Total retailers n % 380 157 373 80 990

for them to generate traffic to their site (Huizingh, 2002). Whilst general fashion retailers may not have a specific product category to exploit, typically those who are multiples will have their own distinct brand name. For example multiples such as French Connection, Jigsaw, Diesel and The Gap, who are heavy spenders on advertising, undertaken in order to differentiate themselves from their competitors and keep their brands to the forefront of the market (Keynote, 2002). Yet in comparison to the product specialists, Table III informs us fewer general fashion retailers are transactional. Therefore suggesting that retailers whose proposition is based upon product focus are exploiting the virtues of the Internet more than those whose proposition is based upon brand. Nevertheless the percentages for both product specialists and general fashion retailers (26.8 per cent and 27 per cent respectively) are similar for those who are informational only, indicating that not all product specialists are interested in making the most of their niche online. With regard to the fashion designer retailers, there seems to be a consensus that they have chosen to protect their brand image by not selling online. Whilst such a decision thwarts the opportunity to sell to customers who are not in easy reach of the few and exclusive designer retail outlets, it serves to protect their selective image through limiting their distribution channels. Whilst many of these retailers have registered a domain name, the majority have web sites that are informational (73.2 per cent). This finding is similar to that identified in Dall’Olmo Riley and Lacroix’s (2003) study of luxury brand Web sites. There may be two explanations for this. First, buying full priced fashion positioned at the luxury end of the market typically involves a high degree of customer service, which is difficult to replicate in an online environment. Second, given the designer retailers have an international brand name and reputation; selling online to an international market involves investment in resources such as logistics, that these companies may not wish to make. Rather typically they use the Web site to communicate information about the latest seasons fashions, showcase their latest advertisements, provide up to date news and events, offer details of where their stores are

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38.4 15.9 37.7 8 100

Identification of UK fashion retailer use of Web sites

International Journal of Retail & Distribution Management

Ruth Marciniak and Margaret Bruce

Volume 32 · Number 8 · 2004 · 386-393

located and provide company information such as personal histories of the designers.

them with an opportunity to exploit their niche and increase their geographical spread. In terms of the pure play retailers, the majority of these were product specialists (64.5 per cent). Various niches are identified for example, pure play retailers range from selling lingerie (Figleaves, Amplebosom and B2G), to specific sportswear specialists selling, for instance, golf (Fade Fashion), surf wear (Kangaroo Poo) and snowboarding gear (Positive Altitude). The pure plays were either made up of manufacturers or distributors selling on behalf of manufacturers. Lingerie manufacturers such as Playtex are an example of a supplier who sells to variety of different retailer types including pureplays, mail order and the high street. Whilst product specialist mail order companies were not as well represented as the independents and pure play product specialist retailers, examples of these include well established retailers such as the outdoor specialists Field and Trek and children’s wear mail order retailer Vertbaudet. Overall, it is the mail order companies who have exploited the online selling facilities of the Internet the most, as 90.4 per cent of these retailers were transactional. Further to this, 27.3 per cent of these retailers also had retail outlets. It is not surprising that such a high number of mail order companies use the Internet to sell. These retailers, such as Boden, Next Plc., Le Redoute, Clothing

Operational structures The extent of multi-channel retailing within the UK fashion market is evident. From Table IV it can be seen that a total of 597 retailers in the survey were multi-channel, with just less than half, 224, being transactional, thereby selling goods online as well as via an alternative channel to market such as the high street and or mail order. Such a strategy is one of market penetration, which fits strategically for a firm when its present customers can be induced to buy more and typically, when a company wants to attack the market share of their competitors. Given that generally the market for clothing within the UK is mature evidenced by intense competition (Keynote, 2002), then penetrating these markets by targeting consumers who are looking for convenient ways to shop via a Web site would seem to be a viable growth strategy. As can be seen from Table V, multi-channel retailers who are product specialists were composed predominantly of either independents or pure play. Independent retailers include, for example, the shirt makers Charles Tyrwhitt and specialists in cashmere such as N Peal who both have an online presence and hold strong positions in their niche market. Here the Internet provides Table IV Fashion retailer by operational structure and Web site functionality No Web site n % Multiple Independent Department store Supermarket Fashion designer Mail order Pure play Total

Transactional n %

40 127 7

65 82 7

35 1

4 66 176 400

210

21.2

Informational n % 120 92 14 6 115 4

40.4

351

Holding page n %

Total retailers n %

10 7

35.5

3 2 7 29

235 308 28 6 157 73 183 990

2.9

23.7 31.1 2.8 0.6 15.9 7.3 18.5 100

Table V Fashion retailer by product focus, market position and operational structure Product specialist fashion retailer n % Multiple Independent Department store Supermarket Fashion designer Mail order Pure play Total

Fashion designer retailer n %

General fashion retailer n %

102 123

General merchandise retailer n %

117 176

16 9 28 6

27 53 373

9 12 80

157 37 118 380

38.4

157

15.9

Note: all the supermarkets were transactional with regard to groceries, but none sold clothing online

391

37.7

8

Total

n

%

235 308 28 6 157 73 183 990

23.7 31.1 2.8 0.6 15.9 7.3 18.5 100

Identification of UK fashion retailer use of Web sites

International Journal of Retail & Distribution Management

Ruth Marciniak and Margaret Bruce

Volume 32 · Number 8 · 2004 · 386-393

Connection (GUS), Lands End, Gratton and Kays, all have competences in handling distribution direct to individuals’ homes together with handling the high level of returns that direct selling brings. With regard to the multiples, Table IV indicates that the majority of these have registered a domain name. Many of these companies were familiar high street retailers that have established retail operations and own brands wherein the consumer has developed trust. Indeed a good number of high profile own brand multiples such as Jigsaw identified above, had Web sites that were information only. These brands are behaving in a similar way to the fashion designer retailers, the majority of which, as already established, are also informational. Such behaviour occurs in the high street. For example London’s Bond Street captures the importance of designer branding and is seen as a key location for these luxury retailers (Fernie et al., 1997). Likewise retailers such as Jigsaw have also sought to establish themselves in this location as part of their retail strategy in order to associate themselves with an exclusive market positioning. Therefore it is not unreasonable to think that what could be defined as aspirational fashion multiples are copying similar online business models to the designers. Examining the independents, Table V reveals that, whilst over one third, 123 retailers were product specialists, just over half, 176 (57.1 per cent) were general fashion retailers. However Table IV informs us that it is the independents who were the highest number of retailers not to have a Web site, 127 retailers, 60.5 per cent of all the independents in the survey. This may be because these small retailers serving local markets do not see the need to invest in e-commerce initiatives and therefore do not bother to buy a domain name. Undertaking a chi square test informs us that an association exists between operational structure and web site functionality (chi square ¼ 159.179; df ¼ 4; p , 0.001). Evidence suggests that the fashion designer retailers are effectively using the pure play retailers to adopt a mixed channel selling approach in order to shift end-of-season goods. Here consumers are provided with an opportunity to purchase heavily discounted stock. In total, the survey identified 19 pure play retailers who sold designer fashion at discount. Such companies include kitmeout.com, yoox.com, and netaporter. Traditionally such stock is sold via discount outlets operating on low margins, such as TKMaxx, where the goods are promoted as bargain has beens in stores. However selling via a Web site may provide retailers with an approach to promoting these goods in a more stylish way as, in comparison to a low margin high street retailer, through good Web design, a low margin Web site can still make the designer product look exclusive. It could be argued that this

is more difficult to achieve for the low margin discount high street retailer, as the costs incurred through trying to create an upmarket retail store image will be much greater. For instance, costs of location will be much higher. The pure play retailers selling designer discounts have to date company names that are unfamiliar compared to the designer names they are selling, for example, Paul Smith, Armani and Chloe. However, the effect of the designer brand names gives their Web sites instant authority in that legitimacy is brought about by the designer brand name, which acts as a promoter of online transactions. As Ward and Lee (2000) indicate, potential customers searching to purchase designer apparel will typically search for designer names rather than the retailer’s name, that is until they have had a positive direct experience of buying from the company, then the retailers name will increase in significance. Within the survey the pure play retailers who were manufacturers selling directly to the consumer were typically very small companies for example the children’s waterproof company muddypuddles.com. Information on their company home page informs us that the company manufactures children’s waterproof clothing and was initially set up as a side line to the owners mixed cattle, sheep and arable farm! Similar other companies include the Stockport based Catsuit Corner, the new born baby clothes specialists, Baby Pants and the Guersney Knitwear company, all micro businesses. These companies, who have engaged in disintermediation, will be manufacturing on a small scale and therefore may not have the capacity to sell to high street retailers. Such findings support Reynolds (2000) point that disintermediation is more likely to occur in specialised markets. With regards to supermarkets, none of these retailers identified in the survey sold any of their fashion products online. Of the retailers in the survey who were classified as department stores (28 in total), three quarters of these had a web presence with seven retailers in total a transactional facility. Given that many fashion goods sold within department stores are sold via concessions, may explain why these retailers were not selling online.

Conclusion From the results it can be concluded that a relationship exists between Web site functionality and specific characteristics of fashion retailers. Whilst product specialist retailers, designers, general merchandisers and general fashion retailers all have a strong presence on the Internet, transactional retailers were predominantly made

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Identification of UK fashion retailer use of Web sites

International Journal of Retail & Distribution Management

Ruth Marciniak and Margaret Bruce

Volume 32 · Number 8 · 2004 · 386-393

up of product specialist retailers who were multiple, independent, mail order or pure play retailers. However it is the product specialists who have the greatest visibility online and are exploiting the Internet the most in terms of its transactional capabilities. Further to this, many of the pure play retailers are product specialists either selling manufacturers’ brands or alternatively, micro manufacturing businesses, by passing the retailer, selling to niche markets. In general, own brand fashion multiples and the fashion designers web sites are informational therefore not fully exploiting the full interactive potential of the Internet, one reason may be that the designers and aspirational multiples wish to protect their brand image. Here it can be concluded that, as established earlier, whilst branding has become an increasingly important feature of fashion retailing, this study suggests that in terms of selling online, it is currently product focus that is significant. In all, multi-channel retailing in the UK is extensive evidenced by the numbers of multiples, independents, department stores, designers and mail order retailers who have a Web presence. It has been forecasted that traditional “bricks” retailers will lose substantial business to Internet shopping (Dennis et al., 2002). However further research is warranted in order to understand better how these multi-channel retailers manage all their various channels to market. For instance, what synergies are made between the various channels? Also, how is the retail brand managed between the various retailer’s channels?

Dennis, C., Harris, L. and Sandu, B. (2002), “From bricks to clicks: understanding the e-consumer”, Qualitative Market Research, Vol. 5 No. 4, pp. 281-90. Easey, M. (2001), Fashion Marketing, Blackwell, Oxford. Ellis-Chadwick, F., Doherty, N. and Hart, C. (2002), “Signs of change? A longitudinal study of Internet adoption in the UK retail sector”, Journal of Retailing and Consumer Services, Vol. 9, pp. 71-80. Feinberg, R.A., Kadam, R., Hokama, L. and Kim, I. (2002), “The state of electronic customer relationship management in retailing”, International Journal of Retail & Distribution Management, Vol. 30 No. 10, pp. 470-81. Fernie, J., Moore, C., Lawrie, A. and Hallsworth, A. (1997), “The internationalisation of the high fashion brand: the case of Central London”, Journal of Product & Brand Management, Vol. 6 No. 3, pp. 151-62. Hargrave, S. (2003), “NETAPORTER: designer solutions”, New Media Age, 18 September, pp. 22-4. Hollander, S. (1970), Multinational Retailing, Michigan State University, East Lansing, MI. Huizingh, E.K.R.E. (2002), “The antecedents of Web site performance”, European Journal of Marketing, Vol. 36 No. 11, pp. 1225-47. Jackson, T. and Shaw, D. (2000), Mastering Fashion Buying, Palgrave Macmillan, London. Keynote (2002), Clothing Retailing, Keynote Publications, Hampton. Marketing Week (2003), “E-commerce continues to accelerate”, Marketing Week, 29 May. Mintel (2002a), Home Shopping, Mintel Publications, London. Mintel (2002b), Designer Wear, Mintel Publications, London. Mintel (2003), Clothing Retailing: UK, Mintel Publications, London. Moore, C.M. (1995), “From rags to riches: creating and benefiting from the fashion own-brand”, International Journal of Retail & Distribution Management, Vol. 23 No. 9, pp. 19-27. Moore, C.M. and Burt, S. (2001), “Developing a research agenda for the internationalisation of fashion retailing”, in Hines, T. and Bruce, M. (Eds), Fashion Marketing, chapter 3, Butterworth-Heinemann, Oxford. Rees, S. (2002), “Online support”, Revolution, 18 September, pp. 23-5. Retail Knowledge Bank (2002), Directory of Fashion Retailers in the UK, 2001-2002, Retail Knowledge Bank, London. Reynolds, J. (2000), “E-commerce: a critical review”, International Journal of Retail & Distribution Management, Vol. 28 No. 10, pp. 417-44. Reynolds, J. (2002), “Charting the multi-channel future: retail choices and constraints”, International Journal of Retail & Distribution Management, Vol. 30 No. 11, pp. 503-35. Schneider, G.P. and Perry, J.T. (2000), Electronic Commerce, Thomson Learning, Cambridge, MA. Schoenbacher, D. and Gordon, G. (2002), “A multi-channel shopping: understanding what drives channel choice”, Journal of Consumer Marketing, Vol. 19 No. 1, pp. 45-53. Siddiqui, N., O’Malley, A., McCall, J.C. and Birtwistle, G. (2003), “Retailer and consumer perceptions of online fashion retailers: Web design issues”, Journal of Fashion Marketing & Management, Vol. 7 No. 4, pp. 345-55. Ward, M.R. and Lee, M.J. (2000), “Internet shopping, consumer search and product branding”, Journal of Product & Brand Management, Vol. 9 No. 1, pp. 6-20.

