These days, she goes to Zara whenever she needs to buy birthday presents for friends. Most of them like clothes — especially from Zara. To better understand the business behind the fashion, she needs to consider a key business concept that helps drive success at companies like Zara: In other words, a strong business model will help a company use the resources it has to make money.
Well this is what seems to be a rage these days in the up-market society of Mumbai. Zara is a Spanish clothing and accessories retailer based in Arteixo, Spain. Funny story about the founder is, because of the fluctuation in the stock markets, he became the richest man on the planet for couple of minutes and then was back at number 2.
Before knowing the exact business model of zara, we must know one thing from the fashion industry i. Similar to FMCG — this fashion comes and goes.
Fast Fashion also means that the impulsive nature of the buy transaction is highly impulsive, because girls know that what ever I am seeing today — may not even be in stock in the next 15 days — so if I like it to the extent of buying it later — I might as well buy it now — BRILLIANT!
Lot of advantages with Zara Business model: They quickly spot new fashion trends, they always under predict the forecast of stock requirements which reduces discount wars on leftover stock and artificially drives demands to the sky, quick churning of the stock which keeps ladies coming back for new everytime.
They are also extremely responsive to factors like the weather, and competitor trends and designs. From the first design up to the final production and ultimately distribution to the stores happens all within 7 days flat.
Since the lead time is less than a week from design to doors, they do not have to stock stuff and then sell — they can adapt to the weather and other conditions and change their entire collection within a week.
Roll over the inventory at such a fast pace that consumers are actually scared that if they like anything — will it stay till the next visit so that they buy it off immediately on seeing.
They do this in a continuous loop: Fashion Spotting newest trends based on fashion, weather etc.Zara, unlike its competitors such as Gap, Benetton, and H&M, does not use Asian outsourcing. Eighty percent of Zara’s materials are manufactured in Europe, with 50% made in Zara controlled facilities in the Galicia region of Spain near headquarters.
1 Professor Dr. Andre Schwarz MBA Jun 15, Zara: IT for Fast Fashion 1. What information does Zara need to operate its business model? Zara needed to know its consumers’ tastes in clothing and preferences for the fashion products to forecast and be able to respond quickly to the demands of target customers (3)%(10).
Despite these limitations, however, Zara's parent company, Inditex, has built an extraordinarily well-performing value chain that is by far the most responsive in the industry. The case describes this value chain, concentrating on its operations and IT infrastructure.
1. What information does Zara need to operate its business model? %(8). ZARA: IT FOR FAST FASHION 5 Analysis of company’s goals and strategy Zara’s overall business model is simple. As previously stated, their primary goal is to “link customer demand to manufacturing, and link manufacturing to distribution” (Mcafee, Dessain, & Sjoman, ).
Fast fashion retailer Zara has such a fast, adaptable business model, that it's managed to avoid the fates of other apparel retailers. Despite these limitations, however, Zara's parent company, Inditex, has built an extraordinarily well-performing value chain that is by far the most responsive in the industry.
The case describes this value chain, concentrating on its operations and IT infrastructure. 1. What information does Zara need to operate its business model?