- 1 zara fast fashion case summary
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zara fast fashion case summary
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. What is Zara value proposition to customers? How is Zara’s Supply Chain helping this value proposition? Zara is able to sell fashionable clothing to consumers. It can quickly respond to consumer trends and bring garments to market that follow trends in the local market. This concept of “fast fashion” allows trends to move from catwalk/conception to retail location quickly, in some instances in just a few weeks. It also affords these fashionable items at reasonable prices. Consumers therefore look to Zara for affordable, trendy clothing. Zara is able to deliver on this promise for trendy, affordable goods because of the strategic choices it has made within its supply chains. They allow Zara to quickly adapt the clothes that it sells in its stores. Zara created two basic collections each year, but regularly introduced other items throughout the seasons. Characteristics of importance: • ZARA receives textiles from their own suppliers, often undyed ‘gray’ fabric, which allows for customization closer to the sale date. • Low levels of inventory – they produce a lot of products, thousands of skews and much higher than the average company, but they only produce a few of each item. This helps them keep their inventory levels low, and also drives multiple visits to consumers to the store to see the latest trends. • Shortened period of.
. region of Spain is one of the world's fastest growing clothing retailer that designs, produces and sells apparel and fashion accessories through 1,284 stores around the world under many brand names. Zara is an apparel chain owned at operated by the Inditex. It specializes in fast fashion and offers women's, men's and children's fashions at affordable prices. This report analyzes the case Zara: Fast Fashion and the problems associated. The report covers the detailed study of Zara's:•Situational Analysis, which includes factors such as the environment, industry, SWOT analysis, and marketing strategies. •Marketing problems faced by Zara and narrowed it to two primary issues:-1.Growth and product differentiation in the International markets. 2.High manufacturing and distribution costs. Our team has designed the following strategies in order to aim to overcome the problems faced:1.Product differentiation can be used as strategy to increase market penetration2.Different pricing strategy for each country3.Sourcing more goods from cheaper labor marketsThe above designed strategies target to improve Zara's current problems and resolve the issues. 2.0 Situation AnalysisZara, an apparel chain owned at operated by the Inditex of Spain specializes in fast fashion and offers women's, men's and children's.
Zara Fast Fashion Case Analysis Essay
. Zara: Fast Fashion Case Analysis INTRODUCTION In 1975, a Spanish entrepreneur first opened Zara as a retail store in La Coruña, Spain. He then created the corporate group, Inditex. Inditex had become one of the world’s largest specialty retailers; it had six different chains, through which Inditex designed, manufactured, and sold apparel, footwear, and accessories for women, men, and kids around the world. Stability distinguished Inditex from other apparel retails. Although Inditex had become a public company with increasing stock price and high margins, Inditex always aimed to become a very sustainable company rather than most profitable one in the world. Zara was the largest and most internationalized chain for Inditex. Its headquarter was located in Arteixo, Spain. Zara was well known for its success in creating “fast-fashion” by selling fashion items at affordable prices and responding the market trend very quickly. Its business system and international expansion had become Inditex’s proudest decision. Inditex became increasingly international after 2001. It announced that Zara’s strategy in international expansion was the main reason for the group’s sales growing globally. Zara was no doubt the cash cow and key business for Inditex. However, Zara itself faced some difficulties when expanding.
Essay about ZARA IT for Fast Fashion
. ZARA IT for Fast Fashion ( Case Analysis) 1) Please describe three most important competitive advantages of ZARA (Inditex) over its main competitor. How sustainable is this advantage? 2) Assume that ZARA is considering to enter the US market. Please recommend actions for ZARA. Please make clear assumptions when necessary. After reading and analyzing the Zara case we came several conclusions when it comes to Zara’s competitive advantage over its competitors. We understood that Zara is using totally distinctive business model compared to other more traditional fashion retailers. In our opinion there are three most important advantages that Zara has over its competitors. These are : IT Software/internal information flow, Factory locations/Geographic placement, Just in Time approach. We believe that these three factor are the main determinants when it comes to Zara’s strong current position on the market. Below I will go more in detail and explain every single factor individually. Software/internal information flow First factor which gives Zara competitive advantage according to me is their software. The fact that all the software (PDA) used currently by Zara is developed by them gives them huge competitive advantage. Having the software developed internally makes.
Essay on Zara Fast Fashion Case
. 2nd Assignment _ ZARA: Fast Fashion Though Inditex (a global specialty retailer), Zara manufactures and sells apparel for women, men and children. But what has made Zara the prosperous company that is nowadays? In an extremely dynamic environment where the consumer’s tastes are changing, the competitors are fighting fiercely, and the globalization and new technologies are changing the traditional market rules… Zara has developed a unique strategy that has allowed it to maintain a competitive advantage. Zara faces certain challenges to maintain these advantages: • Vertical Integration ( This is an original strategy of Zara. It is the only competitor in the market that has had “the idea of combining distribution with manufacturer”. This way, Zara has been able to implement a successful merchandising strategy, which allows them to build up a powerful and prestigious brand image. By owning its own production Zara is also able to reduce costs and provide its customers updated fashion in the amount demanded by the market. That makes Zara one of the most flexible apparel retailers in this business. But this up/downstream strategy might be a double-edged sword. By following this strategy Zara is not able to reach economies of scale, so that makes ZARA´s costs higher than their.
. technology development, consumers are easier to access to fashion. As a result, the customers are changing and the companies are evolving to deliver customers satisfaction. Zara, the most profitable brand of Spain clothing retail group Inditex, has leveraged its unique strategy to achieve success and will be expected to maintain a sustainable growth in the fashion industry. Zara’s core competencies can be divided into four areas: process development, distribution, marketing and integrated business structure (referred to Appendix 1). Zara’s unique process development allowed Zara to produce in a shorter cycle time and more quickly response to the customer’s needs than other competitors. When the fashion season started, Zara’s designers attended trade fairs and ready-to-wear fashion shows to translate the latest trend of fashion into their design. Zara’s product development staff, at the meanwhile, researched the market through different retail stores and university campuses to understand customer’s preferences. Zara’s IT system, on the other hand, played a key role on the internal communications. This helped Zara’s managers constantly track the sales data and therefore capture the customer’s desire. Moreover, Zara’s centralized distribution facility gave the chain efficiency. Both internal and external products passed through the distribution center, and were inspected and.
. Zara – Solutions: Zara is a world famous Retail Chain based in Spain and is extremely successful in their supply chain. Questions: 1. What is Zara’s Business Model and its unique Supply Chain strategy? Zara’s business model can be broken down into three basic components: concept, capabilities, and value drivers. Concept is to maintain design, production, and distribution processes that will enable Zara to respond quickly to shifts in consumer demands. Capabilities: Zara maintains tight control over their production processes keeping design and manufacturing in-house. Zara maintains the flexibility necessary to design and produce over 12000 new items annually. Value drivers for Zara are both tangible and intangible in the benefits that are returned to all stakeholders. The successful implementation of Zara’s business model provides great value to stakeholders and differentiates their business from their peers. Three goals for operations: develop a system that requires short lead times, decrease quantities produced to decrease inventory risk, and increase the number of available styles and/or choice. Others: Zara has developed a business model based on short deadlines, decrease quantities and a great choice of style and clothes. The infrastructure: Zara only works with stores. They don’t make merchandising in internet. The company.
Zara : IT for Fast Fashion Essay
. Zara : IT for Fast Fashion Zara is a leading brand in the fashion retail industry. It is a vertically integrated retailer, a pioneer of the Just-In-Time Inventory system. It becomes important to define the critical success factors for this industry in the analysis presented through the following three questions: 1. How can you differentiate Zara’s use of IT? Technology investment should be targeted at the points in the value chain where the impact is most significant. If we look at the value chain of the fashion retail industry(considering a manufacturing value chain), the key activities or the high value adding primary activities are: Marketing and Sales(it’s a customer facing industry and it doesn’t matter how efficient the operations are if the sales don’t happen): Zara doesn’t advertise its products -> the advertising expenditure is only 0.3% of revenue as compared to the industry norm of 3%-4%. So, Zara has to resort to other means in order to attract customers and maintain steadily growing sales. In the fashion retail industry, it is of utmost importance to stock apparel that would appeal to the public. In this regard data becomes extremely significant in order to ensure that stores carry the kinds of things customers want to buy. Zara’s store managers can perform the task of collecting information by interacting with customers about.
Zara maintains the flexibility necessary to design and produce over 12000 new items annually. Value drivers for Zara are both tangible and intangible in the benefits that are returned to all stakeholders. The successful implementation of Zara’s business model provides great value to stakeholders and differentiates their business from their peers. Three goals for operations: develop a system that requires short lead times, decrease quantities produced to decrease inventory risk, and increase the number of available styles and/or choice. Others:
Zara has developed a business model based on short deadlines, decrease quantities and a great choice of style and clothes. The infrastructure: Zara only works with stores. They don’t make merchandising in internet. The company succeeds to make moderate prices with a large choice of new clothes every time. The success of ZARA is based on two principals: follow the trend to be able to sell garments at a moment where people want this kind of style, without using any advertisements as the concurrence does. They don’t want to convince people to buy their clothes but give the public what they desire at the moment.
Secondly, the trust that had been given to employees allowed the company to delegate. They decide what clothes should be in stores, the designed the garments by pairs for a specific collection. Their role is to create clothes not to be sold for a long time but only for a short period in appropriateness with the current trend. The goal: of the firm is to convince the consumer to buy their clothes. Their bid: they propose and deliver all fashion style at the moment and they don’t want to make marketing for old or past fashion collections.
The design and the organization of the stores are changed every four years behind the indications and orders of La Coruna in order to be creative and innovative all the time. Unique Supply Chain strategy: They have strategic agreements with local manufacturers that ensure timely delivery and service. Zara is a vertically integrated company that owns different levels of the supply chain. From manufacturing to warehouse to retail outlets, Zara owns all of these different entities. This allows Zara to globally optimize instead of locally.
This type of centralized decision making reduces the bullwhip effect on the overall supply chain. Production costs (machinery and labor) are relatively high for Zara’s supply chain compared to their competitors. Another interesting aspect about Zara’s supply chain is Zara does not forecast the upcoming season’s products before production. Instead , their design team observes the fashion trends at that second and reacts to consumer’s taste. Information is also centralized allowing permeability amongst the different layers in the supply chain.
In order for this model to work, the supply chain has very short lead times and Zara states that it is able to go from design to final product delivery in 14 days. 2. What kind of IT System they are using and what are the major Benefits? Zara’s information and communication protocols are significantly different from its competitors. Zara spends less than 0. 5% of total revenue on IT and IT employees account for only 0. 5% of Zara’s total workforce. This differs from their competitors who spend on average 2% of total revenue on IT expenditures and have 2. % of their total workforce devoted to IT. Zara utilizes human intelligence (from store managers and market research) and information technology (such as their PDA devices) in order to have a hybrid model for information flow from stores to headquarters. For example, managers at Zara stores use handheld devices to send standardized information regarding customer feedback and ordering needs directly to in-house designers. This not only keeps Zara’s designers informed of fast-changing customer trends and demand, but also provides the company with insight on less-desirable merchandise.
Zara’s unique approach of human intelligence assisted IT solutions results in well-managed inventories, linkages between demand and supply, and reduced costs from obsolete merchandise; Hence, the hybrid information and communication system that Zara uses provides cost advantages to Zara’s operations and helps to abide by their fundamental principle to have the ability to rapidly respond to changes in consumer demand. 3. Can you suggest any improvement in their IT System and Networking? There is still room for improvement in their IT processes to realize more effective management of inventory levels.
Zara is able to sell fashionable clothing to consumers. It can quickly respond to consumer trends and bring garments to market that follow trends in the local market. This concept of “fast fashion” allows trends to move from catwalk/conception to retail location quickly, in some instances in just a few weeks. It also affords these fashionable items at reasonable prices. Consumers therefore look to Zara for affordable, trendy clothing.
Zara is able to deliver on this promise for trendy, affordable goods because of the strategic choices it has made within its supply chains. They allow Zara to quickly adapt the clothes that it sells in its stores. Zara created two basic collections each year, but regularly introduced other items throughout the seasons.
Characteristics of importance:
•ZARA receives textiles from their own suppliers, often undyed ‘gray’ fabric, which allows for customization closer to the sale date.
•Low levels of inventory – they produce a lot of products, thousands of skews and much higher than the average company, but they only produce a few of each item. This helps them keep their inventory levels low, and also drives multiple visits to consumers to the store to see the latest trends.
•Shortened period of garment development from market research → sample creation → shipping final garment to stores. Design/production and majority of suppliers are located close to the action where it will be sold helps shorten this process. (Versus other companies who outsource in third world countries). This shortened cycle time reduced working capital.
•40% of finished garments were manufactured internally; and many of the ‘risky’ fashion items were contracted by local suppliers so they were able to get them to market quickly, get feedback, and order more of the lot based on consumer shopping data •Different than other competitors, Zara’s design teams bridged merchandising and production.
•Investing in prime locations
Under the Newsvendor paradigm, how would you compare the Overage and Underage costs of Zara and Gap?
