SPA

Speciality store retailer of Private label Apparel

SPA(Specialty store retailer of Private label Apparel) is the business model that completes everything from standardization to sales of own-brand products in-house.
Until then, apparel manufacturers took the lead and trading companies, wholesalers, and retailers played their respective roles, but now retailers are in charge of planning, designing, manufacturing, material procurement, and distribution.
It is a business model that has permeated mainly in the fashion industry, and as SPA is translated as manufacturing and retailing, a retailer that handles clothes and fashion miscellaneous goods takes the lead in product planning and design, manufacturing, and sales. I will.
In the past, the apparel manufacturer was in charge of planning and design, the materials were procured by the trading company, the distribution was handled by the wholesaler, and the retail store sold it, which was a complete “ horizontal division “. > SPA is a “vertically integrated” model , in a sense the opposite of unbundling.

At SPA, retailers handle raw material procurement, product planning, manufacturing, distribution, marketing, and sales. As a result, product sales trends and customer needs can be grasped directly from the site, and the grasped needs and sales trends can be quickly reflected in the production plan. As a result, it becomes easier to control inventory, and it is possible to reduce costs by producing it with pain to the outside.

In addition, many apparel companies such as UNIQLO, which adopt SPA, integrate product planning, distribution, and sales to plan products based on customer information and manage inventory and production. We have adopted “ fabless management “, which we do not own, but outsource production to companies in countries with low costs.

 

History of SPA

The pioneer of SPA is the American apparel company “GAP”. GAP is also a huge chain with more than 3000 stores worldwide, but initially it was a small jeans store dealing with Levi’s in Los Angeles and San Francisco.

However, feeling the needs of the West Coast baby boomers who want to casually enjoy casual wear that fits their body shape, the founders, Mr. and Mrs. Fisher, have a wide range of fashion sizes, but the choice of size range is inconvenient. On the other hand, the retail price of special-sized items could not be set at a low price, so the company’s original products were gradually used as ignition agents for SPA.

 

 

SPA type

Retail type

The retail type is called “backward vertical integration” and is a mobile phone in which distributors work together to integrate manufacturing departments. Representative companies include UNIQLO and GAP.

Originally, UNIQLO was mainly a retailer selling branded products such as Nike, but by incorporating the manufacturing department, we decided to stop selling other companies’ products and specialize in selling our own products.

This is “ backward vertical integration ” in the sense that it integrates the upstream of the value chain, and is called “retail type SPA”.

 

Manufacturer type

The manufacturer type is called “ forward vertical integration “, and the manufacturer plays a central role in integrating the distribution departments. Representative companies include ZARA and H & amp; M.

ZARA became a SPA business company by starting from a manufacturer and entering the retail business.

In this case, it becomes a “forward vertical integration” that integrates the downstream of the value chain, and is called a “manufacturer-type SPA”. In addition, UNIQLO is particular about materials and quality, and fashionability is important, while ZARA is particular about fashionability rather than functionality and quality, and has a strategy of anticipating trends. As a result, UNIQLO has less replacement of products themselves,

While selling throughout the season, ZARA is restocking products in just a few weeks. ZARA’s first-come-first-served basis, which sells out in a short period of time, encourages customers to buy products that they like, unless they buy them on the spot.

 

SPA 2nd generation

While GAP and UNIQLO value the low price of goods by SPA, the second generation of SPA has valued the trend, that is, speed.
Trends are important in the fashion industry.
Sweden’s H&M and Spain’s ZARA have focused their value on that trend.
In order to respond to the rapidly changing trends, ZARA has many young designers and will develop products as soon as trend information is obtained on Paris Fashion Week. We have adopted a speedy and agile tactic of changing the production volume according to the subsequent sales situation by putting a small amount on the sales floor without mass production. It is said that the span from planning to sales is only about 2 weeks or 15 days, and the freshness of such trend fashion can be realized only by SPA, and for ZARA, basically only a certain number of the same products are available. Because I don’t make it, I get the impression that different products are lined up every time I go to the store.
That should be the case, and it is said that ZARA has about six times as many customers as other apparel companies in the same industry. If you don’t keep it on the spot, it will sell, and even at an online shop, it will be sold out immediately, and ZARA has a high turnover rate of products. From these points, the second generation of SPA is called “fast fashion”.
As an aside, ZARA rarely advertises, and it boasts a high profit margin because the advertising costs that would be enormous for ordinary companies are very small.

