Growth insights from the global leaders in retail

The impact of the pandemic has been far reaching across global economies and firms, resulting in the closure and consolidation of many retailing and clothing manufacturing operations. South Africa was not spared, with closures having a negative impact on employment and livelihoods, making it important to identify trends and strategies which may be leveraged to support industry recovery and growth, especially in light of increasing retail demand for local manufacturing capacity.

Our review of global retail leaders: ASOS, H&M, Inditex, JD Sports, Primark and Uniqlo offers some insight as to how this can be achieved.

Growth drivers What they mean
Agility Rapid understanding of trends and market signals
Defensive and offensive in-season responses to fashion trends
Defensive and offensive in-season responses to the economic strength of the market
Omnichannel Significant online and mobile presence
Blending and integration of customer experience across all retail channels
Strategic complementarity between online and physical store channels
Sustainability Visibility into origin as well as social and environmental footprint of products
Introduction of sustainable brands and collections
Proliferation of sustainable fabrics
In-store recycling and green packaging


In further engagements with industry, we have yet to hear a dispute to these three growth drivers. Perhaps what is more interesting (and at times controversial) is the best approach to achieve these growth drivers. Four supporting value chain strategies stand out for review of global best practice:

  1. Custodianship of the value chain
  2. Variable margin retail model
  3. Strategic Sourcing diversification
  4. Investment into real-time data, analytics and AI capabilities

Yet, our review highlighted that there is no-one size, fits all answer to how firms should execute these strategies.

Take custodianship of the value chain as an example. Significant commercial research, business school case studies and academic papers have focused on Inditex’s vertical supply chain as a core strength of its business model and the pinnacle of retail sourcing.  However, while custodianship of the value chain may happen through vertical integration, it does not necessarily require it. Inditex prefers to own many of its key suppliers in order to fully align incentives, whereas ASOS, H&M and Uniqlo outsource all production. In the latter cases, value chain custodianship and shared value are exercised through 100% capacity booking up to 5 years in advance (H&M, Uniqlo, Primark), meaningful supplier grading systems whereby the retailer guarantees sourcing at least the same percentage of the product category from a given supplier the next year provided a particular operational and/or sustainability performance level is met (H&M), investment in an army of 400 technical fabric and product specialists permanently deployed to support suppliers on operations and sustainability (Uniqlo), and production teams that visit external factories weekly to resolve quality challenges (Uniqlo).

In the domain of sustainability R&D, retailers are looking beyond their own internal capabilities and direct retailing responsibilities to drive their value chains forward. H&M acquired a polymer recycling technology start-up, sponsors research at the University of Boras in Sweden, holds equity in three fabric development companies, and invested in the H&M Laboratory, an innovation hub focused primarily on sustainability and the circular economy. Inditex has earmarked EUR 1 billion for R&D and is collaborating with research institutions in the US, Spain and China, and Uniqlo has partnered with an industrial materials science corporation to develop fibres and fabrics from recycled materials.

Whatever the ownership structure, these retailers understand that their growth and profitability depend on what their value chains enable them to bring to market, whether in terms of price, trend accuracy, quality or sustainability. They understand that it is in their interest to take responsibility for their value chain and that as the lead firm they have the power to do so. In the case of omnichannel retailer, ASOS, even logistic providers are noted as strategic suppliers, with relationships nurtured and managed to align the business’ strategy from end-to-end.

For South African retailers, the experience of global retailers highlights a broad spectrum of options, connected by one, unbreakable thread: the best retailers are those that recognise they are the culmination of their value chains.

To read the full Clothing, Textiles and Footwear Intelligence Report (2021) visit: