Zara: You will never wear the same clothes as others

Zara is well-known for its fast response in the fashion industry and has become a benchmark.

"Out of stock, following the trend, not advertising" chain fashion giant Zara abandoned the retail industry to resolve the risks of globalization,

Fast, stylish, dominating the world after being born in a remote corner of northwestern Spain. Inditex, the parent company of inexpensive chain stores Zara, has transformed into a leading fashion retailer in Europe for the past five years. , is now committed to accelerating development in Asia and the United States. However, when the company's chief executive, Pablo Isla, developed a global expansion plan, some people doubted whether Inditex's promotion process was too quick for its own interests.

Isla's global layout plan

Today, 42-year-old Isla hopes to open more than one store every day for the next few years. By 2009, the number of stores will increase from the current 2,800 homes to 4,000. From Bangkok to Tokyo, Zara has opened about 40 stores and the first store in Shanghai opened earlier this year.

In the United States, Zara plans to double the number of stores by 2009, over 50, and focus on the coastal areas. "Is it advancing too fast?" Isla thinks sheer nonsense. "We think we can maintain this pace of expansion with guaranteed profits."

One thing is certain: The company's performance has left a very deep impression. Since 2000, Inditex’s sales and profits have tripled, and the number of its eight brand chain stores has doubled. (Zara is the largest, accounting for two-thirds of the total profit.)

With its extremely dangerous expansion activities, Zara has increasingly threatened its competitors such as Gap (NYSE: GPS) and Sweden's H&M Hennes & Mauritz.Gap with more stores and higher sales - 160 Billion US dollars, but Zara 16.2% profit margin is far higher than Gap's 10.9%.

Although H&M's sales volume and revenue were slightly higher, the profit rate was also higher (21.5%), but it only involved 22 countries and could not match Zara in response to the latest trends. "No one can match Zara's speed," said Kerryton, chairman of the London brand consultancy company.

Zara must keep up with the changing supply of new fashion around the country, which means the right balance between mobility and cost. So when the opponents purchased in Asia, Zara produced its most fashionable products in its 12 Spanish factories, which accounted for half of all commodities. Longer shelf-length garments such as T-shirts are sold to low-end manufacturers, mainly in Asia and Turkey.

Create uniqueness

Zara succeeds by breaking all retail rules. For most clothing stores, the top-selling of goods is a disaster, but Zara encourages temporary out-of-stock to make its goods unique.

"We don't want everyone to wear the same clothes," Isla said. With the replenishment of new goods twice a week, the company has made it a habit for customers to visit regularly. "If you see a piece of clothing and you don't buy it, forget about it. You don't want to come back later because you can't buy it later," said Cueto, a 23-year-old Barcelona student.

In addition, to abandon the idea of ​​leading the trend, Zara prefers to follow the trend. Its goal is to allow customers to buy multiple types of clothing at affordable prices. Zara launched 20,000 single products last year, which is about three times that of Gap. Dana Catok, a 25-year-old administrative assistant, said while traveling through the shelves of the Zara Store on Fifth Avenue in New York City: “In the Gap store, things are the same.”

"In the end, you will never wear the same clothes as others." This is the common voice of people who praise Zara all over the world. Marila, a 34-year-old architect, is also a frequent visitor to Madrid Zara.

Zara never needs to collaborate with big-name designers or spend millions of dollars on ad campaigns. Instead, it builds its own brand through its large, minimally-requested stores and clothing inspired by the sidewalk. Isla thinks, "Our store is the best advertisement. The money we save can be spent on the top location."

Zara's stores are located on the world's most expensive streets: Fifth Avenue, Ginza, Tokyo, Condotti in Rome, and Champs Elysées in Paris.

In Galicia, a small town of Arteixo with a population of 25,000, Zara’s headquarters is located, and Zara’s hub is a 11,000-square-foot hall. There, hundreds of designers, purchasers, and product planners work in a coordinated team that completes all of the company's design, sales, and production. Concentration allows Zara to put a dress, shirt, or jacket from the drawing board onto the shelf in just two weeks, which is less than a quarter of the industry's average time.

Resolve expansion risks

However, the cost of the expansion of the territory is also obvious. Zara's involvement in the broader market is risking losing its speed advantage.

Because Zara embraces the responsibility of globalization and distributes merchandise from Spain everywhere, regardless of source. Twice-weekly cargo replenishment at global stores will become increasingly complex and costly.

Tension has begun to emerge: costs have risen, while sales growth at the same stores has slowed. Compared with 9% in 2004, the profit growth rate of the branches opened more than two years last year was 5%. “The farther away from Spain, the less competitive they are,” said a professor at Harvard Business School. “As long as Zara has A production and sales base will be limited in its model to some extent."

So far, the company has already escalated its pricing to offset the problems that have arisen from being away from headquarters. For example, Zara’s price in the United States is 65% higher than in Spain, according to figures estimated by Lehman Brothers (NYSE:LEH).

However, for Zara, strict control makes it always ahead of the competition. “We have strong adaptability,” Isla said. “At the beginning of each quarter, we guarantee that the purchase volume is at a lower level, ensuring that when the new trend is highlighted, we can respond quickly.”

This response is clearly reflected in Zara's grasp of the trend index.

This summer, Zara mastered the most popular fashion trends in just four weeks. At the beginning of the process, its prevailing trend observers returned content to headquarters: white cotton clothing with small holes would become a hot spot. Zara's store manager quickly confirmed through phone surveys that such fabrics would become mainstream, and then interior designers began work. They passed the design electronically to the Zara factory across the street, and the fabric began to be cut.

Local subcontractors sewed these white mesh v-neck strappy dresses in less than a week—recall Jackie Kennedy. This $129 dress was inspected, tagged, and passed underground after 1960. The channel is transmitted to the distribution center.

There, they were quickly distributed to various Zara stores from New York to Tokyo. Only two days later, they disappeared from the shelves.

link

Zara

Inditex is Spain's number one and global number three apparel retailer, with nearly 2,000 stores in 52 countries worldwide, of which ZARA is the most famous flagship brand of Inditex's nine brands, which is called “in the fashion industry. DELL computer." ZARA is known for its fast response in the fashion industry. Its successful and innovative model has become the industry benchmark. ZARA offers 12,000 different product items for customers to choose from each year. It takes only a dozen days from design concept to product shelves.

What's even more surprising in Zara's success is that its labor costs are even higher than some of the foundry top brands – at least half of its factories are in Europe, and it's clear that workers' salaries will be higher than those in Asia and Africa.

As a model of the fashion chain industry, the key to ZARA's entire supply chain management lies in its precise and almost complete control over the entire supply chain.