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The middle-aged
mother
buys
clothes at the
Zara
chain
because they are
cheap, while her
daughter aged in
the mid-20s buys
Zara
clothing
because
it
is
fashionable.
Clearly, Zara is
riding two of the
winning
retail
trends-being
in
fashion and low
prices-and
making a very
effective
combination out
of it. Much talked
about especially
since its parent
companys IPO in
2001, often admired, sometimes reviled, but hardly ignored, Zara
has been a interesting case study for many other retailers and
fashion brands around the world.
Competitor
Strategies..
Crushing
Information
Technology
Keeps It Boiling
Poor communication is often the
culprit
of
bottlenecks.
Zara
invested in information technology
(IT) early on. Their in-house IT is
simple and effective.
Information travels from the stores
to the designers, transmitting the
demand and concerns of the
customers. Zara's shops use
Information Technology to report
directly to its production centers
and designers in Spain.
Advanced Logistics..
Products of Zara are shipped from
the manufacturing site in Spain
through Corunna depot or Zara
Logistics. The inventories are not
stocked and are distributed to the
Zara stores twice in a week. For
overseas
distributions,
the
inventories are carried to the
Spain border, and the logistics
carrier of the country takes it
down to the stores. Stores order
more
stocks
from
offers;
commercial manager takes the
orders and passes on to the
logistics who handles the stock.
Stores are graded according to
their sales and accuracy of orders,
this rank governs their priority
level for supplies of order. If any
product is not selling in the market
their production is immediately
stopped. This means that no
stocks will be piled up. If a product
is not selling in certain stores, the
company stops production of that
product.
This
eliminates
unnecessary stocking of unsold
goods. This process adapts to
consumers preferences quickly.
Is Future Growth
Sustainable..??
What have changed since then is
the scale of the business and
the scale of the challenge facing
Inditex
management.
After
decades of dizzying growth,
some are asking whether Inditex
is approaching the limit of its
long expansion drive. With close
to 6,400 stores in 88 countries,
900m items of clothing sold last
year,
and
an
increasingly
important presence in online
sales, how much more of
Inditexs ever-growing output
can the global consumer absorb?