References Alba, J., Lynch, J., Janiszeski, C., Lutz, R., Sawyer, A. and Wood, S. (1997), “Interactive home shopping: consumer, retailer and manufacturer incentives to participate in electronic marketplaces”, Journal of Marketing, Vol. 61 No. 3, pp. 38-53. Berman, B. and Evans, J.R. (2001), Retail Management: A Strategic Approach, 8th ed., Prentice-Hall, Englewood Cliffs, NJ. Birtwistle, G. and Freathy, P. (1998), “More than just a name above a shop”, International Journal of Retail & Distribution Management, Vol. 26 No. 8, pp. 318-23. Burt, S. and Sparks, L. (2003), “Competitive analysis of the retail sector in the UK Institute for Retail Studies”, report submitted to the Department of Trade and Industry, London. Cox, R. and Brittain, P. (2000), Retail Management, Pearson Education, Harlow. Dall’Olmo Riley and Lacroix, C. (2003), “Luxury branding on the Internet: lost opportunity or impossibility?”, Market Intelligence & Planning, Vol. 21 No. 2, pp. 96-104.

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Fashion and commerce: a historical perspective on Australian fashion retailing 1880-1920 Dale Miller and Bill Merrilees

The authors Dale Miller is a Lecturer and Bill Merrilees is Head, both at the School of Marketing and Management, Griffith University, Gold Coast Campus, Bundall, Australia.

Keywords Fashion, Retailing, Australia

Abstract Fashion retailing has evolved in response to opportunities and market pressures. It has been both reactive and proactive. For example, Palmer, in 2001, analyses what might be called a partnership between Canadian department stores and European couture houses in the 1950s. Her work affords a rare overview of retailing’s fit with fashion design and commercial delivery systems, and is a point of departure for closely examining an earlier period (1880-1920) in Australia. The current paper studies the leading role that department stores played in shaping the Australian fashion scene and the marketing techniques they used. A context, period and country, where a set of major retailers formed the predominant influence on fashion trends, and styles and diffusion throughout the community have been identified. Findings suggest that for the 1880-1920 period the department store retailers were market-driving rather than simply market-driven, implying a more proactive and innovative role for the department stores.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0959-0552.htm

International Journal of Retail & Distribution Management Volume 32 · Number 8 · 2004 · pp. 394-402 q Emerald Group Publishing Limited · ISSN 0959-0552 DOI 10.1108/09590550410546214

Introduction Fashion, like most industry sectors, moves through cycles. In each upswing, key catalysts make major contributions to driving change. For example, the Paris-based couture houses in the late 1940s and 1950s were a significant catalyst to the fashion revolution in that period (Lehnert, 2000). The immediate post-second World War period has attracted noteworthy interest from a fashion marketing perspective. The current paper analyses an earlier fashion revolution (1880-1920) and a different catalyst (department stores) in the Australian context. In the 1880-1920 period, fashion retailing emerged as a mass marketing phenomenon, spanning the upper end carriage trade with an emphasis on high quality custom-made (made-tomeasure) tailored clothing and evolving forms of quality ready-to-wear clothing. Moreover, a growing Australian middle market embraced a better grade of ready-to-wear clothing than the “slops” (loose, basic clothing) worn by common folk in the 1830s to 1870s. The means of acquisition of fashionable clothing suited to the colony was augmented by a considerable retail trade in the prerequisites for making clothing, either in the home or by local seamstresses. The last facet was facilitated by access through retail outlets and their mail order catalogues to popular brands of paper patterns, the provision of fabric pattern samples and the increasing availability of the sewing machine. The nature of these developments implies a major catalyst to the mass marketing phenomenon. By the 1880s, department stores had evolved in Australia from family drapers (David Jones, Farmer & Co.), ironmongers (F. Lassetter), and milliners (Anthony Hordern and Sons). Without the forceful, dominant role of department stores in the 1880-1920 period, the mass marketing fashion explosion would have been more of a whimper. Department stores took the initiative to lead fashions, especially clothing and accessories, and homewares. The thesis of this paper is that the widespread and aggressive move of department stores into fashion heralded the first serious mass marketing fashion revolution, in the 1880-1920 period. The choice of period is important for three reasons. First, the literature focuses more on later periods, so there is a gap to address. Two, the department store as mass merchandiser flourished worldwide in this period. Three, rich archival and secondary The authors gratefully acknowledge the assistance of Barbara Horton, archivist, David Jones archive and the permission granted to access and research in the archives and to publish their findings.

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Fashion and commerce: a historical perspective on Australian fashion

International Journal of Retail & Distribution Management

Dale Miller and Bill Merrilees

Volume 32 · Number 8 · 2004 · 394-402

data are available. Although we primarily use Australian examples, similar trends are evident in other countries, including Canada, USA and UK (Adburgham, 1981; Benson, 1986; Brash et al., 1985; Briggs, 1984; Dunstan, 1979; Lancaster, 1995; Mulvey and Richards, 1998; Santink, 1990). The paper also presents the marketing techniques and methods used by department stores to propagate this fashion marketing revolution.

There was a subtle distinctiveness in Australian dress that was not merely an uncritical acceptance of European taste, but one generated by local women and unique to the colonies (Maynard, 1994, p. 87).

Historical overview of fashion: the role of designers, celebrities and society Prior to 1920, designers such as Charles Worth (from 1857), Paul Poiret (from 1903) and Jeanne Lanvin periodically influenced international western fashions. An erudite survey from the 1890s is provided by Mulvey and Richards (1998). Clothing was inextricably linked with social status through “a strict stratification of dress according to status” (Mulvey and Richards, 1998, p. 16). Royalty and wealthy aristocratic women influenced fashion. Close association with celebrities including prominent singers, dancers and actors, further reinforced the glamour aspects of fashion. Furthermore, the rapid industrialisation of society meant increased prosperity and greater opportunities to participate in leisure activities. For women the challenge was to find appropriate clothing for recreation and active sports (Mulvey and Richards, 1998, pp. 16-17). The changing roles of women in society included greater participation in education, employment and social activities. In the 1920s designers became more influential on the fashion scene. Jean Patou, Paul Poiret, Coco Chanel and Madeleine Vionnet were famous in the 1920s, followed in later periods by, inter alia, Christian Dior, Pierre Balmain and Yves Saint Laurent (Lehnert, 2000; Mulvey and Richards, 1998). Two works help to situate the unique Australian position (Joel, 1998, Maynard, 1994). Western fashion in Australia had its genesis in the founding of the first colony in 1788, when a Western culture was “grafted onto an alien country” (Joel, 1998, p. xii). There are divergent views on the relationship between Australian fashion and English fashion in the nineteenth century. Joel (1998) posits that many dress standards expected in England were maintained in Australia. These standards were exemplified for example when “jutting bustles, jewel colours and elegant, tall hats were much in evidence” in the 1887 painting of Melbourne Cup Day by Carl Kahler (Joel, 1998, p. 23). Conversely, Maynard points out that:

Colonial consumers had to negotiate the paradox of maintaining European dress standards at a distance from their origins in a temperate climate. Ebbett (1977, p. 2) argues that New Zealand was “. . . so unsuited to the fashions of the times – no proper roads, dense bush, raging rivers, mud everywhere”. The nineteenth century Australian social environment became quite complex, with a mix of free settlers and emancipists (freed convicts), and increasing prosperity. Moreover, the clothes people wore did not necessarily reflect their social position accurately. Maynard explains that: . . . in a society where both the elite and the newly rich could afford elaborate clothing, but where there was no inherited aristocracy, the conspicuous display of wealth . . . did not necessarily aid in the demarcation of class boundaries (Maynard, 1994, p. 97).

She argues that Australian women were strongly influenced by Parisian fashion, and that middle class women were keenly interested “within the constraints of their individual means” (Maynard, 1994, p. 86). Notwithstanding, news of English and Parisian fashions was slow to reach Australia prior to the introduction of steamship transport and telegraphic communications. Royal visitors like the Prince of Wales in 1867, and the Duke and Duchess of Cornwall and York in 1901 and later celebrities like actor Nellie Stewart (Joel, 1998) displayed what were perceived as the latest fashions. The influence of designers was somewhat less significant in Australia partly because of the problems of distance from Europe. Charles Worth did dress some prominent Australian women including Nellie Melba and Lady Anderson Stewart, according to Joel (1998). The Australian market context of the period was characterised by rapid expansion in the retailing sector, in response to population growth and the introduction of the department store format, with its vast merchandise assortment. Changes in transportation and communication in the early 1900s meant that European fashion trends could be recognised early, and fashions could be imported more quickly. Furthermore, the larger department stores like David Jones, had commenced some local manufacturing along the lines of European fashion. Depending on the quality of the chosen fabrics, customers could purchase the custom-made garments at premium or mid-price, in a type of early democratisation of fashion.

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Fashion and commerce: a historical perspective on Australian fashion

International Journal of Retail & Distribution Management

Dale Miller and Bill Merrilees

Volume 32 · Number 8 · 2004 · 394-402

Fashion and commerce The intersection of fashion and commerce can be inferred from a review of some of the department store literature. Also, department store archives, together with museums and art works are helpful sources of artefacts, documents, references or samples. Social and historical studies of fashion give limited treatment to the interface between fashion and commerce. Often, overt fashion studies simply acknowledge the rise of department stores as a means of catering to the requirements of fashionable women. Early evidence of the fashion-commerce interface was the series of world fairs and international exhibitions, held from the mid-1850s in locations ranging from London, Paris, Chicago, and Toronto, to Sydney. They displayed the plethora of manufacturing achievements that dominated the period from the 1850s to 1920s, and influenced fashion. Department store retailers like Marshall Field in Chicago helped in the distribution of fashion to the consumer (Mulvey and Richards, 1998, p. 11). In the Australian context, the climate and the geography of Australia demanded adaptation in clothing. From the early days of the colony, retailers recognized this need, and adjusted their ordering from London accordingly. For example, David Jones wrote to Stephen Nutter, his London agent that: Trade continues very brisk with us . . . Slops are much in demand I am astonished of the quantity we sell . . . (DJA2, David Jones, 27 November, 1838).

Slops were ready-made but often ill-fitting and drab, and were worn by convicts and free settlers, as well slops suits were popular (Maynard, 1994, p. 162). The loose unstructured fit probably contributed to their popularity especially in the summer heat. Certainly there was demand for lighter weight fabrics in the colony (DJA2 18381839; Maynard, 1994). Joel (1998) goes further than most other studies. She notes that simpler shapes and sizing strategies helped department stores develop their mail order business and that three sizes of women’s clothing dominated the 1914 Buckley and Nunn Melbourne catalogue. This limited offer was augmented by the potential for individual adjustments at additional cost (Joel, 1998, p. 63). Some social researchers claim that the retailing establishments went too far in tempting women to make fashion purchases (see Reekie, 1993). This purported problem was seen as primarily gendered with male department store owners and managers portrayed as manipulating female staff and customers. In counterpoint, Australian

department stores were an important source of employment for growing numbers of women. They offered better wages, conditions and training than the main occupational alternative of domestic service. Probably the most well researched and comprehensive analysis of the association between department stores and the haute couture industry is Palmer’s Canadian study (2001). She notes that many Canadian women in the 1950s preferred to buy couture locally as it gave them time to think and they could try on before buying. In Toronto, Eaton’s, Simpson’s, and Holt Renfrew placed great emphasis on the interior design of their couture departments, creating a luxurious atmosphere where the customer felt pampered (Palmer, 2001, p. 58). The private consumption of haute couture can be viewed as a specialised undertaking, with an emphasis on etiquette, time, money, setting, social connections, relationships and in-store services like alterations, all integral to a purchase (Palmer, 2001, p. 63). The department store purchasing system of couture is described clearly by Palmer (2001). Eaton’s for example had buying offices in London, Paris, Dublin and New York. The buyers worked through agencies in Paris. The agencies arranged for clients to be accompanied to the couture house. They made contact with the vendor, took a commission and handled ordering, delivery and dispatch (Palmer, 2001, p. 76). Regular buying trips to Europe from Canada were a treasured part of a retail couture buyer’s role. In the early 1950s, the President of Holt Renfrew accompanied buyers to select couture merchandise in Paris (Royal Ontario Museum, 2003). Such high-level involvement helped Holt Renfrew achieve an exclusive Canadian licensing agreement in May 1952 to sell Christian Dior clothing and accessories. Eaton’s created the Fashion Bureau to promote and co-ordinate the fashion image for the store. Training was accomplished through manuals and demonstrations and through fashion shows. There was always a staff preview of the Fall and Spring fashion shows, important for introducing new merchandise, trends and styles to Eaton’s employees (Palmer, 2001, p. 92): The value of (the leading department stores) featuring couture in fashion shows and having it worn by the leading socialites who patronized the store went beyond dollars and sense. Having these clothes available demonstrated a merchant’s link to European design and raised the store’s profile and cultural identity in Toronto (Palmer, 2001, p. 71).

Canadians favoured the British notion of fit, which was less restrictive than that of French or Italian designs. British evening wear was widely sold in Canada, with the simpler but more colourful

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designs of the Queen’s designer, Norman Hartnell, admired (Palmer, 2001, p. 97). Canadians also valued the detailed workmanship of Italian designs that were available below French prices. Holt Renfrew “. . . secured an exclusive Canadian licence to sell Simonetta Visconti and Fabiani designs” (Palmer, 2001, p. 106). The literature reveals some of the perspectives of the department store buyers, and of their customers. One emerging idea is that of local adaptation in terms of both fashion and commerce and the interface between the two in the department store.

opened in 1838. Available archival materials embrace catalogues (from the late 1800s), detailed and frequent board minutes and annual reports from incorporation in 1906, wide-ranging advertising and newspaper files, diaries of the family owners and correspondence. As such, the evidence takes on a longitudinal nature, and for the purposes of this study, material covered four decades of department store fashion retailing activity.

