The latest European import: fast fashion

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Browsing the aisles of her neighborhood Target store in Columbus, Ohio, Katie Carey, 18, stops to admire the faux-jewel buttons on a light-blue Firoucci sweater for $24.99.

"It's got a great retro feel to it," she says, twirling a button between her fingers. "But it's a little more than I'd usually pay. I usually buy everything on sale." Indeed, Ms. Carey is soon distracted by a sales rack offering 30% off already-slashed prices.

The sweater's connection to high Italian fashion was news to Ms. Carey, but it was part of "a limited 60-day showcase of fashions" from Firoucci, a design house in Milan, and Target's first foray into the world of "fast-fashion," a hot merchandising tool of in-and-out products that industry watchers predict will be the marketing strategy of 2006 for apparel retailers.

So what exactly is fast fashion? It can be anything from a limited-edition $34.99 canvas hot pink purse by Firoucci at Target to a pair of crocodile sling-back heels at J.Crew for $600.

The strategy is based on Merchandising 101 tactics like scarcity and exclusivity, long lost to an industry stuck in a seemingly endless cycle of markdowns that account for a whopping 49% of all apparel sales today.

Fast-fashion could also be the balm to pre-empt what Pam Danziger, president of luxury-marketing firm Unity Marketing, sees as the inevitable backlash by consumers against the homogenization of the retail landscape. "If I go to a mall in Columbus, Florida, Las Vegas or New York and go to an Ann Taylor store, each one has the same stuff," she said.

Fast-fashion is not simply "cheap chic" on steroids, according to Kris Miller, who heads the retail practice at consulting firm Bain & Co., which closely advises a handful of retail clients eagerly adopting fast-fashion strategies. Instead, it's best defined by a shortened cycle from design to finished product, a mere six to 10 weeks, compared to an industry standard seven to nine months. The short cycle makes it easier for retailers to "stay on trend" and beg, steal and borrow ideas from the high-fashion runways.

Fast fashion also requires frequent, limited-edition products, or "in-season design," on store shelves on a weekly, if not daily basis.

And it's the product, not sale advertising, that's used to drive store traffic.

Compare that to the typical three-month seasonal cycle now ubiquitous among mass-market retailers-a cycle analysts consider on the verge of boring consumers with a endless glut of cheap, predictable products. Instead of focusing on entire lines, fast fashion focuses on specific items to drive more-frequent inventory turns.

No mystery

"You're not going to see stacks and stacks of items when you come into a store, but simply a handful of tops or jackets you like that you better buy then or you won't get down the road," said Ms. Miller of Bain.

Specialty retailers such as H&M, Mango and Zara are the originators of this fast-fashion model. Today they are the highfliers of European retail and fast encroaching on the U.S. market. Despite their moderate to mid-range pricing, combined they now control almost 18% of the market in Europe, according to Bain.

A handful of specialty retailers stateside, such as Charlotte Russe, Bebe and J.Crew and Chico's are copying some of these fast-fashion strategies, but for now might be better labeled "pseudo-fast-fashion" retailers. "U.S. apparel retailers are responding by taking one element, testing it out and applying it to their traditional business," said Bain's Ms. Miller.

The impetus isn't a mystery. Discount retailers such as Target and Wal-Mart are grabbing more of the apparel pie-17% in 2004, compared with 11% in 1998. And in just the last decade, apparel prices have declined 31%. Unable to push through premium pricing, retailer profits are hurting.

This February, Target plans to launch another limited-edition line, which showcases international designers "making waves in the fashion world," according to the company. Instead of backing a single designer for the long haul, such as Isaac Mizrahi, each quarter the discount retailer plans to introduce a new, fresh line by a revolving door of designers. The first is British designer Luella Bartley.

But for fast-fashion to truly work, retailers like Target will need to set up sourcing in the U.S., a trend that could be a potential boon for the decimated U.S.-based textile mills. It simply takes too long for a container ship to make it to the U.S. from China. Ms. Miller said the challenge for mass-market retailers such as Target will be adopting the fast-fashion distribution strategy to thousands of stores.

Will Wal-Mart jump in?

So will Wal-Mart jump on the fast-fashion bandwagon, owning fast-fashion before cheap-chic competitor Target? "Unlikely," according to Ms. Miller. "Target already has a much better positioning. Wal-Mart is still playing catch up. But if Wal-Mart, because of their massive sales, decided to take it seriously, say just 2% of their apparel offerings, they could dramatically change the apparel landscape."

Ms. Danziger of Unity Marketing questions whether retailers in the U.S. understand yet how to execute this latest British import, especially when retailers like J. Crew jumped into the trend by offering limited-edition $600 crocodile sling-backs.

"If I'm going to spend that much on a pair of shoes, it's not going to be at J.Crew, it's going to be on a pair of Manolo Blahniks," she said.

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