Some Lessons From Zara; How Fast Fashion Fits Today’s Economy
Zara has 5,900 stores in 85 countries. Only 45 are in the United States. I’ll get back to why that is. I’ve been aware of Zara for a while of course, but when my ever vigilant research department sent me this article, I decided there were some lessons we could all learn.
Because I don’t want to rehash the whole article, this will be pretty short. Zara, headquartered in Spain, has factories and a distribution center right across from its corporate offices. Their template is “…trendy and decently made but inexpensive products sold in beautiful, high-end-looking stores. “ Sales people are trained to gather information from customers. That information goes to headquarters daily, where trends are identified, clothing designed, and manufacturing orders placed.
The production time is two to three weeks. There’s never an over production issue. The company does not advertise. I may have said a time or two that selling through at full margin and telling your customer, “Sorry, it’s all gone!” is the best advertising.
Typically, stock turns over in like 11 days. The result is that “…every purchase is an impulse buy” because you know it won’t be there when you come back.
Think about the quality and efficiency of operations, including inventory management, required to operate like this. I’ve been writing for a while now that operating well was no longer a competitive- just a requirement of being in the market. Maybe in fast fashion it is an advantage.
Here’s another quote you should pay attention to. “A business model that is closely attuned to the customer does not share the cycle of a financial crisis.” You know, we all knew that. But it’s so obvious I, at least, have never thought about it quite in that way. I guess the closest I’ve gotten is to say focus on the gross margin dollars you generate rather than sales growth.
Zara’s business model encouraged its customers to visit their stores often, to spend less on each item, but to buy more items because they know they won’t have each of those items long. It’s not a perfect comparison, but the moment I read about spending less on items you know you won’t have long, I thought about how the popsicle skateboard market has evolved.
I wonder if, at some point, an unexpected reaction to fast fashion might be for consumers to get tired of constant shopping and turnover. Maybe the next retail chain will be “Timeless Concepts” offering apparel that tends to not go out of style, at least not so quickly. Or maybe I have no clue how men and, especially, women think about fashion.
And why does Zara have only 45 stores in the U.S.? Partly because they are aware that foreign brands have a long history of failing here. But it’s also because the Americans “…don’t fit in the clothes. So why do it? Having to make larger sizes makes production so much more complex.”
Well, that’s embarrassing. Maybe having an extra-large burrito and a milk shake for lunch will make me feel better.
The other way to look at it Jeff is that Zara caters to little people and not normal sized people like you or me. Ha Ha
Norm,
The littler people represent a much bigger market I guess.
J.
Seems like Zara is the antithesis to companies like Patagonia and Finisterre.
The concept of quick/agile production makes a lot of sense though. I just tried to order a pair of stock standard Vans from my local skateshop and they said they are already ordering for Fall of next year and can’t order single pairs. No wonder small shops are struggling, I’m willing to wait and spend more money just to support my local retailer and the distributor/manufacturer cripples them from doing so.
Lawless,
There’s a lot of money to be saved through quick/agile production in terms of minimizing your inventory investment if nothing else. If a lot of people like you are willing to support their local skate shops, those local shops will do fine. If, on the other hand, people aren’t willing to be patient and pay higher prices, then they won’t do so well. Basically, the consumer tends to get what they want.
Thanks for the comment.
J.