February 2008 | By Rosario Silva, Professor of Strategy at IE Business School.
Homeless, a quality designer brand named after street people, has achieved success using a unique strategy that distinguishes it from the rest of the sector.
This fashion company, created in 1994 under the name of Homeless and rechristened Hoss Intropia a few months ago, targets the medium-high segment of the women´s clothing market. To understand its strategy, we first need to take a brief look at the current situation of the fashion industry. The sector includes companies with very different strategies. On the one hand, you have the large international chains which, with their cheap & chic formula supply well identified consumer segments with a lot of design at low prices and, thanks to investments in outlets, they have created powerful brand names. On the other, you have the companies which also offer a lot of design but have a brand name that is generally associated with a designer. They have also preferred to invest in their own shops with the same idea of strengthening their brand name.
The strategy applied by Homeless is very different from its competitors in many ways. First of all, its position of high-level design and quality has focused on all kinds of women; in other words, they do not appear to segment the market, which is particularly surprising in view of the progressive specialisation of the sector. Secondly, its Homeless brand name has been associated with a social commitment by the company´s founders to helping homeless people, showing their own style and unique identity. Thirdly, its designs have been distributed through its own shops (it owns 14 in Spain) and through multi-brand shops (twelve hundred points of sale in Spain and abroad), which has afforded high growth without having to commit large amounts of financial resources. Finally, unlike its competitors, it focuses mainly on the domestic market (70% of sales).
Undoubtedly, the change of brand name was a good decision since the original brand sounded very harsh and was prone to being misunderstood by its target market. The enormous capacity for design the company has shown throughout these years, together with a new brand name, will be essential for the success of its international expansion, which began in London and is to continue in the direction of Italy and the United States.
This article was published in the monthly IE academic newsletter IE Focus. To see the originally published article please click here.
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