The thesis presented

Department store retailers used many marketing techniques in the 1880-1920 period to project their influence on Australian fashion styles. The techniques included press advertising, catalogues, fashion-specialisation, idiosyncratic promotions (like post cards or silk fans), expert staff, ownbrands, control of product sourcing and window and internal displays of merchandise. “What’s in store?”, a shopping history exhibition at the Powerhouse Museum, Sydney (2003) demonstrates how major Sydney “stores competed for a unique identity and customers” using giveaways such as tape measures (Grace Bros early 1900s), medallions to celebrate Queen Victoria’s Diamond Jubilee (Gowings, 1897), and makeup mirrors (F. Lassetter & Co.). The aim was to stimulate trade with souvenirs. Press advertising was the most vibrant influence, with bold, large advertisements, especially in the daily newspapers of Sydney and regional Australia (DJA3). The advertisements made clear where the centre of gravity was in the fashion area and what styles were in vogue. Catalogues performed a similar role and were impressive because of the enormous space allocated to fashion products and the details describing each product. The sheer size of the catalogues (with Anthony Hordern & Sons having the largest) exuded authority as fashion leaders. Catalogues emphasised fashion, new season and special occasions such as weddings. Dominant themes emerge in the Grace Bros. catalogues (see Brash et al., 1985). First, the illustrations and the text depict the high quality clothing available. For example, The Model Trade Spring Fashion Number July 1912 catalogue promoted “Cool summer frocks direct from our own factory . . . and only the best workmanship is used. They are not slop made” (Brash et al., 1985, p. 85). By inference, these clothes were tailored designs. Second, the cover of a 1913 catalogue highlights the connection between fashion and society, using the phrase “The Broadway girl at Government

The history of fashion is often associated with the role of particular designers. In contrast, the role and contribution of fashion retailers (including department stores) is either subservient or omitted altogether. As shown, a major scholarly exception to this portrayal of retailers is Palmer’s (2001) study. Focusing on couture merchandising (which was only a fraction of total fashion sales), Palmer weaves a strong thread demonstrating more of a partnership between the couture designers and the department stores. Importantly, Palmer positions the retailers in a relatively active and vibrant role. The current study examines a different context, country and period for fashion retailing. The research design was a longitudinal retrospective qualitative study using thematic analysis of data derived from archival material. The template for the thematic analysis was a fashion marketing framework. Australia is similar to Canada in terms of having a Commonwealth heritage and being some distance from the fashion heartland. The period of 1880-1920 embraces an earlier situation in a different context. Fashion was then in a more embryonic stage, with limited history in terms of mass marketing. The couture houses had a more limited role, as did national manufacturers of fashion goods and indeed most of the players that were to become dominant in the 1950s. It is in this vacuum that department stores stepped in. The roles of the Australian department store retailers not only encompassed the distribution of fashion goods. They were instrumental also in selecting and promoting and even designing particular fashion styles and trends. The current study uses various secondary works and department store archival records (see Archival References DJA1-9). David Jones, Australia’s longest surviving department store has a rich and comprehensive archive, which is one of the top three department store retailing archives in Australia. The firm’s roots were in a drapery

Marketing techniques and methods used by department stores

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House” with an illustration of a fashionable and regal young woman outside Government House (Brash et al., 1985, p. 10). Third, the Autumn and Winter 1920 catalogue entitled Fashion’s Dictates by Grace Bros. Limited, provides authority in helping women answer the question “what is correct in the world of fashion” (Brash et al., 1985, pp. 116-117). Fourth, the Grace Bros. fashion authority was very detailed about styles, fabric pattern and colours. To illustrate, The Model Trade Souvenir Number (July 1908) catalogue advises that: Stripes are much worn in all materials for dresses, stripe flannels for coats and skirts, narrow stripes (not any wide stripes) in striking colors at present. . . . The favourite colors this season appear to be moss, banana, pastel blue, cinnamon, pale grey, reseda and heliotrope (Brash et al., 1985, p. 65).

Grace Bros. was not unique in its use of catalogues to promote fashions. The extensive David Jones catalogue collection reinforces the fashion-forward nature of the department store offerings (DJA1). For example in Shopping by Post Guide Winter 1899, David Jones addresses fashion notes to the customer stating they have obtained “the best information from the London and continental sources of fashion”, and the fashionable fabrics, colours, and the popularity of tailor-made skirts and jackets (DJA1, 1899). Other department stores issuing significant fashion catalogues were Farmers in Sydney and Buckley and Nunn in Melbourne. Fashion specialisation was common among Sydney’s department stores, and most evident with two upmarket stores (David Jones and Farmers). Some of the smaller department stores were almost exclusively fashion. For example, Sydney Snow Ltd: . . . announced in 1912 the opening of a new retail store whose aim was to cultivate and captivate the ladies of Sydney. . . . This bright and attractive store . . . drew a varied group of customers who were enticed by its individual style of merchandise and its up-town location (Pollon, 1989, p. 164).

Georges was positioned as an upmarket Melbourne department store. Dunstan (1979) shows that although they had always kept women’s needs at the forefront, from 1908 Georges formally shifted from a universal provider to a fashion store. The store was redesigned with a white and green colour scheme of decorations and an innovative ladies’ club room, with luxurious armchairs, carpet, gas fire, writing tables and a reading table with magazines (Dunstan, 1979, p. 56). The store boasted well appointed showrooms, including a millinery showroom said to be “the finest in Australia” according to a store brochure (Dunstan, 1979, p. 56). An interesting innovation was:

. . . [a] Private showroom . . . [where] “the exclusive and choice” models were shown to ladies “privately” before being displayed in the showrooms or windows (Dunstan, 1979, p. 56).

Although less important, other promotions supported the fashion emphasis. For example, the David Jones Archive holds a delicate silk 1907 fan put out by David Jones as a promotion (DJA4). By inference, such souvenirs were distributed with the intention of increasing the association of the department store to fashion expertise. Postcards were another marketing tool. In Picture Postcards of Australia 1898-1920 Cook (1986) argues they were very useful for: Simple purposes, such as the confirmation of orders, besides being an excellent display for the advertisers’ message. The Sydney store of F. Lassetter and Co. Ltd produced an excellent set of cards which was used to inform customers of the despatch of goods or the receipt of orders, as well as promoting different departments of the store, and their products, by attractive illustrations. . . . Many of the larger stores . . . issued their own promotional cards. Lassetters in Sydney was joined by Mark Foys, David Jones, Grace Brothers and Anthony Horderns (Cook, 1986, pp. 33, 37).

In 1884, David Jones produced coloured postcards featuring beautiful etchings of current fashions. Each postcard depicted one costume design worn by an elegant lady in a garden setting, and the obverse listed specific information on prices for the costume depending on the materials used (DJA4). Millen’s informative investigation of Kirkcaldie and Stains, a department store in Wellington (New Zealand) explains that: Collecting and sending postcards was very fashionable around the turn of the last century. . . . Throughout 1904, a series of superbly printed cards of a little girl was used to advertise the store’s sales and special promotions (Millen, 2000, p. 72).

In a slightly different use of postcards, Gowings, a quasi-department store, sent postcards “. . . to acknowledge customers’ orders in 1912” (Gowing, 1993, p. 31). The front of the card is a photographic representation of “a corner of our tailoring department, including trimming tables” (Gowing, 1993, p. 31), reassuring customers of the extensive range of fabrics available. Availability of expert staff with fashion knowledge was extremely important. Consumers were only gradually entering the world of high quality ready-made clothing and lacked experience in choosing style and fit. Advice given by expert staff was thus invaluable. To illustrate, the 1918 Grace Bros. catalogue proclaimed that customers could avail themselves of the services of Madame Joan “. . . a designer whose skill is equal to that of

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the style-creators of Paris” to reflect their own individuality and personality (Brash et al., 1985, p. 106). In Australian department stores, own brands had commenced in the late 1800s. David Jones in particular made strong use of their “Orient” brand for men, emphasising the quality and affordability of ready-made suits. The 1903 catalogue reveals a number of own brands, including socks and underwear (DJA1). Such brands escalated over the next two decades. Manufacturer brands were not dominant, and the use of own-brands was a very strategic, pioneering and clever way of shaping the fashion landscape. Control over product sourcing was also very important in controlling and influencing the fashion scene. Much stock was imported from the UK and to a lesser extent continental Europe. Many larger department stores did not use intermediaries, but instead did their own sourcing through overseas buying offices. By 1880, David Jones had buying offices in London, Paris, Lyon and Grenoble (DJA4). Co-operative overseas buying occurred when, for example, New Zealand department store retailers Milne and Choyce (Auckland) and Ballantynes (Christchurch) used the David Jones London Buying Office. Apart from being more economical to buy directly, the buying offices enabled the Sydney-based department stores to control the range of styles and materials sent for Sydney’s fashion consumers. David Jones highlighted this aspect of their business in catalogues. The Autumn and Winter Fashions 1903 catalogue explains: This year, our selections merit special attention, having been purchased directly by our London Representative, Mr T.G. Brocklehurst, for many years our General Manager in Sydney (DJA1, 1903).

Window and internal displays of merchandise added to the power of the department stores in swaying fashion tastes. Edward Lloyd Jones (I), the son of the firm’s founder was by 1876 a partner in David Jones, when he travelled to America and England. His diary for the trip records visits to major department stores, and retailers including Field Leiter & Co. (predecessor to Marshall Field’s) in Chicago, A.T. Stewart, Macy’s and Lord and Taylor in New York, and Kendal Milne and Marshall and Snelgrove in England (DJA7, 1876). He was inspired by display techniques especially the use of plate glass windows and elegant signage. Photographic evidence from about 1910 onwards reveals that increasingly, stock was moved from drawers and displayed more openly (DJA8).

The special case of “ready-to-make” In the late 1800s, paper patterns emerged as a method of selling, linked to the gradual spread and increasing affordability of sewing machines. Department stores facilitated the adoption of pattern-based, home-made clothing, through the sale of paper patterns, fabrics and notions (zippers, thread, hooks, buttons) and sewing machines. Customers ordered paper patterns and requested samples of current materials by post (DJA1). Furthermore, David Jones secured the exclusive agency for Buttericks paper patterns in about 1910 (DJA5). Department stores had a multi-faceted approach to influencing the fashion scene. In addition to pattern-based clothing, department stores were leaders in made-to-measure tailoring and in high and medium quality ready-to-wear clothing. A fourth fashion arm, termed ready-tomake, supported the three-pronged approach (DJA1). Ready-to-make represents an era in fashion design that appears hitherto not discussed in the Australian fashion literature. Our investigations in the David Jones archives uncovered an era spanning 1903-1915 (DJA1). Research reveals references to ready-to-make in catalogues from 1903, 1908 and 1911 (DJA1). The 1907 Minute Book (DJA5) shows the concept was extended from blouses to dresses, and a 1913 departmental review (DJA6), confirms that the ready-to-make department was still in existence. The nature of ready-to-make is that the customer selected a style and fabric and, for a small additional fee, the garment was cut out, and thus was “ready-to-make”. For example, the Autumn and Winter Catalogue 1908 of David Jones emphasises that: Home dressmaking [is] made easy by our ready-tomake department. For an extra cost of 1/2 on Materials purchased at our house any garment may be cut to your measure and sent all ready to sew up at the machine. Every tuck or pleat, together with any trimming used, are all pinned into position. There is little fitting or adjusting required, and no trouble with paper patterns. . . . Fill in the Selfmeasurement Form accurately, and you will find no difficulty in making a success of any garment you may order (DJA1, 1903, pp. 98-99).

The catalogue offered a modest range of ready-tomake lines. The selection provided a choice of three blouses (one “pretty”, one “extremely smart” and the third “very serviceable and always popular”); one “very dainty dressing jacket”; one “very pretty costume”; a “charming coat and skirt of newest shape”; a “stylish coat” and three skirts variously described as “new circular skirt”, “very

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graceful skirt” and a “useful nine-gored skirt” (DJA1, 1903, pp. 98-99). The buyer’s guide to The White House Autumn and Winter Number 1911 David Jones Ltd shows greater complexity in the range of ready-to-make lines. Each line is also more technically complex, which may explain variations in cutting costs. Instead of one price for cutting, in 1911 a scale was used from 6d. for cutting lining, 1/2 for blouses, 1/ 6 for skirts, 2/2 for costumes, 2/6 for evening dress, and 3/6 for coat and skirt (DJA1, 1911, pp. 62-63). The promotional description in the 1911 catalogue shows increased sophistication:

because of a trend to fashion consciousness, a trend that they themselves stimulated. Other influences complemented the success of the department stores, and ranged through specialist fashion stores, dressmakers, manufacturers and wholesalers, couture houses, fashion magazines and newspapers of the day. The escalating availability of fabrics of diverse characteristics in terms of colours, patterns, textures and durability, and the introduction of domestic sewing machines added choices for the consumer. Moreover, the changing socioeconomic situation for women in terms of greater participation in the workforce suggests they had more disposable income to devote to their wardrobes. To illustrate, E. Way and Company imported much of their goods and gradually developed into an elegant store, known for its warm relationship with customers (Pollon, 1989, pp. 133-135). It was a large specialist fashion store as shown by The Latest Designs in Costumes and Millinery: Season 1890-1891, a catalogue unearthed in the David Jones Archive. The assortment featured women’s and children’s wear. The catalogue shows an emphasis on “. . . the latest Paris and continental designs” for made-to-measure, and “a nice assortment of ready-made costumes in stock with the bodices made or unmade” (DJA9, 1890-1891, pp. 6, 10). The catalogue shows that the merchandise selection covered costumes, fabrics and trims, millinery, jackets, elaborate children’s outfits, corsets and “ladies’ underclothing and baby linen”. The cover gives addresses in London and Paris, apparently buying offices. Magazines such as Weigel’s Journal of Fashion (Dunstan, 1979, pp. 42-43) and The Australian Home Journal provided authority and guidance on fashions. The latter was issued monthly and each edition incorporated advice, pattern offers, and extensive fashion advertising by department store retailers (for example The Australian Home Journal, 1904, 1917).

The home dressmaker helped by our ready to make department. Our ready-to-make department or cut-out department is devoted entirely to cutting out garments to ladies’ own measurements from materials purchased here – and pinning them together as far as possible, ready to be sewn up. To the home dressmaker this department is an immense help and saving – you secure a good cut and perfect fit; you save the cost of the paper pattens and there is no risk of faulty cutting. Patterns of materials are sent gratis and post free to any address, and a book of styles (DJA1, 1911, p. 62).

