Shopping is a Girl’s Best Friend (by Katrina Co)

I actually like shopping less than the average girl. To be more accurate, I only go shopping when I’m abroad because I see it as a recreational activity. Here in the Philippines, I rarely ever have time or feel the urge to splurge on anything except books. In recent years,
I’ve become a fan of the renowned Spanish brand Zara (was never a fan of Mango), and H&M as well when I first discovered it in 2006. Zara because of its trendy, fun and stylish designs; H&M because it used to have such nice clothes that were really, really cheap!


The clothing industry, with focus here on women’s clothing, is characterized by monopolistic competition. There are a lot of firms involved in the trade: locally there’s Zara, Mango, Kamiseta, Bayo, Topshop, Plains & Prints, and a host of others; in Europe there’s Stradivarius, Mim, Pimkie, Bershka, New Look, Jennyfer, and many more. There are so many players in the game because of free entry and exit in the market.

It’s relatively easy to start your own brand and produce some articles of clothing—even my cousin is starting her own swimsuit line from scratch. It’s also easy to extract yourself from the market if profits aren’t turning up as they should, since no heavy investments in machinery is involved or anything. Many clothing companies actually outsource their products.

The products being sold are also differentiated, but highly substitutable. At the end of the day, clothes are clothes, but to the target market of these companies (trendy, vain fashionistas of the world), the brand itself is a status symbol, and clothes certainly make the woman. Differentiation comes from many sources—the brand, the overall style of the clothes, the impression they give off, and the marketing strategies employed by the firms.

Mango, in what seems like many eons ago, was once the household name for chic, fashionable clothing. But right now, it doesn’t take a marketing consultant to notice that sales have been on the decline, and it’s no longer the brand to have. This loss of popularity could be attributed to the entrance of strong contender Zara in the international arena, which offers consumers the same—if not more stylish—clothes at a more affordable price. Also, I personally think the fit of Zara’s clothes is more responsive to the different body sizes and shapes out there. Mango’s clothes generally only look good on stick-thin people (see right).

Another thing that Zara is doing right is its advocacy of Fast Fashion. They’ve placed primary importance on responding quickly to consumer demands, and thus have implemented a series of strategies in accordance with this knowledge. Zara store managers are given more responsibility to decide which garments to put on sale in their stores, leading to speedy decision making. The firm also keeps updated on the latest trends instead of producing classics, which has kept goods moving and has increased impulse purchasing. Aside from that, vertically-integrated manufacturing operations has enabled Zara to move designs from conception to the store racks in a span of just three weeks. All of these strategies certainly sets Zara a cut above the rest in terms of differentiation.

H&M on the other hand seems to be focusing all on price. They produce generic, plain styles excessively and sell these at extremely low prices. But what you pay for is really what you get, since the quality of these clothes leaves much to be desired, and they’re just not made of the finer fabrics available in the market. Most of their selection consists of simple tops, but there are some products with really audacious designs.

It’s a well-known fact that the more you prefer something, the more money you are willing to spend for it. Personally, as a consumer, I have a much greater preference for the style and fit of Zara’s clothes (and actually Pimkie as well in Europe) than other brands such as Mango or other nameless stalls in tiangge. Thus I’m perfectly willing to pay the amount on Zara’s price tags, which I deem to be fairly affordable and worth it.

Because of Zara’s limited monopoly power in the industry, it can afford to charge a price higher than its marginal cost of production, that is the extra cost of producing an additional unit. That’s why its prices are noticeably higher than those of local brands. However, the firm must be careful not to push the prices to high because that might lead consumers to search for cheaper alternatives. The demand curve for clothing is fairly elastic, in that if there’s an increase of a few hundred pesos in a garment, it’s likely that it won’t sell as much anymore.

I think this type of competition, a monopolistic competition, makes every shopping experience an adventure, to say the least. As they say, variety is the spice of life, and these companies provide exactly that. It’s always good to have a plethora of brands to choose from that fit varying budget constraints and personal styles. Though the continual entry of new players may lead to an oversaturation, it would indeed be interesting to see what innovations new firms can add into the mix.