Mariana Russo |June 25, 2016 | Retail Buying.X1.Su16.Online
QUALITY –VS- QUANTITY (ZARA)
The three winning formulas that Zara relies on for success are:
- Short Lead Time- When fabric is in stock, Zara aims for a 15-day production window. This is possible by being vertically integrated and keeping raw goods in stock.
- Smaller quantity per style- With Inditex CEO being quoted as saying “In fashion, stock is like food, it goes bad quick.” Zara keeps low stock on hand to avoid having large amounts of merchandise on sale. This reduces risk and exposure.
- More styles per year- More fashion faster. Where an average company has 4 seasons, Zara boasts 104 seasons updating racks 2 x per week
In Zara’s case react rather than predict means that Zara does not expend energy on creating trends but instead, reacts to trends quickly. As we saw in the video uploaded for our class lecture “Zara Beast” by the time Madonna was finishing her Spanish tour, concertgoers were donning Madonna “inspired” outfits from Zara only weeks after the tour began. Zara’s vertically integrated operations along with their work force integration and communication allow for efficient workflow from design to production. Zara is clear on who they are – a fast fashion retailer and they do not deviate from this. In order to allow for efficient and fast communication, they have invested in good IT to support their needs.
Having personally worked with retailers developing product, it would be impossible for a traditional retailer to ever compete with Zara and their infrastructure. For one, traditional retailers don’t typically own their production lines nor do they stock raw materials. A traditional production lead-time is 6-8 weeks with months of development and perfecting samples prior to purchase orders being cut and approved. I have personally experienced approvals taking 2 weeks alone because of bureaucratic reasons. Zara’s business model of a self-sufficient business from raw materials to production as well as integrating departments for a seamless flow of communication is an avant-garde approach to developing and producing. (Dutta, pg 108) “Traditional retailers are not equipped to do that without having to completely revamp their business models”.[1]