Customers of this service could be measured in the store or send their measurements on the selfmeasurement form provided. From the retailer’s point of view, the materials were pre-cut according to a particular design, and it was mainly a matter of the customer sewing the materials together to form the garment. As such, ready-to-make involved more processing by the retailer, than simply pattern-based clothing, but less processing than ready-to-wear or made-tomeasure. Ready-to-make was an innovative fashion process, with the department stores seizing the opportunity of offering a greater service than pattern-based clothing, but allowing some customers to spend less money than would be necessary with either quality ready-to-wear or made-to-measure. No other party in that period other than the retailer could provide such a fashion service, relying on the skilled cutters and design judgement possessed by the department stores.

Market-driven or market-driving? Complementary influences on the mass marketing fashion revolution, 1880-1920 The department stores spearheaded the mass marketing of fashion. This paper demonstrates the powerful fashion role exerted by large-scale department store retailers in Australia in 18801920. The fashion influence of the Australian department stores stemmed from their strong market position. They were able to succeed partly

Much conventional marketing theory and practice assumes the virtue of an organisation being market-driven. Market-driven means that the marketing activities focus on the need to satisfy the customer. That is, the firm should be reactive or responsive to the needs of consumers. The concept of a firm being market-driving, an alternative perspective, has recently emerged (for example, Kumar, 1997). Market-driving means that firms are not simply reactive to consumers,

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but rather take the initiative developing new products or services. Although not a major theme of fashion marketing literature, arguably market-driving is very apt for the fashion industry, particularly in light of the short duration cycles and discontinuity of many fashion products. In other words, it is up to designers or those commissioning the designs to take radical and risky steps in projecting their own vision of the future. It is very much a proactive rather than a reactive approach to marketing. Applying this thinking to 1880-1920, it is apparent that department stores were marketdriving rather than market-driven. First, no market research industry or discipline conducted what today would be standard surveys of consumers’ thoughts about fashion products. Second, the mass-market for fashion products was embryonic, until about 1910. There was a restricted history of large-scale fashion marketing experience, especially from the consumer’s perspective. Consumers had limited skills in judging the quality and appropriateness of clothing, relying on professional salespeople for guidance. The appropriateness issue spanned the many occasions for which different fashion attire was needed, depending on whether it was for lunch, afternoon tea, evening or a special event (like weddings or mourning). Third, there were few other fashion facilitators besides the department stores, with limited scope for manufacturer brands, specialist fashion shops and fashion magazines.

make was a cutting service based on materials and fabrics purchased in-store. As such, it enabled consumers the option of getting quality garments at a cheaper cost than buying the equivalent readyto-wear product. It was ingenious because it enabled the department store to better satisfy a particular segment of fashion consumer, to increase sales of the store’s fabrics and to provide another avenue for influencing/dictating the fashion styles in vogue. Ready-to-make is thus symbolic of the interplay between fashion and commerce, the outcome of a more proactive or market-driving role played by department stores in the 1880-1920 epoch.

Conclusions The paper studied the role of department stores as a catalyst in the mass marketing fashion revolution in Australia in 1880-1920. Using historical analysis the department stores were shown to have used a wide variety of marketing techniques, including advertising, catalogues, postcards, staff expertise, own brands and displays, to exert a powerful influence on fashion tastes. The evidence from catalogues is particularly strong and leaves an indelible footprint of the presence of department stores. Own brands in clothing started to make their mark in the early years of the 1900s, when there were few national manufacturer brands. Product brands of any source were not a dominant force, allowing an even greater role for retailer brands, associated with the overall reputation of particular stores. The paper highlights an innovative practice used by Australian department stores, namely the offering of a ready-to-make service. Ready-to-

Archival sources David Jones Archives, Sydney, Australia The following signifiers are used: DJA1 Mail order catalogues (1899, 1903, 19031904, 190, 1911). DJA2 Letters (David Jones to Stephen Nutter 1838-1839) (transcriptions). DJA3 Newspaper advertising and clippings collection. DJA4 Ephemera collection including 1880 Calendar, 1884 Fashion postcards, 1907 Silk fan. DJA5 Board minutes 1906-1920. DJA6 Harwood report, 1913. DJA7 Diaries of Edward Lloyd Jones 1862, 1876, 1882-1883. Originals and some transcriptions are held. DJA8 Photographic collection. DJA9 E. Way and Company catalogue: The Latest Designs in Costumes and Millinery: Season 1890-1891.

References Adburgham, A. (1981), Shops and Shopping 1800-1914: Where, and in What Manner the Well-dressed Englishwoman Bought Her Clothes, George Allen & Unwin, London. (The) Australian Home Journal (1904), The Australian Home Journal, Sydney. (The) Australian Home Journal (1917), Sydney. Benson, S.P. (1986), Counter Cultures: Saleswomen, Managers, and Customers in American Department Stores, 18901940, University of Illinois Press, Urbana, IL. Brash, N., Burke, A. and Hoeben, C. (1985), The Model Store 1885-1985: Grace Bros: 100 Years Serving Sydney, Kevin Weldon, McMahon’s Point. Briggs, A. (1984), Marks & Spencer 1884-1984: A Centenary History of Marks & Spencer, the Originators of Penny Bazaars, Octopus, London.

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Cook, D. (1986), Picture Postcards in Australia 1898-1920, Pioneer Design Studio, Lilydale. Dunstan, K. (1979), The Store on the Hill, Macmillan, Melbourne. Ebbett, E. (1977), In True Colonial Fashion: A Lively Look at What New Zealanders Wore, A.H. & A.W. Reed, Wellington. Gowing, S. (1993), Gone to Gowings: A History of Gowing Bros, State Library of New South Wales Press, Sydney. Joel, A. (1998), Parade: The Story of Fashion in Australia, HarperCollins, Sydney. Kumar, N. (1997), “The revolution in retailing: from marketdriven to market driving”, Long Range Planning, Vol. 30 No. 6, pp. 830-5. Lancaster, W. (1995), The Department Store: A Social History, Leicester University Press, London. Lehnert, G. (2000), A History of Fashion in the 20th Century, Konemann, Cologne. Maynard, M. (1994), Fashioned from Penury: Dress as Cultural Practice in Colonial Australia, Cambridge University Press, Cambridge.

Millen, J. (2000), Kirkcaldie and Stains: A Wellington Story, Bridget Williams Books, Wellington. Mulvey, K. and Richards, M. (1998), Decades of Beauty: The Changing Image of Women 1890s-1990s, Hamlyn/Reed, New York, NY. Palmer, A. (2001), Couture and Commerce: The Transatlantic Fashion Trade in the 1950s, UBC Press in association with the Royal Ontario Museum, Vancouver. Pollon, F. (1989), Shopkeepers and Shoppers: A Social History of Retailing in New South Wales from 1788, Retail Traders’ Association of New South Wales, Sydney. Powerhouse Museum (2003), “What’s in Store? Shopping in Australia 1880-1930”, Exhibition, Sydney, 14 March-July. Reekie, G. (1993), Temptations: Sex, Selling, and the Department Store, Allen & Unwin, St Leonard’s. Royal Ontario Museum (2003), “Elite elegance: couture fashion in the 1950s”, 23 November 2002-4, May, curated by Alexandra Palmer, exhibition design by Yabu Pushelberg. Santink, J.L. (1990), Timothy Eaton and the Rise of His Department Store, University of Toronto Press, Toronto.

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Introduction

The secret to a fashion advantage is brand orientation Kerrie Brı¨dson and Jody Evans

The authors Kerrie Brı¨dson is Research Fellow in the Department of Marketing, The Australian Centre for Retail Studies, Monash University, Caulfield East, Australia. Jody Evans is Senior Lecturer at the Melbourne Business School, The University of Melbourne, Carlton, Australia.

Keywords Brands, Fashion, Competitive advantage, Product differentiation

Abstract The purpose of this research was to develop a comprehensive measure of brand orientation and empirically examine whether a fashion retailer’s brand orientation assists in explaining variations in its retail offer advantage over competitors. This study provides a conceptualisation and operationalisation of brand orientation within the context of fashion retailing. Four dimensions of brand orientation are introduced including distinctiveness, functionality, value adding and symbolic. The results suggest that the more brand oriented the fashion retailer, the greater its retail offer advantage over competitors. It concludes with new insights and suggestions for fashion retailers in driving greater differentiation and competitive advantage.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0959-0552.htm

International Journal of Retail & Distribution Management Volume 32 · Number 8 · 2004 · pp. 403-411 q Emerald Group Publishing Limited · ISSN 0959-0552 DOI 10.1108/09590550410546223

The fashion retail marketplace has attracted criticism for a lack of differentiation, possibly due to greater degrees of market concentration and the standardisation of the fashion retail offer across stores and regions (Birtwistle and Freathy, 1998). In addition, new technological developments have enabled fashion retailers to replicate competitor offers with relative ease (Fernie et al., 1997). Thus, fashion retailers face both a differentiation dilemma and a challenge in sustaining any longterm advantage over their competitors. One way that fashion retailers have sought to differentiate themselves from others and develop a sustainable competitive advantage is through branding not only the products, but the total store experience. Davies (1992) argues that for the store name or fashion label to be elevated to the status of a retail brand, it should perform four functions: (1) The ability to differentiate. (2) Command a price premium. (3) Have a separate existence to the corporation. (4) Provide a form of psychic value to customers. In the context of fashion retailing, these attributes are not independent from one another. For instance, many fashion retailers ranging from Benetton to Dior are able to differentiate their products and store experience from others through the psychic value they provide to customers. Moreover, the ability to transfer the retail brand to other products or store formats, as Victoria’s Secret and Gap have done, is often dependent on the strength of its psychic value. The price premium issue is becoming increasingly contentious in retail branding, as some fashion retailers (i.e. Top Shop and H&M) have attempted to differentiate their brand from competitors through a discounting position. This does not preclude the retailer from transferring the brand or providing augmented symbolic value to customers. Thus, a fashion retailer may still be considered a brand regardless of its pricing strategy. It is evident that fashion labels and retailers can be viewed as retail brands. While it is important to clarify the status of fashion retail brands, such discussion is of a predominantly descriptive nature. An issue of greater importance, which has more predictive implications for competitive advantage in the fashion retail sector, is the degree to which the organisation values brands and its practices are oriented towards building brand capabilities. Thus, the purpose of this paper is to develop a comprehensive measure of brand orientation and examine whether a fashion retailer’s brand orientation assists in explaining variations in retail offer advantage. The first section of this paper discusses the retail offer

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advantage, provides a conceptual background to brand orientation and presents a four dimensional model of the construct. The second section examines the relationship between a fashion retailer’s brand orientation and retail offer advantage. Following this, the research methodology is discussed and empirical evidence analysed. Conclusions are drawn and insights provided to guide fashion retailers in focussing their business efforts in the future.

the firm. Urde (1999) defines brand orientation “as an approach in which the processes of the organisation revolve around the creation, development and protection of brand identity in an ongoing interaction with target customers with the aim of achieving lasting competitive advantages in the form of brands” (p. 117). Hankinson (2001b) suggests that brand orientation can be conceptualised along a continuum. Consequently, brand orientation is defined as “the extent to which organisations regard themselves as brands and an indication of how much (or how little) the organisation accepts the theory and practice of branding” (p. 231). While Hankinson’s (2001b) and Urde’s (1999) definitions recognise the importance of branding and provide greater clarity, current definitions still fail to encapsulate the holistic orientation at the heart of the construct or capitalise on the extant brand conceptualisations. A review of the RBV literature suggests that most business orientations, such as market orientation, lack common conceptualisation. This is also evident in general models of the brand concept (de Chernatony and Dall’Olmo Riley, 1998b). The issue driving the different orientation conceptualisations is rooted in the lack of a common understanding of business orientations (from a philosophical or behavioural foundation) (Avlonitis and Gounaris, 1999). The philosophical foundation views brand orientation to be embedded in the organisation’s thinking and reflected in organisational values and beliefs. Conversely, the behavioural foundation concentrates on the orientation in terms of implemented behaviours and activities. Thus, brand orientation is conceptualised as a multidimensional construct encompassing the organisation’s values, beliefs, behaviours and practices towards brands. We propose that brand orientation can be best defined as the degree to which the organisation values brands and its practices are oriented towards building brand capabilities. Such capabilities include using the retail brand as a mark of distinction, a means of satisfying consumer’s functional purchase needs, a source of value adding and a symbolic reflection of consumers.

The retail offer advantage Johnson (1987) argues that retailers have essentially two bases upon which competitive advantage can be sought, namely, cost-focussed and market focussed. The cost and market focus are similar to Porter’s (1985) framework of generic strategies for achieving competitive advantage, which include cost leadership, differentiation and focus. The differential strategy is the foundation of the retail offer advantage construct examined in this study. Ghosh (1994) proposes that the creation of an advantage based on differentiation, which he refers to as differential advantage, is necessary in order for a retailer to survive in the current competitive climate. The success of fashion retail brands is often assessed in terms of the degree to which the organisation achieves a differential advantage (Schmitt, 1999). Retailers must not only achieve differential parity, they must give consumers superior reasons to visit their stores compared to their competitors (Ghosh, 1994). In the context of this study, retail offer advantage is the advantages fashion retailers’ achieve when they are considered superior or better than some point of reference (Hunt and Morgan, 1996). The retail offer advantage reference point to be used in this paper is consistent with Oppewal and Timmermans’ (1997) use of a retailer’s main competitor. In line with earlier studies (Walters and Knee, 1989), the dimensions of a retail offer advantage encompass four theoretical areas; merchandise, trading format, customer communication and customer service.

