The objective of this document is to discuss the issue of Inditex’s DOS-base IT infrastructure and how it affects Zara’s performance. Inditex is concerned about its IT infrastructure being antiquated and the possibility that hardware vendors will upgrade their machines leaving them incompatible with DOS. Because Zara’s core business model is vertically integrated, it could specialize in speed and efficiency and the fast fashion trend. By assessing the pros and cons of the new IT infrastructure with Zara’s brand image, they determined that implementing the new POS networking system is beneficial for Zara because 1) it creates a more robust and scalable system that is more responsive to Inditex’s supply chain network, 2) it removes the risk of the system becoming obsolete and no longer compatible with vendor’s machine upgrade, and 3) it helps to maintain and improve efficiency of decentralization because information flow can be improved between stores, DC, and plant.
Zara’s main competitors are multinational clothing retailers such as H&M, Gap, and Benetton. Zara and its competitors sell clothing for men, women and children, and women section is the major section of these clothing retailers. However, Zara is different from its competitors in four ways: 1) Zara does virtually no advertising (twice-yearly ad promotion on sales and opening new store announcement). Thus, Zara’s marketing expenditures averaged 0.3% of revenue, instead of the 3% to 4% for competitors. 2) Zara only sells trendy clothes and not try to produce “classic” clothes which would always be in style. Zara’s clothes have fairly short life spans. About 75% of the merchandise changes over every three to four weeks. The shoppers do not expect Zara garments to be highly durable. 3) Zara introduces substantially new design collections throughout the year. Other competitors introduce new design collections at the start of the fall/winter and spring/summer