Fast fashion has become very popular through out the years and has become a serious when it comes to bringing styles of the runway into the hands of stores in the in a matter of days. One of the leading clothing businesses that is excelling in this fast fashion and has learned the ropes of making this style of business work has been none other than Zara International. As quoted in the text, "no business does fast fashion better than Zara International". With shoppers all around the globe, 77 countries to be exact, they have been able to provide customers with the latest of fashion trends without charging them an arm or a leg.
Elements of the classical management approach can still be found evident at Zara International which is a leading cause in their success at attempting fast fashion. Classical management consists of three different techniques. Fredrick Taylor's scientific management sought efficiency by identifying the best way to perform tasks. According to the text, Zara has been able to remove wholesalers and intermediary partners from the middle, which allows them to cut profits and keep more for themselves. They found that the best way to be more efficient and getting the products out to the consumers quicker is by internalizing may points in the supply chain. They design, distribute, produce and control retail sales internally helping their profits, which is up 63%. Another look at Taylor's scientific management can be seen in how Zara's parent company, Inditex, has been able to supply customers with fast fashion by eliminating shorter delays in products that were showcased on run ways. The company has a team of over 200 professionals to stay on top of the latest fashion, with this being the most efficient way to perform this task, it only takes the company two weeks to update trends and get them to the stores, and new styles hit the market twice a week.
Operations Management can be seen clearly in the way Zara International operates. Operations management refers to the administration of business practices to create high level of efficiency possible, the company has been able to improve its inventory management by having store managers track sales by handheld computers. This has enabled them to keep track of items that are selling quick and which aren't. This then lets designers know to put together another style and remove the one that isn't selling. New styles are taken into the store in matter of days and many others styles are not replenished which gives them exclusivity and makes the consumers buy them immediately.
Contingency thinking by definition, is the best way to manage depending on circumstances. Zara has been able to still open up over 1,500 stores around the world, and has generated 72% of international revenue and 67% of revenue to the Inditex Group. How can a company do so well while we're in recession? Well Zara has used some brilliant strategies to stand out while many companies fail. For example, the company strategically places its stores in high end shopping streets such as New York's 5th Ave near flagship stores of very high end fashion brands. With prices much lower to those of the high end brands, this attracts many customers and helps them gain the sales. They successfully managed a company despite some economical circumstances, and have gained victory against competitors such as H&M and The Gap.
After reading this article on starts to wonder if Inditx and Zara are still doing as good as what has been read. Well according to abs-cbnnews.com, Inditex and Zara has been doing very well. In this article that was posed on 6/15/2011 it states that for the first quarter profit, February-April, they have totaled 332 millions euros, which is up 10.3% compared to the previous year. In the financial year ending on the 31st of January, they have reported a 33% jump in profits, as well as opened up a store in Australia. There have been reports that many of the clothing provided by Zara have been considered a bit too small for the American consumers (www.economist.com). The article states that the company has been struggling a little bit in the United States due to its slim cut which may not necessarily fit many of the women. The company has been aware and has combated this problem by now providing extra large sizes according to an article at www.tmcnet.com. Inditex has seen this issue has fixed the problem by providing a larger size to fit those who aren't so slim.
Links:
http://www.abs-cbnnews.com/business/06/15/11/zara-owner-sees-soaring-profits-international-expansion
http://www.tmcnet.com/usubmit/2012/06/02/6342690.htm
http://www.economist.com/node/21551063
Great research, it is interesting to see how quickly Zara can address a problem like sizes being too small in the US. This is a great example of how Zara utilizes the environment around them to increase sales. Your post does a great job of citing the book and giving good definitions of key words. It definitely showed me that I need to provide more definitions and citing in my own blogs, so thank you Axel.
ReplyDeleteGreat job on this post, you made good examples especially with the outside material. Zara's strategy to compete against "high-end" fashion shops indicate that their global growth has not changed their operations management strategy but increased their revenues. Zara seems to be on top of things when it comes down to the way they update their shops in a global perspective.
ReplyDeleteGood work, especially in describing Taylor's scientific management. They clearly shows how efficient they are in controlling the supply chain. The fact that they could eliminate wholesalers and intermediaries is probably the most important reason for their success.
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