Zara fast fashion pdf

Changing this system to a new system would require training of the employees. Acceptance of the new system by the employees might be difficult due to the inertia to change. Currently, store employees can easily operate the POS system without worrying about the procedures. The probable problems that would arise in adopting the new system will be difficulty in training the staff, more IT staff experts etc.

Zara has always treated IT as a cost center rather than enabler. This mentality can crush ambitious projects in the company that lacks the management expertise and experience of a senior IT official. The new OS will nurture future inventions. The adaption period required for the new system would lead to less productivity.

The employees could face problems such as faulty hardware, incompatible software, and possibly updating of the other equipment. Zara has a decentralized and an informal current culture. However, if the new system requires too many tasks then this could dissolve creativity and autonomy of the personnel over time. Zara has been using this system for more than a decade, as the system was operable.

The current POS system did not require any IT assistance as software installation, and reinstallation in case of serious event was straightforward. Therefore, no additional training of employees is necessary. With the current system, Zara was able to make quick decisions and the managers at each Zara store were able to manage their daily business operations.

Thus, Zara had a competitive advantage over its competitors. They will not have to match the sales record at the end of the day, but rather the data will be automatically updated not only at store levels but also at the headquarters. The managers will be able to locate the inventory in the supply chain easily and ask for a particular SKU immediately rather than calling and checking which store has one.

The managers will be able to manage inventory on an ongoing basis on the frequency of the shipment. All the stores will share the inventory information, which will enhance the inventory management. The communication between the stores will be faster.

The employees will be less stressful due to the reduced workload. The time spent by the managers in looking and matching inventory and making calls can now be utilized in more productive decision-making, planning and further improve organizational earnings.

In addition, the store managers could learn about trends and development at each store, which is currently not possible in this decentralized group. All of this will lead to increased employee satisfaction, higher efficiency, and enhanced goodwill. Another benefit the new system can provide is the efficiency in matching the demand and supply at the order entry process rather than using the old batch process. It will enhance the ordering process.

The use of PDAs for ordering will prove useless just to process orders. This will lower operational cost as well as increase productivity. By the use of this modern internet system, stores will be able to transmit information related to inventory and orders easily to the headquarters or to the other stores.

This will enable to match the supply and demand more accurately and reduce the inventory risk. Conclusion for Evaluation of IT Implementation To conclude, the tangible and the intangible benefits outweigh the costs. While the cost of the new software will be a one-time charge, the maintenance cost will be distributed over the long run.

Conclusion and Recommendations For Zara to upgrade the current system, I would recommend Zara to implement the change gradually. In the short term, there is no immediate need to upgrade the system.

Zara needs to make the change over a long period. For Zara to sustain in the competition, it should first develop a strategy for the change. At present, Zara should stop more investment in the current system and probably conduct a pilot test of the new OS to collect the data of its effects. Instead of investing at a time, Zara should make the investment in sequential stages. Zara will need to design a formal chain of decision-making. The PDAs used for ordering are inconvenient to use and so, Zara should replace them with convenient equipment such as the PCs.

In order to improve the networking capabilities at each store level, Zara should switch from a modem-based network to a broadband-based network. This will allow Zara to stay connected with the other stores as well as with the headquarters.

The POS should have the customer-based functionalities that will record sales, returns, exchanges, layaways, etc. Zara should also use CRM software such as Sap that not only help to address the short-term imperatives- to reduce cost and increase the decision-making, but can also help achieve differentiated capabilities in order to compete effectively over the long-term.

Initially, Zara should run the old and the new systems side by side, until the new system is operating smoothly. Even when the new system is operating smoothly, Zara should keep the old system for while. Under the expertise of the CIO, Zara will be able to tackle the IT related problems and undertake ambitious developments. In addition, Zara should use the internet to make online sales, and take advantage of the available free social media to promote itself.

Zara has always used IT as an adjunct rather a substitute McAfee, These will add more entry barriers for the new competitors and the existing competitors will have to enhance their operations in order to stay in competition with Zara. It shows how a company can enhance its operations by the necessary use of IT. The case suggests Zara to change the old technology and adopt the new technology to stay in pace with the competition. But Greece offered, to us at least, a unique real estate opportunity.

