Zara is extremely competitive compared to its competitors by producing 11,000 items compared to 2,000-4,000. Each season new collections are sent to the stores, each store receiving 12,000 units (8,000 for women’s, 2,000 for men’s’, 2,000 for children) in a one-week period. By having a large amount of merchandise shows that the sales associates are spending their hours sorting and organizing inventory. Zara’s emphasis on associates doing inventory and replenishment is having a huge impact on how efficient they are in managing their stores. Using these shift hours causes the employees to focus on the merchandise rather than the
Zara has tailored its working hours at the distribution center to match demand, and thus pays for only the labor needed to achieve accurate and timely shipping. While it has 800 regular employees, it has at its disposal up to 400 extra part-time employees as needed to meet demand and maintain lead times during periods of high demand in peak seasons. Zara has also opened a second smaller distribution facility in order to assure adequate capacity in the distribution chain. By having more distribution capacity than is required at all times, Zara will not be caught short should capacity suddenly surge, such as during the holiday seasons. Another innovative approach is to ship clothing on hangers and racks, ready for display in the retail outlets.
The initial goal of Zara was offer their products with affordable price to customers by producing clothes of medium quality. (Harvard )Since its establishment, Zara was able to generate rapid and high profits and it has reported 22% increase in the profit margin in 2012, mainly due to growth in eastern Europe, Canada, and China. Profit for 2012 marked €2.36 billion and sales posted €15.9 billion, which is a growth of 16% from the previous year. As a global specialty retailer that designs and manufactures its own accessories to apparel targeting people of various ages covering children to men and women, Inditex opened 482 stores just in the year of 2012, totaling 6,009 stores worldwide. Shares in Asia have now grown from 18% to 20% and from 12% to 14% for American stores.
Rapidly changing fashion trends and shorter product life cycles do not only require innovative marketing strategies, but also responsible sourcing models and efficiency in terms of the supply chain. In order to establish and maintain a long-term competitive advantage, a firm has to improve the overall value chain to ensure fast supply of new collections, as well a convincing marketing and store concept. Why is outerwear fashion a good industry to invest in? As the demand for new clothes will continue to rise, investments in the fashion industry have significant future potential. MarketLine reports: The global women’s clothing industry is marking a 12% increase in five years, expected to exceed $621 billion in 2014.1 Within this industry we analyzed two companies, Abercrombie & Fitch (A&F) and ZARA, for which we predict different future outlooks.
The differentiation strategy involves production of product or services, which is unique throughout the industry and because of its uniqueness the customers are willing to pay more for it. The uniqueness may be in terms of design, brand image, technology or customer service. In case of Zara, it is the fast fashion philosophy adopted by the company. Zara’s unique selling point is to design and produce the latest fashion trends within a short span of two weeks. And these new styles are only available for sale on the floors only for a period of 4 weeks.
Product development cycle in fashion supply chain management and the potential benefit and issue relating to the use of product lifecycle management (PLM) systems Introduction Fashion is one of the biggest industries in the world. Having 4 basic season a year and more different season according to the retailer, customers expectation on the product changing frequently, it was easy to have more that hundreds of style of product per year for a well-known brand in US. In order to provide all the style fitting their target customer's need, a cycle of product development will hold to design product customer may want in the future and develop it to merchandise. In order to satisfy the market needs and keep the brand competitive in the market, designers need to do different type of research and analysis to get the idea of what the market want. But after knowing the demand, several of products will be designed base on the concept and developed so finally can come up with a product that can fit and sell to the target customers.
1. From the start it was determined that IKEA would be a price leader, offering sleek well designed furniture at nearly 50% of the cost of its competitors. As the strategies succeed, IKEA grew into international markets. With each additional stage in growth, IKEA had to reevaluate the way it did business. What I believe allows IKEA to be successful is the speed and flexibility with the company adapts.
Gross Domestic Product (GDP) has grown in the 6% range for the past several year, and the retail market has grown over 200 times from 1996 to 2002. The growing middle class wants to spend more of their disposalable income on retail good, while the poorer segment is only interested in necessities such as food and clothing. Both present an opportunity for Wal-mart. Social: China is very traditional, but there is shift towards more westernized views. Chinese are socially drawn to saving money and spend a lot of their leisure time shopping for the best deal.
It is a good indicator of how well management has used its internal resources to expand profits. Organic growth also identifies whether managers have used their skills to improve the business. The growth of BSkyB in the UK is an example of a business that has grown organically. BSkyB has been able to add over £2bn of annual revenues since 2004.Several years ago, the firm set itself the corporate objective to achieve 10 million household subscribers in the UK. BSkyB achieved that objective earlier than expected, and that is one key reason why they have been able to enjoy consistent growth in revenues and profits, despite the recent economic downturn.
The wage and benefits package offered at Trader Joe’s is highly competitive, with the starting salary ranging from $45-$75 thousand per year and managers bringing in six figure salaries. Trader Joe's business structure encourages its employees to experience different positions at one time. The corporate philosophy is that happy employees equals happy customers and happy customers spend more and visit more frequently (Quinton, 2013). Effective