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Bringing the family business community together

The World's Four Biggest Clothes Retailers

11th March 2016 Jeremy Hazlehurst, Business Family

The four big fast-fashion businesses are all owned by families. Do they have anything in common? Is there a secret to being a mega-corporation, and still being family-controlled and family-managed? 

There is a battle going on in the fast fashion sector. In the US, GAP saw its earnings fall by a third in the last quarter, while those of Zara and H&M increased by a third. Meanwhile, Uniqlo’s global sales are almost level with GAP’s in the US. 

Why do we care? Because all the four firms mentioned above - the world's four biggest fashion businesses - are family-owned.

Sweden’s H&M is in its third generation of family management, with Karl-Johan Persson as CEO. Doris Fisher, who co-founded GAP with her husband Donald (who died in 2009) is still on the board of the company, as are two of their sons. One, Robert,  has served as interim CEO.

Zara is part of the Inditex group, owned by the secretive Spanish billionaire Amancio Ortega Gaona, and Uniqlo - or rather parent company Fast Retailing Co - is owned by its Japanese founder Tadashi Yanai who evolved the company from his father’s tailoring business (a pretty successful one, to be fair, with 22 stores.)

So why are the world’s four biggest clothing companies family-owned? Do they have anything in common? On the face of it - not really. In fact, they are almost laughably different.

Zara’s success is based on getting the latest fashions to market faster than anyone else. Uniqlo concentrates on staples that will never be out of (or very much in) fashion. “Uniqlo is not a fashion company, it’s a technology company,” says Yanai.

Both Ortega and Yanai were trained to make clothes, though. Yanai suits, and Amancio Ortega Gaona shirts. So is that the secret? Do they, like the family owners of high-end fashion brands, have deep fashion knowledge? No. H&M founder Erling Persson didn’t have any real interest in fashion, he just saw a product that could be produced more cheaply than it had been. 

And the secret of GAP was to buy a small number of products (Levi’s jeans, to start with) and sell them in every possible size. The innovations at GAP and H&M were pure retail concepts. The product was almost immaterial.

The name game

What do they have in common? Well, there is one thing:  none were precious about their names. Zara was going to be called Zorba, until the family realised there was already another shop called Zorba. Gap was The Gap and lost the participle at some point. 

Uniqlo was called Uniclo. When expanding into Hong Kong an official mis-spelled the name and Tanai decided it was easier to change the Japanese name than go through more paperwork to change it again for Hong Kong. H&M was called Hennes (“she” in Swedish) and became Hennes & Mauritz when it bought another shop in 1968, 21 years into its life. It slowly mutated into H&M (perhaps because it was easier to pronounce for an international clientele.)

Maybe this is stretching the point, but does that mean the founders were less concerned about the name, and more about the concept? There could be something in it. Consumers certainly didn’t care. (Don't tell the banding consultants.)

The only other thing the big four have in common is that they were perfectly placed to ride the wave of cheap manufacturing in the 90s, in China and other Asian countries. Perhaps that huge success allowed the family to keep control, with no need for outside shareholders. 

If that theory is right, then the reason the biggest clothes brands are family-owned is not really about clever management or good next-generation education, but something far simpler - the power you get from making lots of money fast. 

 

About the Author - Jeremy Hazlehurst is the founder of Business Family and this article has been reprodueced with permission.  Visit the website here to find out more.

 

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