Zara success factors
This is first time I search about Zara; I found they know how to play with their rules and uses all their effort in creating market leaded by customer needs in fashion, I am really passionate about what they do.
When a company uses its capabilities and innovation to keep its market, Zara is a very good example in innovation and management and become the first name in fast fashion controlling more of its manufacturing and supply chain than most of its competitive counterparts.
Supply chain management is the key to Zara’s success and relies on the fact that they refresh collections almost twice a week. This Rapid change of collections make them adapt to rapid demand changes while covering a vast customer base. The new latest trend delivered by their own designers converted into new product in a couple of weeks in Zara stores and approximately there is not dead stock or fear of unsold inventory because the refreshed batches are of small quantity.
Zara’s success proves the theory that if a retailer can forecast demand accurately, far enough in advance, it can enable mass production under push control and lead to well managed inventories, higher profitability, and value creation for shareholders in the short and long term.
The limited amount of stock with each collection gives the customers a sense of urgency to head out and buy the clothes before it gets replaced with the new or goes out of stock and also saves excess inventory. Of course, this gives the customer’s loyalty for the product. Unsold items account for less than 10% of stock. Re-designing their stock in this manner gives consumers the feeling that the products are new.
Store managers monitor customers’ reactions on the basis of what they buy or don’t buy and what they say to a sales clerk and report this information to the headquarters every day where it is then transmitted to a vast team of in-house designers, who quickly develop new designs and send them to factories to be turned into clothes.
Zara also has extra capacity on hand to respond to demand as it develops and changes. For example, it operates typically 4.5 days per week around the clock on full capacity, leaving some flexibility for extra shifts and temporary labor to be added when needed.
The business strategy allows the company to sell more items at full price because of the sense of scarcity and exclusiveness. Zara’s strong distribution network enables the company to deliver goods to its European stores within 24 hours, and to its American and Asian outlets in less than 40 hours.
Zara also is introducing an augmented realityexperience in its stores. Shoppers can engage their mobile phones to see models wearing selected fashions when they click on sensors in the store or displayed on AR-enabled shop windows.
Creating customer curiosity is a most powerful pull marketing strategy. Every human being is innately programmed to satisfy it. With this new AR application and in so many other ways, Zara excels by pulling customers into the brand and involves the customer interactively in the decision-making process. That is the Zara difference.
Zara might consider new technologies to anticipate parabolic demand. For instance, algorithms that combine the rate of sale of various products as compared to similar products during same seasonal cycles could yield warnings enabling Zara to adjust manufacturing before peak demand is reached. In a sort of proactive way, technology already readily implemented at Zara could be expanded to connect preliminary data points and offer forecasts. The immediate result of this good technology use is savings in inventory. Sustained innovative new lines of clothing constantly replace old ones in the global Zara network.
Zara depends heavily on technological innovation, user experience, synergy between employees and smart management between sectors, this is all is due to the wise and leadership of Amancio Ortega who is Zara founder.
https://www.zara.com