 

 

Advantages of SPA

Cost reduction

First, SPA is retail-led in planning, manufacturing and sales, and can provide better products cheaper and faster.

Until then, there was a disadvantage that a intermediate margin was generated at each stage and the price was high. However, retailers are profitable by taking care of everything from planning to sales, eliminating margins for other companies.
It is important to reduce costs by entrusting mass production. Therefore, it is possible to control the production contractor and it is necessary to assemble the product.

 

Speed ​​

Until then, it took more than half a year to actually commercialize the product because it was also a planning and design apparel manufacturer, a trading company for material procurement, and a wholesaler. There was a demerit that it was not possible to catch the trend due to the delay in commercialization. However, as soon as all retailing became consistent, it was possible to line up in the sales floor.

In particular, ZARA in Spain is particularly focusing on this speed, and while having many young designers, not famous designers , fashions that express the trends of Paris Fashion Week are instantly lined up in the sales floor.

 

Product development that meets your needs

You can plan products and manage production based on the information on the retail site.
We need a system and mechanism that can discover customer needs from the point of contact with the final consumer and incorporate them into product planning. In addition, an information system is also needed to transfer on-site flow information and inventory information to production control.

 

Easy inventory management

Since it is possible to manage and control the entire supply chain and manage a wide range of functions such as raw material procurement, production, and sales, it is necessary to manage suppliers and contractors, and clarify the scope of responsibility of the entire supply chain. It is necessary to have the imaginative power of conversion and overall design. In SPA, it is important to manage the supply chain by utilizing the information in order to reflect the hot selling information and inventory information in the store to the production site and the distribution site.

 

Disadvantages of SPA

Consumer churn and tiredness due to mass production

In manufacturing and retailing, production and raw material procurement often depend on other companies, so if relationships with those companies deteriorate or problems occur with business partners, production consignment or procurement becomes impossible. I get a sting when I carry out SPA.
In addition, one of the merits of adopting SPA is cost reduction due to mass consignment production due to economies of scale. The effectiveness of leadership strategies will be reduced and huge amounts of unsold products will be left unsold, jeopardizing even the survival of the company.

 

 

Typical example of SPA

Apparel companies such as Uniqlo, Zara, H&M, and GAP

The above apparel companies are the format that started SPA. Please refer to the above for the strategies and business models of these companies.

JINS

JINS is a SPA company that offers overwhelmingly reduced prices as a company that sells glasses that can be purchased for less than $60 along with innovative products such as “PC glasses” and “pollen-cut glasses”. is. The secret of popularity is the cheapness of eyeglasses because almost all the processes are done in-house and the intermediate margin is eliminated.

In conventional eyeglass chains, distribution from manufacturers to retailers is multi-layered, and each vendor takes a margin, so the retail price of a set of eyeglasses has reached tens of thousands of yen.

In addition, it took a long time to deliver the products to customers, so JINS developed a business to assemble and sell cheap frames and lenses originally purchased from South Korea in order to solve these problems.

It worked, but as some companies started to do similar business, we planned it ourselves and introduced SPA to sell it at a low price.

Currently, almost all frames are designed by our company and are mainly produced at contract factories in China. We also provide technical guidance for eyeglass bathers in Fukui Prefecture and incorporate high-quality parts made in Japan into some of our eyeglasses. We have improved the quality of eyeglasses .

In addition, by quickly reflecting the best-selling information at retail sites in production, we have created a system that can speedily provide customers with high-quality eyeglasses with a set of threats of $60 yen as described above, while reducing lost sales opportunities. It is.

 

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2021年6月4日
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SPA

 
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