ZARA-INDITEX AND THE GROWTH OF FAST FASHION
Stephanie 0. Crofton High Point University Luis G. Dopico Macrometrix
This paper presents the “fastfashion” model, its historical development, and its prospects. Fast fashion departs from traditional norms of designer-led fashion seasons, using instead designers who adapt their creations to customer demands on an ongoing basis. From its origins in Galicia, Spain, in the 1960s fast fashion changed the fashion industry. With annual sales of $8 billion in 2005, Inditex, the leading practitioner offast fashion, is now the second-largest fashion company in the world and operates over 2,700 stores in over sixty countries. As Inditex grows, many other fashion companies are copying its unique business model.
This paper presents the “fast fashion” model, its historical development, and its prospects. This model departs from traditional norms of designer-led fashion seasons, using instead designers who adapt their creations to customer demands on an ongoing basis. Fast fashion was pioneered by reclusive entrepreneur Amancio Ortega Gaona and his companies Zara and Inditex (Industria de Diseno Textil) in Galicia, Spain. This model has changed the fashion industry. In the 1960s, Ortega’s company was a local, privatelyheld business with annual sales of $30 million. In 2006, Inditex is the second-largest fashion company in the world, operates over 2,700 stores in over sixty countries, and is a 1 publicly-held company valued at $24 billion, with sales of $8 billion. As Inditex grows, business model. many companies are copying its unique 41 Crofton and Dopico
THE FAST FASHION MODEL
Inditex describes its business model as “creativity and quality design together with a rapid response to market demands” and the “democratization of fashion.” To deliver 2 rapid responses to customer demands and reasonable prices, Inditex abandoned the fashion industry’s traditional model of seasonal lines of clothing designed by star designers, manufactured by subcontractors months earlier, and marketed with heavy advertising. In contrast, the Inditex holding company operates over one hundred subsidiaries, including Zara, vertically integrating design, just-in-time production, distribution, and retail sales to speed communication from customers to designers. 3 Linking Customers and Designers Over three hundred Inditex designers continuously seek information about what customers may like from a variety of sources. Designers attend fashion shows in Paris, New York, London, and Milan; snap digital photos as models come down runways; and send them to headquarters. Designers peruse magazines, observe styles worn by opinion leaders, and visit clubs, cafés, and colleges to anticipate what innovations from other designers their customers may desire. The key source of information for Inditex designers comes from its chains of dedicated stores; Inditex sells its products only through its stores and these stores sell only Inditex products. Twice weekly, stores send to headquarters daily sales totals and detailed information on items sold, broken down by color and size. Store managers also place orders twice a week and have great autonomy to select what they believe will sell in their store from wide and continuously updated offerings. Designers review the success of products daily and respond to formal and informal input from store managers. In Inditex’s effort to make the creation of fashion an interactive process, José Toledo, a Zara executive, argues that customers are “our accomplices.” 4 Vertical Integration Seeking to synchronize supply with ongoing changes in customer demands, Inditex deviates from industry norms by vertically integrating stages of production within the company. Inditex policy states that “production shall be adapted to customer demand production will be able to focus on trend changes happening inside each season’ Thus, 5 the company bases production largely on customer demand as gleaned from...
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