Goal 2020: low cost, one decade shrinking fashion prices

While the amount of labels that include technical specifications of garments are getting bigger every day, the ones that show their price are getting smaller and smaller. If there is a phenomenon that has impacted the fashion business in the last decade, its low cost. cl, these types of fashion players have revolutionized the distribution map in the world, as well as how fashion is consumed. How much does a jean cost today? Whatever Primark says.

Low prices are not new: supermarkets had been selling like that for decades. The disruptive thing about low cost operators, with Primark at the top, was their ability to combine efficiency in operations and competitive price of supermarkets with the tools and aesthetics of companies such as Zara or H&M.

While this companies were immersed in a price war, with offers and discounts to try to make it into the consumer budget, low cost broke into the lower part of the pyramid and customers received it with open arms. 

If, during the crisis, the drop in fashion spending boosted these operators, after the crisis they have also kept its pace. The consumer got used to paying ten dollars for jeans and no longer wants to pay sixty again. At the same time, groups such as Primark or French Kiabi have evolved their business model, with stores increasingly similar to those of their competitors.

To cope with the speed of low cost giants, companies have also developed and promoted their own off-price concepts. This is the case of C&A with Clockhouse, or Lefties, which was born as Zara’s outlet but soon ended up gaining its own space in the market. This concept (which the group continues to consider as part of Zara) revenues more than 200 million euros and has a presence in Spain, Mexico, Russia or Morocco, among other markets. 

Companies have also developed and promoted their own off-price concepts 

The low cost formula also reached other segments such as footwear, with the giant Deichamnn in front and Decathlon for sportswear and equipment. The group, owned by the Mulliez family has an offer for men, women and children and it’s one of the largest retailers in the world by revenue. Like Kiabi, Primark or Deichmann, Decathlon has also begun to enter the main commercial axes, after years of development in shopping centers and medium-sized location. 

The other kings of low cost

Primark has broken into the top five of the biggest fashion retailers in the world. Decathlon, meanwhile, has increased its own by one point since 2008, to 3%, ranking as the fourth largest operator in the sector, ahead of H&M. Of the five largest operators, only three have increased their number of buyers: Primark, with 8.7 million more; Decathlon, with three million more, and H&M, which has added almost two million customers. Meanwhile, the sector continues to look sideways at the supermarket business, where it inspired for its business model.