MGT200 INTRODUCTION TO MANAGEMENT, D. Ong-de Jesus
CASE 1: ZARA INTERNATIONAL: Fashion at the Speed of Light
At the announcement of her engagement to Spain's Crown Prince Letizia Ortiz Rocasolano wore a chic white pant suit. Within a few weeks, hundreds of European women sported the same look. Welcome to a fashion, a trend that sees clothing retailers frequently purchasing small quantities of merchandise to stay on top of emerging trends. In this world of "hot today, gauche tomorrow," no company does fast fashion better than Zara international. Shoppers in over 70 countries are fans of Zara’s knack for bringing the latest styles from sketchbook to clothing rack at lightning speed and reasonable prices.
not replenished. Instead they are replaced with new designs to create scarcity value-shoppers cannot be sure that designs in store one day will be available the next. Store managers track sales data with handheld computers. They can reorder hot items in less than an hour. This lets Zara know what’s selling and what’s not; when look doesn’t pan out, designers promptly put together new products. According to Dilip Patel, U.K. commercial director for lnditex, new arrivals are rushed to store sales floors still on the black plastic hangers used in shipping. Shoppers who are in the know recognize these designs as the newest of the new; soon after, any items left over are rotated to Zara's standard wood hangers. Inside and out, Zara's stores are specially dressed to strengthen the brand. lnditex considers this to be of the greatest importance because that is where shoppers ultimately decide which fashions make the cut. In a faux shopping street in the basement of the company's headquarters, stylists craft and photograph eye-catching layouts that are e-mailed every two weeks to store managers for replication. Zara stores sit on some of the world's glitziest shopping streets—including New York's Fifth Avenue, near the flagship stores of leading international fashion brands— which make its reasonable prices stand out. "Inditex gives people the most up-to-date fashion at accessible prices, so it is a real alternative to high-end fashion lines," said Luca Solca, senior research analyst with Sanford C. Bernstein in London. That is good news for Zara as many shoppers trade down from higher-priced chains. Catfights on the Catwalk Zara is not the only player in fast fashion. Competition is fierce; but Zara's overwhelming success (recent sales were over $13 billion) has the competition scrambling to keep up. San Francisco-based Gap, which had been the largest independent clothing retailer by revenue until Zara bumped them to second place in 2009, recently posted a 23% decline in full-year sales and had plans to open a modest 50 new stores. Only time will tell if super-chic Topshop's entry into the American market causes a wrinkle in Zara's success. Some fashion analysts are referring to all of this as the democratization of fashion: bringing high(eR) fashion to low(er) income shoppers. According to James Hurley, a senior research analyst with New York-based Telsey Advisory Group LLC, big-box discount stores such as Target and Wal-Mart are emulating Zara's ability to study emerging fashions and knock out look-a- likes in a matter of weeks. "In general:' Hurley said, "the fashion cycle is becoming sharper and more immediately accessible."
In Fast Fashion, Moments Matter Because style-savvy customers expect shorter and shorter delays from runway to store, Zara International employs a creative team of more than 200 professionals to help it keep up with the latest fashions. It takes just two weeks for the company to up-date existing garments and get them into its stores; new pieces hit the market twice a week. Defying the recession with its cheap-and-chic Zara clothing chain, Zara's parent company Inditex posted strong sales gains. Low prices and a rapid response to fashion trends are enabling it to challenge Gap, Inc., for top ranking...
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