Zara Case Analysis
Zara Case Analysis
Focused on manufacturing affordable yet high fashion concept apparels for women, men and child, Zara is one of the most popular fashion brands in the world now. It is also one of my most frequently visited boutiques. The success of Zara is not a miracle; it is the result of successful operation management.
First of all, Zara has a special planning and design cycle. Zara hires 200 designers and make 11,000 styles of apparels every year, which is about 5 times as many as comparable retailers produce each year. Zara’s production is based on small batches, and this reduces the throughput time. Zara’s timeline began one year in advance of the start of the corresponding year, which means designers start working on the initial ideas for 2013 Spring/Summer collection since 2012. After finishing the initial design collection, the company produced only 50-60% of in-season apparels in advance, with the rest being manufactured on a continuous basis after they are available to the public. Competitors like H&M and Gap, on the other hand, has 80% of its apparels produced in advance, which lead to great amount of inventory in warehouse and high probability of leftovers. This will hurt the companies’ bottom line as the leftovers are usually heavily marked down at the end of the season. Because of its continuous manufacturing method, Zara does not have high amount of inventory and has significantly less leftovers that need to be discounted and would result in loss. Zara can focus on manufacturing only popular collections and thus maximize its profit.
However, this does not mean that Zara will satisfy all consumer needs on popular apparels and Zara actually does this on purpose. I think many of us have the experience of being disappointed because we cannot get some amazingly designed Zara apparels as it is sold out and it is never available again. Zara actually does this to make its customers think that they should get it now before it’s gone forever. The
Focused on manufacturing affordable yet high fashion concept apparels for women, men and child, Zara is one of the most popular fashion brands in the world now. It is also one of my most frequently visited boutiques. The success of Zara is not a miracle; it is the result of successful operation management.
First of all, Zara has a special planning and design cycle. Zara hires 200 designers and make 11,000 styles of apparels every year, which is about 5 times as many as comparable retailers produce each year. Zara’s production is based on small batches, and this reduces the throughput time. Zara’s timeline began one year in advance of the start of the corresponding year, which means designers start working on the initial ideas for 2013 Spring/Summer collection since 2012. After finishing the initial design collection, the company produced only 50-60% of in-season apparels in advance, with the rest being manufactured on a continuous basis after they are available to the public. Competitors like H&M and Gap, on the other hand, has 80% of its apparels produced in advance, which lead to great amount of inventory in warehouse and high probability of leftovers. This will hurt the companies’ bottom line as the leftovers are usually heavily marked down at the end of the season. Because of its continuous manufacturing method, Zara does not have high amount of inventory and has significantly less leftovers that need to be discounted and would result in loss. Zara can focus on manufacturing only popular collections and thus maximize its profit.
However, this does not mean that Zara will satisfy all consumer needs on popular apparels and Zara actually does this on purpose. I think many of us have the experience of being disappointed because we cannot get some amazingly designed Zara apparels as it is sold out and it is never available again. Zara actually does this to make its customers think that they should get it now before it’s gone forever. The