The brand orientation model Although limited by a small number of established definitions, existing definitions of the brand orientation construct have their roots in the traditional brand definition, encompassing elements of the marketing concept and the RBV of

Distinctiveness Through a review of retail and branding literature it was apparent that brands have the ability to be distinctive, such as acting as a symbol of ownership for legal purposes (de Chernatony and Dall’Olmo Riley, 1998a). This was identified by Goodyear’s (1996) early typology work, which refers to the brand as a means of identification and over time as a guarantee of consistency and a shortcut in decision-making. Brands, particularly fashion

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The secret to a fashion advantage is brand orientation

International Journal of Retail & Distribution Management

Kerrie Brı¨dson and Jody Evans

Volume 32 · Number 8 · 2004 · 403-411

brands, can also be distinctive enough to be extended to merchandise, new selling mediums and trading formats. Such activities can be referred to as an organisation’s distinctive brand capabilities. Distinctive capabilities were based on the identification of critical values and beliefs about the roles brands play in the organisation. These include as a sign of ownership, guarantee, shorthand device, legal protection, logo and resource. Brand researchers consistently refer to these distinctive attributes (Bhat and Reddy, 1998; de Chernatony and Dall’Olmo Riley, 1997a; Goodyear, 1996), which suggests that organisations need to manage their distinguishing capabilities in order to achieve their brand objectives. Moreover, Fernie et al. (1997) suggest that fashion brands need to develop their distinctive brand names and, as such, their distinctive capabilities in order to achieve greater market differentiation.

Symbolic Symbolic capabilities are often referred to in the literature as representational characteristics. The adjectives and phrases pertaining to symbolic capabilities include representational, emotional, self expression, self image, personality, psychic value and icon. Apparel branding has been found to function as a cue to reflect consumers’ association with certain groups. Evans (1989) contends that the fashion brand signals the aspirations of the brand wearer. McEnally and de Chernatony (1999) further define these as symbolic capabilities that are highly emotional in nature, such as brands as a personality. Items for both symbolic (reflection of self-expression) and representational (association with social peer groups) factors were incorporated under the symbolic label.

Functionality Functional capabilities as defined by de Chernatony and Dall’Olmo Riley (1997b), relate to the brand’s tangible, rationally assessed performance. Park et al. (1986) identify this dimension and refer to it as the extent to which brands satisfy consumers’ basic or rational needs. Support for the functional capabilities of brands is also provided by Goodyear (1996), who proposed six stages of brand evolution, and suggested that brand advertising at stage two focuses on rational attributes. In addition, Bhat and Reddy (1998), in an empirical study of brand classifications, applied the label of functionality to the opposite end of a spectrum ending in brand symbolism. Thus, it is evident that the literature is in agreement as to the functional role brands satisfy.

Value adding McEnally and de Chernatony (1999) suggest this value adding capabilities relate to the satisfaction of consumers’ utilitarian value and the provision of enjoyment. Value adding capabilities refer to the critical beliefs and capabilities the organisation employs to add value beyond functional capabilities, through adding features and benefits that differentiate the brand from competitors. The adjectives and phrases associated with value adding capabilities include experiential, communicates, physical, service, quality, experience and values. Literature consistently refers to brands as a means of adding value, which suggests that organisations need to manage their value adding capabilities in order to achieve their brand objectives.

Retail offer advantage and brand orientation Empirical evidence of a relationship between brand orientation and retail offer advantage has yet to be established in the retail or general brand literature. It is reasonable to assume, however, that these concepts are related and academic literature makes consistent anecdotal associations between the two. Birtwistle and Freathy (1998) suggest that for fashion retailers to maintain a competitive advantage they need to translate their core values into a coherent brand strategy. Simoes and Dibb (2001) provide support for this proposition by arguing that “in order to enhance their competitiveness, businesses need to establish unique features that distinguish their offerings from those of their competitors” (p. 217). It is therefore proposed that the more brand oriented the organisation the greater its retail offer advantage because, at the heart of brand orientation, is the pursuit of competitor differentiation and price insulation. Brand orientation specifically enhances merchandise distinctions and, therefore, a merchandise advantage over competitors. Through the organisation’s brand oriented values and practices a merchandise advantage can be achieved by influencing such retail issues as depth and breadth of range, pricing decisions and brand exclusivity. Laura Ashley, for example, is a uniquely recognisable global retail brand representing a gentile English country lifestyle (Helman and de Chernatony, 1999). The unique name is easily identifiable by consumers and influences the style of merchandise offered to consumers. Brand orientation may, therefore, provide a framework for assessing their retail offer

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The secret to a fashion advantage is brand orientation

International Journal of Retail & Distribution Management

Kerrie Brı¨dson and Jody Evans

Volume 32 · Number 8 · 2004 · 403-411

advantage in terms of the influence of distinctive and symbolic capabilities on merchandise decisions that reinforce the English country lifestyle brand positioning. For retailers who are resellers of manufacturer brands, brand orientation can influence suppliers in their choice of distribution outlets for their merchandise. Moreover, distinctive capabilities may influence the retailer’s choice of distinctive and exclusive merchandise which fits their brand vision. As an illustration of merchandise advantage, an independent Spanish sports retailer was able to thrive even though their size and location were at a disadvantage relative to major chain competitors. The store targeted prestige consumers and chose to support new brands not readily available and therefore, by offering the latest sporting fashion the retailer achieved a merchandise advantage (Carr, 1999). Highly brand oriented organisations that add value and create symbolic value beyond the functional can also gain a merchandise price advantage by commanding a price premium relative to competitors (Davies, 1992), which is often the case in the couture fashion market. Brand orientation may enable the retailer to achieve a trading format advantage. For instance, value-adding capabilities can distinguish a retailer from their competitors based on a differentiated store experience. Helman and de Chernatony (1999) suggest that the Gap represents a classic American casual lifestyle. Brand orientation may provide a framework for assessing their advantage in terms of whether symbolic capabilities influence store design decisions and ultimately the advantage achieved relative to competitors. Spangenberg et al. (1996) provide some evidence to support this, as it was found that environmental attributes such as perfumed scent can positively influence consumer evaluations and behaviours. Through brand orientation the firm may focus on adding features such as perfumed scents to their store that are valued by customers and re-affirm the brand’s personality, which distinguishes it from competitors. Brand orientation can influence a customer service advantage by influencing staff recruitment procedures. Burghaussen and Fan (2002) found that branding shaped the perceptions and attitudes or company directors. Hankinson (2001a) also found that brands help assist staff recruitment by attracting appropriate staff with mutual fit with the brands’ values. In addition, brand orientation may provide a framework for assessing retailers’ advantage in terms of whether value adding capabilities, for instance, influence staffing levels and the provision of skilled and knowledgeable staff (Birtwistle and Freathy, 1998). The retail

industry is characterised by high employee turnover (Sparks, 1992), which can negatively impact on a retailer’s ability to develop a customer service advantage. Those retailers who can minimise staff turnover and retain knowledgeable staff, who fit with the brands values, may create a customer service advantage. Finally, brand orientation may enable the retailer to achieve a customer communication advantage. Hankinson (2001a) found that the branding process enables organisations to communicate simply and effectively through consistent communication of a set of core values. This approach suggests that all elements of the retail offer will be working in unison, sending the same signals. More specifically, distinctive capabilities may focus communication attention on creating visuals to act as a shortcut in consumer decision making. Distinctive capabilities may provide a basis for explaining Benetton’s communication advantage by influencing their choice of advertising messages and mediums which are highly distinctive, at times socially confronting, and therefore uniquely recognisable. Functional capabilities may also encourage advertising to focus on the benefits and attributes of the store relative to competitors. Through symbolic capabilities, communication may focus on establishing a personality for the brand, which is valued by consumers and resistant to competitor replication. Thus, both brand orientation and its specific dimensions can provide a retailer with a customer communication advantage. It is postulated that the brand orientation concept provides an appropriate theoretical framework to explain variations in fashion retail offer advantage, as depicted in Figure 1. Despite the lack of empirical evidence to support the relationship between brand orientation and retail offer advantage in the fashion sector, the previous discussion and examples do provide a basis upon which a positive relationship can be hypothesised. H1. Brand orientation will have a significant positive relationship with retail offer advantage.

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Figure 1 Conceptual model

The secret to a fashion advantage is brand orientation

International Journal of Retail & Distribution Management

Kerrie Brı¨dson and Jody Evans

Volume 32 · Number 8 · 2004 · 403-411

Disaggregating this hypothesis to reflect the constituent dimensions of brand orientation leads to the following hypotheses: H2. Distinctive capabilities will have a significant positive relationship with retail offer advantage. H3. Functional capabilities will have a significant positive relationship with retail offer advantage. H4. Value adding capabilities will have a significant positive relationship with retail offer advantage. H5. Symbolic capabilities will have a significant positive relationship with retail offer advantage.

Operationalisation of constructs Items from existing literature were grouped according to the common underlying capabilities of brand orientation that they captured leading to four key dimensions labelled distinctive capabilities, functional capabilities, value adding capabilities and symbolic capabilities. The scale for measuring brand orientation was derived from comparable orientation scales (Hankinson, 2002; Narver and Slater, 1990), whereby respondents were asked to indicate the extent to which their business undertakes certain practices. The scale ranged from “not at all” (1) to “to a great extent” (7). Items for distinctive capabilities were based on the identification of critical values and practices about the role the brand plays for the organisation (i.e. our brand name is easily identified by consumers; our brand name is a guarantee of consistency for our customers). Functional capability items deal with how brands satisfy consumer’s basic practical performance needs (i.e. our business differentiates itself from competitors by communicating the functional benefits of the store, e.g. easy to get to, wide rang etc.). In regard to value adding capabilities, the adjectives and phrases identified from several studies and conceptual discussions were combined and items generated to reflect brand capabilities which added value and differentiated the organisation beyond functional attributes (i.e. we view our customers’ store experience as critical to differentiating our brand from competitors, we have added service attributes to the retail offer to differentiate our brand). The items identified from existing studies were modified to form the basis of the symbolic capability items (i.e. shopping in our store says something about the type of person our customers are; our brand, as a symbol, expresses our customers’ personality). Vida et al. (2000) contend that it is appropriate to measure a retailers’ offer advantage in relation to typical retail marketing mix items. The elements of the retail offer identified by Vida et al. (2000) were not exhaustive so they were combined with those identified by McGoldrick and Blair (1995) and McGoldrick and Ho (1992) to form merchandise, trading format, customer service and communication advantages. The retail offer advantage construct was operationalised using an interval scale. Respondents were asked to indicate their firm’s competitive position relative to their closest competitor. The scale ranged from “major disadvantage” (1) to “major advantage” (7). The reliability of the measurement scales, across the total sample of 336 responses, was found to satisfactorily meeting Nunally’s (1978) recommendation, as the Cronbach a’s for brand

Methodology The sampling frame used in the study was purchased from Dun and Bradstreet and included food, general merchandise, hardware, home furniture/furnishings, electrical, stationery/office products, fashion apparel/accessories and other speciality retailers operating in Australia. The mail survey method was used to collect data from respondents through a formal structured questionnaire. The study adopted the three key principles advocated by Dillman’s (1978) total design method: minimise the cost for the respondent, maximise the reward for responding and establish trust (Dillman, 1978; Dillman, 1991). Utilising the key informant method, respondents were senior executives from companies with retail operations in Australia, responsible for strategic planning and strategic brand management. A useable sample of 336 responses was obtained, yielding a 28 per cent response rate overall. A sub section of this sample was fashion apparel and accessories retailers, who accounted for 18 per cent of the sample (approximately 60 responses) and it is this group that provides the basis for analysis in this paper. In terms of the type of fashion retailers represented in the sample, specialty apparel retailers (73 per cent) and footwear retailers (18 per cent) account for the majority of the sample. The majority of respondents (82 per cent) operated fewer than 30 stores and 60 per cent indicated that they generated a sales volume up to AUD$9 million, while a further 17 per cent generated $10-17 million and 12 per cent recorded a sales volume greater that $50 million.

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The secret to a fashion advantage is brand orientation

International Journal of Retail & Distribution Management

Kerrie Brı¨dson and Jody Evans

Volume 32 · Number 8 · 2004 · 403-411

orientation (0.7540) and its dimensions were all above 0.7 (distinctive capabilities (0.8793), functional capabilities (0.7951), value adding capabilities (0.8315), and symbolic capabilities (0.8759)). The Cronbach a for the retail offer dimensions were merchandise (0.6695), trading format (0.8179), customer service (0.7591) and customer communication (0.5447). Exploratory and confirmatory factor analyses were performed and all items significantly loaded on the hypothesised constructs in the hypothesised direction.

evident that brand orientation, as a summary measure, performs well. It links concepts at conceptual equivalent levels, is parsimonious and appropriate for the level of abstraction needed for a summary measure (Edwards, 2001). Model 2 presents the disaggregated brand orientation construct entered into a series of multiple regression analyses. The results indicate that through disaggregation of the brand orientation construct, the explanatory power, in terms of all four dimensions of retail offer advantage, increased to approximately 48 per cent of the variance of merchandise, 24 per cent of trading format, 39 per cent of customer service and 15 per cent of customer communication. In comparison to model 1, model 2 promotes the greatest degree of specificity, precision, accuracy and greater managerial appeal by addressing the relative importance of each of the brand orientation dimensions in predicting each retail offer advantage. The results of the multiple regression analysis provide support for H1. The results indicate that brand orientation does enhance a fashion retailers merchandise, trading format, customer service and customer communication advantage over its competitors. The results confirm that valuing brands and developing practices that are oriented towards building brands can distinguish fashion retailers from their competitors. Of all the dimensions of retail offer advantage, brand orientation has the most explanatory power in regard to a merchandise advantage, followed by

Research results Simple regression analysis was used to test H1 and multiple regression analysis was used to examine H2-H5. Simple regression provides a means of evaluating the predictive ability of brand orientation as a summary construct in terms of retail offer advantage. The use of multiple regression acknowledges that the dimensions of brand orientation may differ in the magnitude of their influence on retail offer advantage in the fashion sector. Thus, the results are presented in two models (see Table I). The results in model 1 indicate that the aggregate brand orientation construct explains approximately 34 per cent of the variance of merchandise, 24 per cent of trading format, 17 per cent of customer service and 8 per cent of customer communication. It is therefore Table I Brand orientation and retail offer advantage Merchandise Standardised regression t-values weights

Model 1 Brand orientation R2 Adj R2 F-ratio Model 2 Distinctive capabilities Functional capabilities Value adding capabilities Symbolic capabilities R2 Adj R2 F-ratio

