Sample Term Paper
Term Paper: When asked why they prefer Zara the middle aged mother replied I buy clothes from Zara chain because they are cheap. When the same question was asked with her 20 year daughter she said I prefer Zara because it’s fashionable and trendy. The point what we are trying to make here is that Zara is playing out very smartly by riding two of the winning retail trend, that is low priced and in the fashion (Dutta).
While the company is now being viewed as a success story what did they did in order to do so. The success of Zara primary deals with controlling all the steps of manufacturing that is from designing to fabric choice, manufacturing, distribution and sales and most importantly trying to do all this in quick succession. This strategy of Zara gives them extra benefits over their competitors for the single reason that in the fashion industry the trend is changing constantly and this ability of Zara to cope up with time and always move ahead of the trend makes them the market leader (Weine).
Why focus on flexibility?
Zara’s flexible approach has helped them achieve what they are today, the question arises how they do so. Answer to this question comes from the fact that it takes less than two weeks for a skirt to get from Zara’s design team to a store in Qatar or Paris or any other store in the world. This speed is 12 times faster as compared to their main rivals. This shorter lead time means that Zara can ship fewer pieces in a superior variety of style. And also they have the option to cancel the lines if they are not selling or giving proper results which eventually means avoiding excessive inventory (Weine).
Secondly another reason of its success is that now days when every other company is heading towards Chine to outsource their production, Zara spends 15% more on producing their garments inside Spain or Portugal. The extra cost which the company bears in production is easily compensated by saving the inventory cost, saving the advertising budget and quickly adapting with the fashion trends. The strategy of Zara’s in house production has given them this extra cushion and this lies with the company’s vertical integration. Also as the company spends very less on the marketing the shops have always been the principal marketing tool for Zara. As we have said this throughout that time is the most crucial factor of Zara’s success, by time hear we mean the lead time in knowing what the customer wants till it’s on the shelf of the store (Clark).
This is where the other companies like GAP went wrong. Not only GAP but there is a general practice in the fashion industry that retailers place their orders for a season’s collection before these lines eventually makes up to the stores. To guess what the customer wants in advance is a tricky job, especially in the fashion industry there is a very famous saying that inventory=death. The reason we have already mentioned that the fashion trends changes every day and hence it’s very hard to predict that how the customer’s choice would shape up now (Gallaugher).
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