zara

Topics: Marketing, United States, Clothing Pages: 1 (350 words) Published: September 2, 2014
Zara’s business model is fairly unique within the clothing retail industry. Zara targets young, fashion conscious individual whose fashion sense is fluid. Store locations in visible, high end areas makes advertising unnecessary, and their regular customers know that if they see something in a store today, it could be gone tomorrow, so they must keep coming back. The intent of the clothes themselves is to last for 10 uses, and by that time Zara believes it will be out of style anyway. It is a fast, volatile market, and Zara has kept up by utilizing flexible manufacturing facilities, pushing decisions out to employees (and minimizing oversight by management), producing to order instead of forecasting, and keeping things simple. They are generally low cost, and although they could have cheaper labor if they outsourced manufacturing operations, the turnaround time and control they have by keeping it local is necessary to their customer value proposition (provide desirable clothing quickly). They also have good communication between the stores, store product managers, designers, and product managers, which helps them decide which products to offer to store managers. Risks are mitigated because an undesirable only affects the stores that decide to order and sell it, whereas if the competitors debut a line that is not successful, it is in every store. The major concern with a produce to order system is that it is not as scalable as a produce to forecast system because it is much harder to plan resources and production. Zara has combated this by obtaining distribution centers in Latin America to serve that market. They will need to continue to expand in this way to effectively get product on the shelf quickly. Based on the data provided, the Middle East has 40% of the stores of Latin America, and they are geographically closer to Spain, so they might not need a distribution center, but as the Asian market grows (currently 9.3% of Latin American market) they will probably...
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