0.580**** 0.337 0.325 29.456****

0.253*

Trading format Standardised regression weights t-values

5.427

0.491**** 0.241 0.228 18.415****

4.291

Customer service Standardised regression weights t-values 0.410*** 0.168 0.154 11.732***

3.425

22.929

0.129

0.829

2 0.409***

2 0.095

20.777

0.043

0.293

0.202

1.518

0.181

1.206

0.277

1.526

0.596***

3.645

4.583

0.187 0.244 0.189 4.446***

1.477

0.165

1.445 0.388 0.344 8.725****

Notes: *p , 0.1, **p , 0.05, ***p , 0.01, ****p , 0.001

408

0.286**

2.275 0.082 0.066

5.176**

1.972

0.479**** 0.484 0.447 12.910****

Communication Standardised regression tweights values

20.032 0.354** 20.004 0.152 0.147 0.0.85 2.369*

20.196 2.254 20.019 1.132

The secret to a fashion advantage is brand orientation

International Journal of Retail & Distribution Management

Kerrie Brı¨dson and Jody Evans

Volume 32 · Number 8 · 2004 · 403-411

customer service, trading format and customer communication advantages. Brand orientation acts as a compass for the fashion retailers decisionmaking. This ensures that all elements of the retail offer, from products within the store, the displays and the service offered to the methods of promotion and communication reinforce the brand position. In terms of H2, the results support a significant positive relationship between distinctive capabilities and merchandise advantage only. However, the hypothesis is actually refuted in the case of customer service advantage, as distinctive capabilities were found to have a significant negative relationship with customer service advantage. Regarding H3, the results support a significant positive relationship between functional capabilities and customer service advantage only. Functional capabilities were not found to have a significant positive relationship with merchandise, trading format or customer services advantages. Furthermore, H4 is supported in relation to a significant positive relationship between value adding capabilities and customer service advantage only. Value adding capabilities were not found to have a significant positive relationship with a merchandise, trading format or customer communications advantages. In terms of H5, the results support a significant positive relationship between symbolic capabilities and merchandise advantage only. Symbolic capabilities were not found to have a significant positive relationship with trading format, customer service or customer communication advantages. Thus, all four hypotheses for the brand orientation dimensions are supported, but in terms of different retail offer advantages.

desired image. While this capability is highly intangible, merchandise can be tangible representations of the brand, which consumers are able to wear and display. Furthermore, the nonsignificant finding in terms of the relationship between functional capabilities and value adding capabilities with a merchandise advantage implies that retailers who are focussed on satisfying consumers’ basic needs and looking to add value do not seem to lead to merchandise superiority and may only be achieving merchandise parity.

Fashion retail insights None of the brand orientation dimensions predict all of the sources of a retail offer advantage. This suggests that fashion retailers must focus on developing each of the four aspects of brand orientation if they are to achieve and sustain an advantage across all four retail offer advantage dimensions. Merchandise advantage Where a retailer seeks to drive a merchandise advantage, they need to foster and promote both symbolic and distinctive capabilities through branding. One explanation of the influence of symbolic capabilities on fashion merchandise advantage is that merchandise can become desirable to consumers for emotional reasons. Brands can reflect a consumer’s self image or

Trading format advantage The analysis did not identify any of the separate dimensions of brand orientation to be particularly important in predicting a trading format advantage for fashion retailers. However, as a group they have strong explanatory power. Trading format is intrinsically linked to the consumer’s store experience and therefore, adding features and benefits that focus on the provision of enjoyment, as well as the distinctiveness of the brand will provide fashion retailers with a competitive edge. In terms of functional capabilities, a trading format advantage is achieved because the store layout, atmosphere and displays satisfy consumers’ basic needs better than competitors. In addition, through fostering distinctive capabilities, trading format advantage is enhanced as the more distinctive the brand the greater the distinctiveness of the trading format. In terms of symbolic capabilities, the trading format can be used by a retailer to tangibly reflect the brand’s personality thereby creating an advantage over competitors when combined with the other dimensions of brand orientation. Customer service advantage Value adding capabilities were the most significant predictor of customer service advantage. A customer service advantage can therefore be best achieved through the fashion retailer offering additional levels of in-store and after sales service in order to add value for consumers beyond their basic purchase needs. Apparel and accessories shopping today is considered more than a rational or functional activity and now represents a leisure activity for some consumers. Thus, customer interaction with staff can be seen as paramount to the enjoyment of their shopping experience. The negative association between distinctive capabilities and customer service advantage is an unexpected finding. One possible explanation for this is that fashion retailers may focus less on providing superior customer service when they are highly distinctive in their marketplace. In addition, neither functional nor symbolic capabilities were found to significantly enhance a customer service

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The secret to a fashion advantage is brand orientation

International Journal of Retail & Distribution Management

Kerrie Brı¨dson and Jody Evans

Volume 32 · Number 8 · 2004 · 403-411

advantage. This may be because the individual personalities of staff may intervene in the relationship. While a retailer may seek to recruit staff who correspond with the brand’s personality, this does not imply that they will provide superior customer service.

between retailers operating in the fashion sector. Second, the sample size was too small for us to perform more sophisticated analysis, however, we took care to ensure that the analyses performed were robust. While the context of this paper is the Australian fashion retail sector it is expected that the conceptual framework and operationalisation would be applicable to a number of other countries and extension into other industry contexts. If fashion retail research is to truly advance it is recommended that other researchers test the antecedents to fashion differentiation. It is acknowledged that brand orientation alone cannot fully explain a fashion retailer’s competitive advantage. For instance, a discount retailer may achieve a merchandise advantage from a specific pricing policy, rather than a distinctive or symbolic brand capability. Thus, antecedents such as organisational strategy, resources and other critical capabilities including market, innovation and operational orientation should also be investigated. Further research could also be directed to examining the importance of private label merchandise as a tangible representation of the retail store brand.

Customer communication advantage Finally, for a retailer seeking a communication advantage they need to promote functional brand orientated capabilities. Functional capabilities refer to the characteristics of branding which meet customers basic purchase needs. Thus, it can be argued that customer communication strategies that focus on solving customer’s purchase problems, provides fashion retailers with an advantage over competitors. Moreover, the results provide some support for Urde (1994) and Hankinson’s (2001a) assertions that brand orientation enables firms to synchronise their communication activities and consistently communicate a set of core values to consumers. Such effective communication using assortment and advertising can distinguish a firm from its competitors who may be less focused. Interestingly, value-adding capabilities were not found to influence customer communication and it is therefore possible to suggest that it is difficult to add value through advertising and assortment. Additionally, distinctive and symbolic capabilities were not found to influence customer communication advantage. This is an unexpected finding, as firms often use associations with celebrities, music and imagery in advertisements to reflect the personality of the brand and its distinctiveness. The fact that such techniques do not create a communication advantage for fashion retailers suggests that competitive parity may exist.

Conclusion As competition increases so to does the need to insulate the retailer from its competitors. Brand orientation is without doubt a critical factor in driving a differential advantage for fashion retailers. This paper demonstrates that brand orientation explains a significant proportion of fashion retailers’ advantage over their competitors. It is recognised, however, that a number of issues must be considered when interpreting the findings of this study. First, while ANOVA’s were conducted, no significant differences were detected in terms of retail type or other organisational characteristics, such as sales volume and number of employees. This may be attributed to the sample size and it is acknowledged that a larger sample may have identified differences

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Further reading Day, G.S. and Wensley, R. (1988), “Assessing advantage: a framework for diagnosing competitive superiority”, Journal of Marketing, Vol. 52 No. 2, pp. 1-20. de Chernatony, L. (1999), “Brand management through narrowing the gap between brand identity and brand reputation”, Journal of Marketing Management, Vol. 15 No. 1-3, pp. 157-79. Doyle, P. (2001), “Building value-based branding strategies”, Journal of Strategic Marketing, Vol. 9, pp. 255-68. Ind, N. (1998), “An integrated approach to corporate branding”, The Journal of Brand Management, Vol. 5 No. 5, pp. 323-9. Moore, C.M. (1995), “From rags to riches: creating and benefiting from the fashion own-brand”, International Journal of Retail & Distribution Management, Vol. 23 No. 9, pp. 19-27. Mosmans, A. and van der Vorst, R. (1998), “Brand-based strategic management”, The Journal of Brand Management, Vol. 6 No. 2, pp. 99-110. Mudambi, S. (1994), “A typology of strategic choice in retailing”, International Journal of Retail & Distribution Management, Vol. 22 No. 4, pp. 32-40. Rubinstein, H. (1996), “‘Brand first’ management”, Journal of Marketing Management, Vol. 12 No. 4, pp. 269-80.

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Introduction

The Burberry business model: creating an international luxury fashion brand Christopher M. Moore and Grete Birtwistle

The authors Christopher M. Moore is the Director for the Glasgow Centre for Retailing and Grete Birtwistle is Head of the Division of Marketing, Glasgow Caledonian University, Glasgow, UK.

Keywords Premier brands, Brand management, Fashion

Abstract The performance of the British fashion brand Burberry has been determined largely by the adoption of business models which, on occasion, have been detrimental to the company’s performance. For the financial year ending 31 March 1998, Burberry saw its annual profits drop from £62m to £25m, leading financial analysts to describe it as “an outdated business with a fashion cachet of almost zero”. However, from 1997, at the instigation of a newly appointed chief executive, Rose Marie Bravo, Burberry has radically re-aligned its business model and has enjoyed, as a result, significant improvements in its business performance. Drawing from extensive documentation that was published by Burberry in support of their initial public offering (IPO), this paper will provide a review of the history of Burberry; evaluate Burberry’s re-positioning strategy as defined by the firm in their IPO prospectus; and critically delineate Burberry’s current business model.

Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0959-0552.htm

International Journal of Retail & Distribution Management Volume 32 · Number 8 · 2004 · pp. 412-422 q Emerald Group Publishing Limited · ISSN 0959-0552 DOI 10.1108/09590550410546232

The viability, or otherwise, of a fashion brand is dependent upon the efficacy and appropriateness of the decisions of those responsible for its management. There are numerous examples of brands that have prospered and/or withered as a result of the business models that management have deployed in order to achieve their strategic (or not so strategic) objectives. Gucci, the Italian luxury brand is a case in point. In the 1950s the brand enjoyed significant success. It was the status brand of choice for Hollywood film stars and European royalty. However, just over a generation later, the brand suffered a loss of cachet and the once profitable business made significant losses. The adoption of a business strategy (which sacrificed management control over product development and distribution in favour of seemingly indiscriminate licensing agreements), undermined the credibility of Gucci as an exclusive and aspirational fashion brand (Jackson and Haird, 2003). Tom Ford’s arrest of Gucci’s decline in the 1990s has been well documented (Moore and Fernie, 2004), and has been attributed to his adoption of a business model that maximised internal controls with respect to product sourcing, brand communications and distribution. Ford’s legacy has been the implementation of an integrative business model which maximised “back-end synergies” in relation to logistics, fiscal planning and real estate management for the purposes of cost management and resource utilisation efficiency. The “front-end” of the Gucci business model is concerned with the management of risk through the provision of a portfolio of distinctly positioned fashion brands and the maximisation of internal control through the abandoning of licensing agreements in favour of company-owned or company-controlled manufacturing and distribution (Gucci, 2001, 2002). Likewise, the performance of the British fashion brand Burberry over the same period has been determined largely by the adoption of business models which, on occasion, have been detrimental to the company’s performance (Cowe, 1998). For example, for the financial year ending 31 March 1998, Burberry saw its annual profits drop from £62m to £25m, leading financial analysts to describe it as “an outdated business with a fashion cachet of almost zero” (Finch and May, 1998). However, from 1997, at the instigation of a newly appointed chief executive, Rose Marie Bravo, Burberry has radically re-aligned its business model and has enjoyed, as a result, significant

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improvements in its business performance (Menkes, 2002). The re-alignment of Burberry’s business model, with its partial public share offering; a preference for internal control over manufacturing and distribution; the expansion of the product portfolio to include a wider customer base and the adoption of a multi-brand positioning, reflect many of the developments that have occurred within other premium international fashion retail companies. These include firms such as Gucci, Ralph Lauren and Prada (Moore and Fernie, 2004). As such, an in-depth analysis of the Burberry business model, as is proposed here, serves to reflect at the micro-level, many of the corporate trends and management issues that currently pre-occupy the international luxury fashion retailing sector. Drawing from extensive documentation that was published by Burberry in support of their initial public offering (IPO), in summer 2002 and from other sources, such as market analysts and investment brokers’ reports, this paper will: . provide a review of the history of Burberry; . evaluate Burberry’s re-positioning strategy as defined by the firm in their IPO prospectus; and . critically delineate Burberry’s current business model.

international store was opened in Paris at the Boulevard Malesherbes. Indirect foreign market participation was instigated in the early 1900s when Thomas Burberry began to supply retail stockists in New York, Buenos Aires and Montevideo. In 1920 Burberry entered into wholesale agreements with Japanese retailers. The firm’s relationship with the Japanese market was further developed when Mitsui were appointed distributor of their outerwear products in Japan in 1964 and then as their licensee in 1980 alongside the Sanyo Company (Adams, 1995; Sherwood, 1998, Burberry, 2002). Acquired by the British retail and catalogue conglomerate, Great Universal Stores (GUS) in 1955, this change in ownership provided the funding for the expansion of the Burberry retail network in the UK and the USA. In addition, licences were granted to a variety of third parties in Europe and Asia to facilitate the expansion of the Burberry product range and increase foreign market distribution (Cowe, 1997). With an everincreasing reliance upon Asia for sales, the sharp downturn in the Japanese economy had a significant effect upon Burberry’s performance in the mid-1990s. By 1997 the vulnerability of Burberry’s strategy became all too evident when their annual profits dropped from £62m to £25m and GUS was advised to sell-off Burberry but to expect no more than £200m for the business (Finch and May, 1998; Roberts, 1998). In their IPO prospectus, published in spring 2002, Burberry identified the key strategic challenges that faced their business in 1997 as follows: . a heavy reliance upon a small base of core products; . a company-owned retail network based within non-strategic locations; . an inconsistent wholesale distribution strategy with Burberry products being sold in a widerange of retail environments of varying quality; . parallel trading of Burberry products by legitimate wholesale customers to other nonapproved distributors and stockists; . a poorly controlled licensing strategy which resulted in inconsistencies in prices, design and quality control across markets; and . under-investment in corporate infrastructures, specifically in relation to marketing, merchandising, product development and other support functions.