From the point of view that it was not a very competitive market there in the early s, we decided to open in Greece. But now our strategy is to be in all the advanced countries [of Europe]. Zara usually employed just one of these modes of market participation in a particular country, although it did sometimes shift from one to another.

Thus, it had entered Turkey via franchising in , but had acquired ownership of all its Turkish stores in Zara had originally expanded internationally through company-owned stores and, at the end of , operated such stores in 18 countries outside Spain. Zara typically established company- managed stores in key, high-profile countries with high growth prospects and low business risk.

Company-owned stores did, however, entail the greatest commitment of resources, including management time. As a result, Zara had used two other modes of market entry, franchises and joint ventures, in about half the countries it had entered since ZARA: Fast Fashion Zara first used franchising to enter Cyprus in and, at the end of , had 31 franchised stores in 12 countries.

Franchise contracts typically ran for five years, and franchisees were generally well-established, financially strong players in complementary businesses. Franchisees were usually given exclusive, countrywide franchises that might also encompass other Inditex chains, but Zara always retained the right to open company-owned stores as well. Zara used joint ventures in larger, more important markets where there were barriers to direct entry, most often ones related to the difficulty of obtaining prime retail space in city centers.

At the end of , 20 Zara stores in Germany and Japan were managed through joint ventures, one in each country. Interests in both ventures were split between Zara and its partners: Otto Versand, the largest German catalog retailer and a major mall owner, and Bigi, a Japanese textile distributor.

In addition, Zara had been presented with opportunities to acquire foreign chains but had rejected them because of overlapping store networks, physical and cultural impediments to retrofitting its model on to them, and the difficulty of meeting profitability targets after paying acquisition premia.

Marketing While management stressed that Zara used the same business system in all the countries in which it operated, there was some variation in retailing operations at the local level. The first store s opened in each market—often a flagship store in a major city—played a particularly critical role in refining the marketing mix by affording detailed insights into local demand.

The marketing mix that emerged there was applied to other stores in the country as well. Pricing was, as described earlier, market-based. However, if a decision was taken to enter a particular market, customers effectively bore the extra costs of supplying it from Spain. Exhibit 15 provides more information, for a representative product. See Exhibit 16 for an old, multi-country price tag. As key Western European markets switched to the euro at the beginning of , Zara simplified its price tags to list only the prices in the local markets in which a particular garment might be sold, even though this complicated logistics.

Who buys from us in Mexico? The upper class and the middle class. That is the class that knows fashion, that is accustomed to buying in Europe, or in the United States, in New York or Miami. In Mexico we are targeting 14 million inhabitants, compared to 35—36 million in Spain [out of populations of million and 40 million, respectively]. But 14 million is more than enough to put in a network of stores there. Thus, according to a survey by Vogue, young Parisiennes— who voted Zara to be their favorite apparel chain—generally thought it was of French origin.

Advertising and other promotional efforts were generally avoided worldwide except during the sales periods, which were typically biannual, in line with Western European norms. And while product offerings catered to physical, cultural, or climate differences e.

Management thought that the implementation of this relatively standardized strategy had become easier over time as tastes converged across national boundaries.

Residual differences permitted products that did not sell well in one market to be sold in others. Sales in other currencies to subsidiaries in the Americas roughly offset dollar-denominated purchases from the Far East. Under Zara Holding were the country operations, which exercised managerial control of the downstream portions of the value chain, particularly the real estate and personnel costs associated with store operations.

Country management teams typically consisted of a country general manager, a real estate manager, a human resource manager, a commercial manager, and an administrative and financial manager. Such management teams sometimes served clusters of neighboring countries e.

Country general managers played a particularly important role bridging between top management at headquarters and store managers at the local level: they were key conduits, for example, in propagating best practices through the organization. A committee of subsidiaries that met every two to three months was of particular help in this regard. Country managers each received four to six months of training at headquarters.