The newsvendor model is relevant for Zara and Gap because even though the items are not technically ‘perishable’, consumers are less willing to pay high prices for clothing that is out of season or no longer on trend and therefore in the ‘fast fashion’ business we should consider the garments perishable. The Newsvendor paradigm helps us understand optimal inventory levels, considering that unsold garments will not garner as high a price (or no price at all), and that demand will be uncertain.
In order to calculate the underage and overage costs of each chain, we would need to understand the regular market prices for their goods, the cost to manufacture the goods, and the cost to liquidate the goods. See chart below for the data that we would need to calculate these values.
In general, I would guess that Zara has a higher underage cost because it doesn’t stock a lot of inventory and the underage cost reflects the cost of being a unit short in inventory. I would guess that Gap has a higher overage costs because they produce more units and therefore have a higher cost of units of excess inventories.
Autor: CHANKIMMY0101 • September 30, 2013 • Case Study • 4,226 Words (17 Pages) • 644 Views
Assignment ZARA:Fast Fashion P1
What industry is it p4
General environment analysis p5
The industry environment p6
Competitive environment p7
Have material about opportunities and threats p8
The firm's resources, tangible and intangible p8
Capabilities identification p9
Core competency analysis p10
Value Chain analysis p11
Pulling it together p13
Current strategies p14
Assignment ZARA:Fast Fashion P1
What industry is it
Apparel Industry Outlook
The global apparel chain was a typical buyer-driven chanin in which upstream structure was fragmented, locally owned, dispersed, and often tiered production whereas downstream intermediaries like retailers and branded marketers. A short summary of the apparel industry characteristics was as follows:
Production: Very fragmented apparel production. Developing countries had an unusually large share, about one half in total exports due to cheaper labor and inputs. Proximity was important since it reduced shipping costs and lags. Despit China's existence as an export powerhouse, regionalization was the dominant motif of changes in apparel trade in the 1990s.
Retailing: The increasing concentration of apparel retailing in major markets was thought to be one of the key drivers of increased trade. In order to improve speed and flexibility, large apparel retailers played the leading role in promoting quick response. Retailing activities remained quite local with respect to oher industries.
Customers:per capita spending on apparel tended to grow less proportionately with increases in per capita income, so that its share of expenditures typically decreased as income increased. Significant local variation in customers' attributes and preferences was an issue not only between regions but also within regions .
General environment analysis
ZARA'S BUSINESS MODEL
We mainly analyzed Zara to recommend on Inditex's strategy since it was the flagship of Inditex and the generator of a huge percentage of financial results by itself. Zara used needs-based positioning , targeting a specific segment of customers and providing a tailored set of activities that can serve those needs best, in developing its business model. Its business model. Its selling ideas was giving middle class customers an exclusivity feeling in its stores with fashionable products, service, store design, and store locations.
Assignment ZARA:Fast Fashion P1
Zara's well-designed marketing mix was in consistency with its "medium quality fashion clothing at affordable price"positioning and its selling idea
Target Customer: It targeted fashion-conscious customers who were at the same time price -sensitive and have frequent shopping behavior.
Product: Zara offered designer -style garments and accessories with broad, rapidly changing product lines；relatively high fashion content；and reasonable but not excessive physical quality.
Place: The prices of products were affordable.
Promotion: Zara spent only 0.3% of its revenue on media advertising, compared with3%-4% for most specialty retailers. It relied on centralization of store window displays and interior presentations in using the stores to promote its market image. Its new items were first displayed in stores. The rapid turnover reflected the freshness of its offerings , the creation of sense of scarcity and an attractive ambience around them, and the positive word-of-mouth that resulted.
The industry environment
Competitive advantages of Zara were mainly the key attributes of its unique business model and the perfect fit of all activities in this business model. The competitive advantages are as follows:
Strong real estate network: As mentioned in marketing mix, Zara located its stores at premium districts. The stores functioned as both the company's face to the world and as informations sources. The promotion and advertising were executed through window displays and interior presentations. However, finding available real estate in these locations was a matter of relations and brand name in addition to financial power which made it difficult to replicate for many competitors.
Quick Response(QR):Despite the global trend was transferring apparel manufacturing facilities to countries with lower lapor and input costs such as China, proximity was the key element in Zara's manufacturing policy. Manufacturing remained mainly in Europe and its neighborhook.40% of finished
Assignment ZARA:Fast Fashion P1
garments were manufactured intenlly. Just-in-time system was installed by the cooperation with Toyota. In addition to this , Zara had its own centralized distribution system. Its focus on internal manufacturing
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