A chronology of Burberry Thomas Burberry founded Burberry in 1856 in Basingstoke, England when he opened a store selling men’s outerwear. The reputation of the company was enhanced through Burberry’s development of “gabardine”, a fabric that was resistant to tearing; was weatherproof but was also breathable (Burberry, 2002). This new fabric was especially suited to military needs and led Burberry to design an army officer’s raincoat which became an integral element of the standard service uniform for British officers in the early 1900s. During the First World War, Burberry continued to develop the officer’s raincoat by adding functional dimensions such as epaulettes, straps and D-rings. Named the “Trench coat” as a result of its military associations, the company developed its now distinctive Burberry check as a lining for the product. Inevitably, as a result of its military associations, Burberry outerwear was readily adopted by leading explorers, such as Captain Scott and Sir Earnest Shackleton who wore Burberry gabardine on their Antarctic expeditions. In tandem with these developments, Burberry developed a retail and wholesale business. The first London store opened in 1891 and by 1910 the first

The extent of Burberry’s problems are typified by the fact that in 1997 the brand was available in more than 60 different stores in central London but was not stocked by the capital’s most prestigious retailers such as Selfridges,

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Harvey Nichols or Harrods (Fletcher, 2003). Rather than disposing of the Burberry business, GUS appointed Rose Marie Bravo as the new chief executive for Burberry (she had previously been president of Saks, New York’s fashionable department store in Fifth Avenue) and a new management team was assembled. From 1997, the new Burberry management team sought to radically reposition a company whose primary asset, the Burberry brand, was undermined by a moribund image and which was overly reliant upon a narrow customer base comprising of middle aged, fashion-conservative men. Furthermore, the team recognised their need to address the problems associated with their inadequate control over product design and distribution arising as a result of indiscriminate licensing and distribution agreements (Fletcher, 2003). Their new strategy sought to re-position the Burberry’s brand as a distinctive luxury brand with a clear design, merchandising, marketing and distribution strategy, which would be appealing to new, younger, fashion-forward customers, while still retaining the traditional customer base (Burberry IPO Prospectus, 2002). Immediately, the management undertook a range of initiatives intended to update the firm’s brand image, re-configure the distribution network and assert fuller and more comprehensive controls over product development, sourcing and distribution both domestically and internationally (Burberry IPO Prospectus, 2002). These initiatives were intended as the platform for the development of a revised business model for Burberry that would provide for future growth, stability and innovation. Derived from their IPO Prospectus of 2002, it is possible to delineate the defining features of what the company described as “the repositioning of the Burberry brand”. These are concerned with new approaches to brand management, product design and sourcing, as well as brand distribution. The specific initiatives undertaken with respect to each of the three dimensions are delineated below.

contemporary packaging. Furthermore, and in recognition of the crucial contribution that advertising plays in the development of international fashion brand positioning, Burberry launched a radically different advertising strategy that sought to change perceptions of Burberry through the use of leading models, such as Kate Moss and reputable fashion photographers, while retaining distinctly British themes as the content of these advertisements. The attempt to re-position Burberry as a relevant, contemporary and also credible high fashion brand also required the opening of a flagship store on New Bond Street in London. The choice of New Bond Street was critical since it placed Burberry adjacent to the other leading fashion and luxury brands in London – such as Gucci, Versace, YSL, Prada, Chanel, Bulgari and Asprey. The management team also recognised the importance of a flagship store as an important mechanism for attracting the attention of the international fashion press and that it would help Burberry obtain greater editorial and other media coverage.

Brand management As has been previously acknowledged, the Burberry brand trademark was a critical business asset for the firm, and as such, the management team acknowledged the importance of an effective and efficient brand management strategy. The first initiative was to update the image of the brand by firstly changing the name from Burberry’s to Burberry. This change was supported with the introduction of a new brand logo and

Product design and sourcing In recognition of their need to extend the range of products included in the Burberry offer in order to furnish a flagship store and compete with the product ranges provided by competitors, the inhouse design team was strengthened, particularly with the appointment of Christopher Bailey as design director. Bailey brought with him extensive experience from other leading fashion houses, most notably Gucci and Donna Karan. With an enlarged design team, Burberry launched the Burberry Prorsum brand – a premium, high – fashion collection that would allow Burberry to compete with the prestige lines offered by their rivals. In terms of the Burberry London brand, the design team sought to upgrade the range to ensure that it more clearly reflected the updated lifestyle positioning of the company. In addition, the company stated that they “restructured its sourcing and pricing and eliminated unnecessary product variation” (Burberry IPO Prospectus, 2002, p. 22). For product sourcing, Burberry reduced its reliance upon licensees for product design and manufacture. Consequently, they acquired their Spanish licensee in June 2000, while in their renegotiated agreement with Japanese licence partners, they secured greater control over licensed product design and manufacturing activity.

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Brand distribution Central to the repositioning of Burberry was the need for the management team to better control where and how the brand was distributed within the UK and internationally. Furthermore, it was imperative that the distribution policy should support the repositioning of Burberry as a prestige and exclusive brand. Consequently, all unprofitable and “non-core” retailer stores in Europe were closed. Wholesale accounts with inappropriate stockists and/or known parallel traders (i.e. firms who sell on branded goods that have not been obtained through authorised sources), were discontinued. Driven by the desire to maximise control over foreign markets, the company bought back the distribution rights within the Hong Kong, Singapore and Australian markets in December 2001 and within the Korean market in 2002 (Burberry, 2003).

Defining the Burberry business model It is important at this stage to note that the various initiatives detailed above markedly improved Burberry’s financial performance. From 2000, (when most of the initiatives were concluded) to 2003, turnover increased by 263 per cent and profits rose by 630 per cent. Table I provides a four year summary of the firm’s financial performance. These initiatives contributed to the formation of a new business model for Burberry that was also delineated in depth in the Burberry IPO Prospectus in summer 2002. Evidence that the business model has been retained and implemented by Burberry after the offering can be found in their subsequent annual report and accounts (Burberry, 2002); in addition to interviews given by the chief executive, Rose Marie Bravo (Fletcher, 2003) and company trading statements and updates. The Burberry business model comprises four inter-related dimensions: (1) Products. (2) Manufacturing and sourcing. (3) Distribution channels. (4) Marketing communications. Each dimension is examined below.

Source: Burberry (2003)

Product ranges – apparel Burberry has a multi-level brand strategy that is comprised of six key brand levels. Burberry Prorsum is the couture/high fashion range that serves as the focus for fashion shows and editorial interest/coverage. Produced in limited quantities in order to satisfy the demand for exclusivity among affluent consumers, the range is distributed through Burberry’s flagships stores, as well as through prestigious department stores including Barneys in New York and Harvey Nichols and Harrods in London. The Burberry London line is the company’s core ready-to-wear range which is presented in two collections for spring/summer and autumn/winter for men and women. In womenswear, between 450 and 500 lines are offered each season, while in menswear, the range has an average of between 330 and 350 lines. In the past, and as a reflection of the firm’s heritage in outerwear, both the men’s and women’s apparel ranges tended to focus more upon autumn/winter collections. However, in order to appeal to warmer climates, the Table II Turnover analysis by product category Product category

Table I Four-year financial summary

Turnover Profit – EBITA Gross margin as percentage of turnover

1. Products With a clear positioning as an authentic British lifestyle brand, the range extends from men’s, women’s and children’s apparel to include “soft” accessories, such as scarves, shawls and ties, alongside “hard” accessories, including handbags, small leather goods, women’s shoes, luggage, umbrellas, eyewear and timepieces. Table II identifies the turnover by product category for 2002 and 2003. At an individual level, Burberry classifies their products as either continuity or seasonal. The former (such as the classic trench coat) have a long life-span and are sold year after year, the former are responsive to fashion trends and are typically sold as a specific collection in one season. In some cases, a seasonal product can become continuity if demand extends beyond the season. The company states that they “seek to achieve a relatively high proportion of continuity products in order to minimise our exposure to changes in consumer preferences and fashion trends” (Burberry IPO Prospectus, 2002, p. 26).

2000

2001

2002

2003

£225.7m £18.5m

£427.8m £68.7m

£499.2m £90.3m

£593.6m £116.7m

46.8

47.8

50.3

56.0

Womenswear Menswear Accessories Others Licences Total turnover Source: Burberry (2003)

415

2002 (£m)

2003 (£m)

165.2 149.4 125.8 5.3 53.5 499.2

197.9 162.8 169.5 5.1 58.3 593.6

The Burberry business model

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Christopher M. Moore and Grete Birtwistle

Volume 32 · Number 8 · 2004 · 412-422

womenswear spring/summer ranges now include swimwear, as well as complimentary accessories, such as shoes, towels and bags for the beach. Likewise, the men’s collection has been extended to include sportswear, swimwear and a ski collection. Reflecting what the company describes as “historical as well as market specific reasons” two separate Burberry London lines are designed for the Spanish and Japanese markets. Both markets make significant contributions to Burberry turnover. For example, in 2002/2003, 40 per cent of Burberry’s wholesale customers were from Spain or Portugal, while the Spanish department store chain, El Cortes Ingles, was Burberry’s largest wholesale customer. Until 2000, Burberry goods sold in Spain were manufactured by a Spanish licensee. As part of their strategy of achieving greater control over product design and manufacture, Burberry bought back the licence from the Spanish partner, but retained the policy of producing Burberry London ranges that are specific to the Spanish market. In Japan, Burberry re-negotiated the terms of its licence agreement to provide for greater control over the design of the goods distributed in Japan, but continued to allow these to be distributed under the Burberry London brand name. The tailored Burberry London range for the Spanish market is described by the company as being “more diverse with a strong classic element. We have in recent years increased the fashion content and improved the quality of fabric and other materials used in these products” (Burberry IPO Prospectus, 2002, p. 26). Likewise, the line developed for the Japanese market is described as being classic in style and is adapted to suit the seasonality and fit requirements of Japanese consumers. The Thomas Burberry range is one of three diffusion brands. This is targeted towards the younger age 15-25 year old customer group. Initially sold exclusively in Spain from 1997 and Portugal from 2002, the availability of the collection has been extended to the UK and Europe. With its emphasis upon casual fashion and its newly modernised brand logo, the range is differentiated from the Burberry London brand (according to the company), by its design, marketing, distribution and pricing. The Burberry Blue and Burberry Black brands are the two other diffusion lines that are sold exclusively within Japan. The former, introduced in 1996, is a casual collection for younger women, while the latter brand is targeted at the younger professional male and is comprised of tailored clothing and sportswear.

The Burberry brand also incorporates the firm’s accessories range, which with a sales value in 2003 of £58.3m, has emerged as a highly significant part of their business. Handbags represent the largest accessories product category by turnover. Scarves, shoes and other leather goods are also included in the accessories category. In addition, and manufactured under licence (the detail of which is presented below), are four other important product categories comprising of fragrance, eyewear, timepieces, and childrenswear. All are marketed under the Burberry brand name. As such, it is possible to classify the Burberry product/brand model in terms of a pyramid as illustrated in Figure 1. From the Burberry Prorsum brand, at the highest tip in the pyramid, to the Burberry Accessories collections, at the lowest, the company has secured three important dimensions in its product model. First, the multi-brand approach provides the company with maximum market coverage and broad customer appeal. Second, the model provides for flexibility and market responsiveness as is evidence by the countryspecific Burberry Blue and Black brands. Third, the broad coverage of product categories and differential price positioning among the brands, provides a comprehensive lifestyle offer that also enables customers to access, as well as trade-up (and down) between the various brand levels. 2. Manufacturing and sourcing Integral to the re-positioning of Burberry in the late 1990s was the company’s determination to ensure that it maintained full control over the development, sourcing and manufacturing of the various collections. The design director, Christopher Bailey, is responsible for the design of the Burberry Prorsum collection, while his London-based design team is responsible for the design of the Burberry London range. This team also oversee the design direction of other Burberry brand lines and ranges. For example, local design teams in Spain and Japan are in regular contact with their London counterparts in order to ensure that all variations of the Burberry London brands are presented in a coherent and consistent manner. The company claims that the Burberry Prorsum collection provides creative direction for all of the Burberry brands in that all of the various design teams look to it for inspiration and direction (Burberry IPO Prospectus, 2002). Assuming a manufacturing and sourcing scheme, comprising of fabric procurement and pre-production, product manufacturing, and warehousing and logistics, it is possible to delineate Burberry’s management of the scheme as follows.