The country managers in key European markets were all locals, but some in the Americas were expatriates. Persistently subpar performance generally triggered extensive analysis followed by attempts to fix the problem s identified rather than market exit.

The growth options for Zara within its home market of Spain seemed somewhat limited. Castellano and his top management team saw the rest of Europe as offering the brightest prospects for significant, sustained growth over the medium term. Italy was thought to be a case in point. Italian consumers visited apparel stores relatively frequently and were considered relatively fashion-forward.

Relatedly, concentration levels were lower in Italy than in any of the four other major European markets. See Exhibit 17 for data on European markets along some of these and other dimensions. An initial joint venture agreement with Benetton, formed in , failed to overcome this difficulty and was later dissolved.

Over roughly the same timeframe, Benetton apparently secured a large bank loan and launched an aggressive campaign, particularly in Italy, to open up directly managed megastores of its own that were much larger than the third-party stores that it had traditionally licensed. Inditex and Percassi reportedly planned to add 70—80 Zara stores in Italy over the next 10 years.

Of course, expansion within Europe was only one of several regional options. Zara could conceivably also deepen its commitment to a second region by investing significantly in distribution and even production there. North America and Asia seemed to be the two other obvious regional possibilities.

South America was much smaller and subject to profitability pressures that were thought likely to persist; the Middle East was more profitable on average, but even smaller. However, the larger regions presented their own challenges. The U. Benetton had had to retreat after a disastrous attempt to expand in the United States in the s.

Asia appeared to be even more competitive and difficult to penetrate than North America. One immediate set concerned the non-Zara chains that had recently proliferated, but at least some of which were of subcritical scale.

Could Inditex cope with the complexity of managing multiple chains without compromising the excellence of individual chains, especially since its geographic scope was also relatively broad? Looking farther out, should it start up or acquire additional chains? Exhibit 13 Product Precommitments: Zara vs. Traditional Industry Source: Inditex. ZARA: Fast Fashion Exhibit 14 Globalization of Inditex Zara Stores Only Europe Spain 57 70 85 99 Portugal 1 2 4 11 17 28 38 49 60 74 87 97 38 France 1 3 5 13 20 30 36 47 55 59 64 68 67 Greece 1 6 8 10 14 17 17 19 29 20 Belgium 4 8 11 13 17 20 21 28 14 Sweden 1 3 3 4 6 6 5 3 0 Malta 1 1 1 1 2 2 2 0 Cyprus 1 2 4 5 8 9 2 Norway 1 1 1 1 1 0 Great Britain 1 3 7 11 11 Germany 2 7 17 15 Netherlands 2 2 6 3 Poland 2 2 2 2 Andorra 1 2 1 Austria 3 3 3 Denmark 1 2 2 Czech Rep.

Over the past five to ten years, the retail industry has changed radically. These changes are clearly seen in the fashion industry, with the advent of e-commerce and fast fashion. While Amazon has transformed the e-commerce space and forced apparel companies to establish themselves online, fast fashion brands, of which Zara is one of the most synonymous, have transformed retail stores.

Traditional fashion retailers are not able to manage or achieve this, as they operate on a seasonal basis and require several-month-long lead times for the production and distribution of collections. Every piece of clothing, for example, is tagged with a radiofrequency identification RFID microchip before it leaves a centralized warehouse, which provides real-time tracking of inventory right up until it is purchased by a consumer at a retail location.

In the coming year, the percentage may rise even higher. In order to remain competitive, I believe that Zara should focus on and expand this initiative. If this method of shopping continues to be popular with consumers, and Zara is able to quickly analyze and process the data, this channel could operate as a just-in-time supply chain. The Company could manufacture and distribute only the guaranteed number of items to be sold at specific locations, reducing its inventory to effectively zero.

I think that Zara could go even further by developing its e-commerce presence. While the Company does not distinguish between online and in-store sales, I would expect that e-commerce contributes less to its revenue. Carousel Next. What is Scribd? Explore Ebooks. Bestsellers Editors' Picks All Ebooks.

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