TFR | Strategy Consulting

Many fashion retailers define their strategy starting from their value proposition and key positioning levers (assortment, price, experience, speed, channels…) to differentiate themselves from competition. It’s part of their DNA but also define their purpose and business model.

The segmentation of fashion brands is illustrated on a pyramid where the more expensive brands are on the top. High price corresponds to high-quality fabrics, made-to-measure garments, exclusive customer service, and other attributes mentioned in previous posts such as Segmentation in Fashion or, in sportswear, Sports and Fashion in the Ironman era.

The Fashion Pyramid

The Fashion Pyramid corresponds to Maslow’s pyramid in many senses. Luxury fashion brands are generally covering the self-fulfillment “desire” and mass-market brands cover phisiological needs.

The pyramid is illustrative for many reasons:

• Brands are positioned in the Pyramid as corporations or conglomerates. Many of these companies compete in more accessible segments, for instance, by selling specific categories (e.g. eyewear, perfumes) or brands (e.g. Armani Privé, Giorgio Armani, Emporio Armani). Another strategy to move across segments is Capsule Collections (e.g. H&M x Moschino).

• Brands positioning or brand’s perception evolves. A clear example of how a company can move across segments is Michael Kors, that after a huge expansion across many channels (mostly department stores), the “brand” was damaged. If loyal luxury customers see their same bag everywhere, the magic is over. Also Tiffany experienced a reputation damage when selling less expensive silver jewelry.

It’s also interesting to note that brand’s positioning in Maslow’s pyramid is not a decision of the company. I’ve heard many colleagues from the business industry explaining their company’s value proposition and mentioning competitors that were totally different from reality or from customer’s perception.

In the end, customers position brands according to their experience, word-of-mouth, advertising, social media, customer service, quality of fabrics, loyalty programs, pricing and promotions, visual merchandising, amongst others. Brand awareness is decreasing, as commented in The New Fashion Retail Paradigm. According to Time Inc/YouGov Survey (2015), in 2007/08, 80% of US Customers remembered a favorite brand. In 2014/15, only 61%. Probably, new generations will embrace niche players in the long tail that are covering a mix of aesthetical and self-sulfilment need. Brands at the bottom of the pyramid will fight for a little space in customer’s brain within the infoxication era.

This is a holistic approach to how fashion brands are segmented in the Fashion Retail industry current state:

• SUPREME LUXURY: Hermés, Dior, Chanel, Bottega Veneta, Loro Piana, Versace…

Hermés Campaign © Eric Valli

• ASPIRATIONAL LUXURY: Prada, YSL, Dolce & Gabbana, Brioni, Armani, Ermenegildo Zegna, Louis Vuitton, Fendi…

Ermenegildo Zegna

• ACCESSIBLE-LUXURY: Ralph Lauren, Max Mara, Paul Smith, Stella McCartney, Dsquared2

Ralph Lauren

• PREMIUM: Guess, Calvin Klein, Hugo Boss, Michael Kors, DKNY, Coach, Furla, Diesel…

Michael Kors

• MASS-MARKET
  • Masstige: Massimo Dutti, Sisley, COS, &Other Stories
  • Mass: GAP, Zara, Bershka, H&M, Fast Retailing (Uniqlo), Mango, American Eagle, M&S, Superdry, Primark…

Mango SS19 Collection

In this segment, department stores like Target, JCP, Walmart, El Corte Inglés or Amazon are also selling private-label brands to compete to national brands, while supermarket chains like Carrefour or Lidl are increasing their apparel categories presence.