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Figure 1 The Burberry product/brand model

In terms of fabric procurement and preproduction, the company utilises its own fabric weaving operation to supply linings and fabrics for the Burberry London collections. Fabrics for the Burberry Prorsum and Burberry London collections are sourced primarily from a limited number of European suppliers. Initial fabric orders are based on sales forecasts to ensure product availability, and further purchases are based upon the extrapolation of early orders received (Burberry IPO Prospectus, 2002). The company purchases directly, or retains full control over the purchase by third-party manufacturers, of all raw materials that bear the Burberry name or other Burberry trade marks (Burberry IPO Prospectus, 2002). Product manufacturing is secured through a mix of internal and external capability. Internal manufacturing facilities based in Castleford (England), Treorchy (Wales) and New Jersey (USA), produce rainwear, outerwear and polo shirts for the Burberry London collections. Finished goods for the Burberry Prorsum, and other elements of the Burberry London collections are obtained from European suppliers. Quality control for the Burberry Prorsum and Burberry London collections is managed internally. Finished goods for the Thomas Burberry diffusion brand are supplied principally by Moroccan manufacturers, although goods are also obtained from other European suppliers. Burberry has outsourced the quality control management of the Thomas Burberry collection to a third-party specialist. Burberry also grants a limited number of licences to those firms capable of producing “brand-enhancing products”, which require

specialist expertise. The principal product categories are as follows. Fragrance, which is manufactured by InterParfums S.A., and is marketed as “Burberry London”, “Burberry Weekend”, “Burberry Touch”, “Burberry Brit” and “Burberry Baby Touch”. The Burberry Eyewear collection, launched in 1997, is produced in collaboration with Safilo S.p.A, a leading Italian manufacturer and distributor. The Burberry Timepieces collection was launched in 2001 in collaboration with Fossil, the watch manufacturer. Finally, childrenswear is produced by CWF, a specialist manufacturer of children’s clothing (Mitsui and Sanyo hold the licence to produce Burberry the children’s range in Japan). In Japan, the design, manufacture and distribution of Burberry products is managed under a series of licence agreements with selected third parties. The two major licence partners are Mitsui, Japan’s largest general trading company, which has acknowledged expertise in textiles, and Sanyo, a major designer, producer and wholesaler of apparel. Both licensees are exclusively responsible for the design and manufacture of the Burberry London collections, as well as the childrenswear and Burberry Golf collections. Royalties are paid to Burberry by both licensees on a monthly basis. These are calculated on the volume of goods produced and their recommended retail value. Provisions are also made to ensure that any exchange rate fluctuations are not prejudicial to Burberry. As part of the licensing agreement, both parties must achieve minimum monthly advertising and marketing targets.

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A total of 18 other firms in Japan hold licences to produce ranges other than those manufactured by Mitsui and Sanyo. Both firms are responsible for the management and monitoring of these sublicensees and in exchange, they receive 20 per cent of the royalties received by Burberry from these other 18 licence partners. A significant proportion of warehousing and logistics activity at Burberry is managed in-house. Warehousing for the wholesale side of the business is company-owed and located in Northumberland, England. There are three further warehouses in the UK, while the company operates two others in New Jersey, USA and in Hong Kong. Through the acquisition of their Spanish licensee, Burberry obtained two further warehouses in Barcelona. As a means of reducing goods handling costs and improving delivery times, the company has piloted the direct shipment of products from suppliers to wholesale customers in the USA and Asia Pacific. The company plans to extend this service to major wholesale customers. All parts of the Burberry operation utilise external logistics companies for the distribution and delivery of finished goods. Figure 2 represents Burberry’s manufacturing and sourcing model. Three important observations can be made with respect to Burberry’s approach to manufacturing and sourcing. First, through the retention of internal weaving and manufacturing capability, the company has retained control over the creation of rainwear, their core product category. Second, through the use of third-party manufacturers and licensees, external expertise is brought to the collections and with it, an ability to be flexible and responsive to changing customer tastes and demands. Third, their exclusive use of licensed

manufacturing in Japan serves to integrate the local expertise, knowledge and commitment of established and reputable local organisations. Furthermore, their use of this near-to-market capability eliminates the problems associated with managing a global supply chain within a very significant profit-generating market. 3. Distribution channels The distribution of the various Burberry brands is achieved through the operation of companyowned stores, by company-controlled wholesale arrangements with third-party stockists, as well as through licence agreements with partner firms in Japan. The turnover by distribution channel method is illustrated in Table III. Burberry markets two clothing collections each year for spring/summer and autumn/winter. Initial orders from wholesale customers are received for spring/summer ranges in the previous June to September, while orders for the autumn/winter season are received by March at the latest. Retail distribution The Burberry retail chain is comprised of four distinct formats. Located within the primary shopping locations in Burberry’s most important national markets, flagship stores are located in Table III Turnover analysis by distribution channel Turnover by channel Retail Wholesale Licence Total Source: Burberry (2003)

Figure 2 The Burberry manufacturing and sourcing model

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Christopher M. Moore and Grete Birtwistle

Volume 32 · Number 8 · 2004 · 412-422

London, New York, Barcelona and Tokyo (the Tokyo store is owned by their Japanese licensee). These stores, with a minimum 10,000 square feet of selling space, stock the full Burberry Prorsum and Burberry London ranges, alongside the various accessory collections. Serving as a showcase to the fashion media and potential wholesale stockists, the stores serve as an important role in communicating the exclusive positioning of the Burberry brand. Described as regular price retail stores by Burberry, the company operates more than 30 of these outlets across Europe, the USA and Asia. Often operated within capital cities, and always within affluent locations, these stores offer a product mix that is broadly similar, but merchandise is tailored to suit local climates and local variations. For example, the Burberry stores in New York and Chicago stock a wider range of rainwear compared to the Beverly Hills store, which has a greater emphasis upon lighter weight products. A third retail format is that of department store concessions, of which there were more than 50 in 2003. In view of the fact that department stores are the dominant distribution method for premium priced fashion in important markets, such as Korea, Japan and Spain, these concessions enable Burberry to access, in a cost-efficient manner, a wide and relevant customer base. In so doing, the associated risks and costs of operating a large number of company-owned stores can be avoided. Unlike the regular price retail stores, these concessions offer an edited version of the Burberry London/Thomas Burberry ranges. Finally, Burberry also operates nine designer outlet stores and three factory stores in the UK, USA and Spain. These stores sell surplus stock at discounted prices from the retail stores and the wholesale side of the business. In addition, these sell products with minor imperfections, as well as products manufactured from surplus fabrics.

directly to wholesale stockists. Through the showrooms and agents, Burberry claims to work with wholesale customers on an individual store basis in order to select appropriate products and volumes in order to maximise the sale of products at full price. In addition, the company works with major stockists to ensure consistent visual merchandising and store presentation of the Burberry brand. A shop-in-shop format, based upon the Bond Street flagship design has been developed and is implemented in department stores. Wholesale customers typically have access to the entire Burberry brand offer, other than the Burberry Prorsum brand. As part of their development of long-terms relationships with wholesale customers, the company also engages in collaborative marketing activity with important clients. Burberry provides co-operative allowances whereby wholesale stockists receive a benefit towards advertising Burberry products (Burberry IPO Prospectus, 2002).

Wholesale distribution The retail network is complimented by an extensive wholesale distribution network. The number of outlets (classified as doors), operated by Burberry’s wholesale stockists in 2002 was in excess of 3,100. Of these, 17 per cent were in the USA, 40 per cent in Spain and Portugal, 37 per cent in the rest of Europe, and the remainder in Asia and elsewhere. Wholesale stockists include prestigious department stores, speciality fashion retailers and duty-free retailers. To serve their wholesale accounts customers, Burberry operates showrooms in London, New York, Milan, Du¨sseldorf, Barcelona and Hong Kong. In other markets, it employs agents who sell their range

Licensee distribution Sanyo own and operate the Burberry flagship store in Tokyo that stocks the full range of Burberry brands, including Burberry Prorsum. Sanyo also operate two Burberry Blue and one Burberry Black stores. The two licence partners are jointly responsible for the wholesale distribution of the Burberry ranges to department stores and speciality stores across Japan. As part of their responsibility as licensees, both firms provide product, visual merchandising and sales staff to their department store customers. Based upon the three distinct strands, the Burberry distribution model is presented in Figure 3. As Figure 3 illustrates, Burberry’s model of channel distribution provides the company with a variety of advantages. The maintenance of a company-owned chain of retail stores, while costly to establish and maintain, provides maximum control over the presentation of the Burberry brand within significant and important markets. Furthermore, this approach allows for maximum return on investment in that none of the profit is lost in having to pay for franchise partners and the like. Through the implementation of an allocation formula which confines the risk of a full merchandise offer to flagship stores and allows for the dispersal of excess stock through its own factory outlets, Burberry efficiently and effectively maintains the exclusivity and integrity of the brand standing of each of their brands. Their development of a comprehensive, yet restrained network of wholesale stockists worldwide provides for maximum market coverage at minimal cost and reduced risk. A symbiotic relationship exists between both the retail and

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The Burberry business model

International Journal of Retail & Distribution Management

Christopher M. Moore and Grete Birtwistle

Volume 32 · Number 8 · 2004 · 412-422

Figure 3 The Burberry distribution channels model

wholesale channels in that the retail stores provide an impetus for media and consumer interest in the Burberry brand within the respective markets which precipitate wholesale sales, while the profits from wholesaling ensure that flagship stores are economically viable. 4. Marketing communications In their IPO Prospectus (2002), Burberry clearly identify the importance of active marketing communications in the development of an image and lifestyle that is capable of “generating interest among retail customers, wholesale buyers and the media” (p. 34). In order to generate and sustain a coherent brand identity, all Burberry marketing activities are managed from London. Any local form of marketing communication and activity are determined by the direction provided by the London marketing team. There are three core strands to the Burberry communications model: (1) Advertising. (2) Fashion shows. (3) Editorial placement. Advertising Launched on a twice-yearly basis to coincide with the delivery of the seasonal collections to their retail stores and stockists, the Burberry advertising campaigns are focused upon the leading fashion and lifestyle publications. The production and media costs associated with the advertisements represent a significant proportion of the firm’s advertising expenditure. With a particular and strong focus upon iconoclastic British images, these advertisements draw heavily from the firm’s heritage and history. With an emphasis upon key products and the trade marks, the campaigns do not feature individual products, but instead

present a mix of products that present the overall brand image and which demonstrate the extent of the product range. In relation to advertising within the Japanese market, both Mitsui and Sanyo manage their local advertising campaigns directly using the images and campaigns generated by the London marketing team. All advertising campaigns in Japan require central marketing department approval. Fashion shows Burberry views fashion shows as an important element in their marketing plan since these serve to underline the luxury status of the brand. Furthermore, the shows establish and reinforce the fashion credibility of the brand and generate international press coverage. The shows for the men’s and woman’s Burberry Prorsum are held twice-yearly in Milan. This decision to show in Milan recognises the importance of the city as the global centre of luxury fashion and serves to maximise fashion media coverage internationally. The Burberry London line is shown at London Fashion Week each season in the London showrooms. Editorial placement In order to create brand awareness, as well as establish and reinforce a luxury positioning, Burberry has adopted a proactive public relations strategy aimed at the fashion and trade press. This strategy aims to maximise world-wide editorial coverage and comment in support of the Burberry brand and to ensure frequent product placement in the leading fashion, business, trade and newspaper publications. In addition, the company provides a brochure each season containing the current collection for

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The Burberry business model

International Journal of Retail & Distribution Management

Christopher M. Moore and Grete Birtwistle

Volume 32 · Number 8 · 2004 · 412-422

Figure 4 The Burberry marketing communications model

wholesale account customers and operates an information-only Web site which includes information on the history of the company, images of current advertising campaigns and shareholder information. The core elements of Burberry’s marketing communications model are presented in Figure 4. Burberry’s approach to marketing communications highlights three important considerations. First, it recognises the importance of advertising in the creation of a luxury brand image and lifestyle association. Second, it is clear that fashion shows and associated events are crucial to the achievement of international media coverage. Finally, a proactive media management strategy is crucial for the achievement of adequate editorial coverage and the development of a credible international brand profile and standing.

Concluding comments The re-positioning and subsequent renaissance of the Burberry brand provides invaluable insights into the machinery of the luxury fashion brand business model. This analysis of Burberry’s strategy has sought to both identify the generic dimensions of such a business model and delineate its defining elements. The value of this analysis lies in the access that it gives to the location of those factors that contribute to the success of an international luxury fashion brand. The Burberry model identifies five key success factors: (1) The importance of a clearly defined brand positioning which communicates a definite set of attractive brand values and lifestyle associations. (2) The requirement to maintain a co-ordinated distribution strategy whereby retail chains compliment and are complimented by wholesale chains which assure maximum market coverage.

(3) The opportunities afforded by a strong brand identity to extend into adjacent product areas either through internal capability or via licensing agreements. (4) The opportunities afforded by a flexible approach to the management of important foreign markets – such as in the form of delegating marketing activity through licensing agreements. (5) The importance of media relations management to the creation and maintenance of a credible luxury fashion brand reputation. Finally, through an in-depth analysis of the Burberry business model, this paper has sought to encourage further interest and debate with respect to the mechanics of generating an internationally successful luxury fashion brand. It is hoped that it will stimulate and encourage other researchers to further explore the apparatus that other fashion retailers use in order to reposition and generate alternative models for the achievement of business success.

References Adams, M. (1995), “Burberry coats: a king provided them with their most familiar alias”, Incentive, p. 68. Burberry (2002), Burberry PLC Annual Report and Accounts 2001-2002, Burberry, London. Burberry (2003), Burberry PLC Annual Report and Accounts 2002-2003, Burberry IPO Prospectus, Burberry, London. Burberry IPO Prospectus (2002), “Burberry group global offer of shares”, Burberry IPO Prospectus, Summer. Cowe, R. (1997), “Saks retailer fits Burberry’s ticket”, The Guardian, 6 September. Cowe, R. (1998), “Burberry fails to weather the Asia storm”, The Guardian, 25 June. Finch, J. and May, T. (1998), “Reputations: putting a zip in a Burberry”, The Guardian, 27 June. Fletcher, R. (2003), “Brava, bravo!”, The Sunday Telegraph, 5 October.

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Gucci (2001), Gucci Group Annual Report and Accounts 20002001, Gucci, Amsterdam. Gucci (2002), Gucci Group Annual Report and Accounts 20012002, Gucci, Amsterdam. Jackson, T. and Haird, C. (2003), “Gucci Group: the new family of luxury brands”, International Journal of New Product Development and Innovation Management, Vol. 4 No. 2, pp. 161-72. Menkes, S. (2002), “Bravo! Reburnished Burberry sets the pace”, International Herald Tribune, 12 September.

Moore, C. and Fernie, J. (2004), “Retailing within an international context”, in Bruce, M., Moore, C. and Birtwistle, G. (Eds), International Retail Marketing; A Case Study Approach, Elsevier Butterworth-Heinemann, Oxford, pp. 3-37. Roberts, D. (1998), “Burberry is not really tailor-made for Far-East”, Birmingham Post, 25 June. Sherwood, J. (1998), “Born-again Burberry modeled by Stella Tennant, worn by Jarvis and Noel and shot for the pages of Vogue and Frank . . .”, The Independent, 3 October.

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