While stores are closing in the U.S., European cheap chic retailers continue to seek growth in the U.S. market. H&M (STO:HM-B) and Primark (LON-ASB) are two that have plans to continue opening stores in the US.
The cheap-chic business is primarily driven by millennials globally. Social media is key for this audience. They crave new fashion so they can show their style daily on Instagram, Snapchat etc. Therefore, this audience demands constant newness.
Merchandise decisions are controlled at lower levels for expediency
The cheap chic brands are all about immediacy, therefore, they have given more control to store managers and merchants who are closest to the customer. (The opposite of the traditional department store setting.)
At Primark store managers are able to order directly from the warehouse.
Zara (BME: ITX) responds quickly to feedback from its store managers around the world, who feed daily updates to a 600 design team in Spain on what is selling and what isn’t. The design team takes this information and whip up designs that can be in stores in a matter of less than a month’s time.
In our recent shop of Europe (London & Amsterdam), we noted classification additions in home, beauty, intimates, active and sneakers
In the H&M stores, the beauty category was much larger than what we have seen in the U.S. The activewear section was also much larger and the store we visited included home, which is still a newer category for the U.S. market.
Under the H&M umbrella, & Other Stories and Monki also offered product related to beauty & home accessories. At both stores we also noted a stronger emphasis on athleisure style that is styled not only for work out purposes, but as everyday wear.
Zara continues to be one of the key retailers to have a strong product assortment that drives consumers to their doors. Their merchandising offers trend-led silhouettes along with key color palettes.
Bershka & Stradivarius, also under the Inditex umbrella, had beauty as part of their offering. Stradivarius also included home accessories. Both stores targeted millennials with messaging for the store experience to be shared across social channels.
Primark which is mostly known for their low prices and fashionable products also has a large beauty section. Their beauty space was also brought to life with Youtube videos featuring beauty vloggers demonstrating how to create looks with their beauty products. As they are known for knocking off looks with their apparel, their beauty packaging is also very similar to brands like Nars and MAC.
Across our shopping, especially with the cheap-chic market we saw these stores to be very trend driven and especially focused on festival season which is occuring now across Europe. These brands target millennials and also have positive messaging where customers can snap and share across their social channels.
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