Global Logistics

Inventory Management of a Fast Fashion Fast-Fashion Retail Network
Felipe Caro
UCLA Anderson School of Management [e-mail]

2012 KUMPEM FORUM ANNUAL RETAIL CONFERENCE Koç University May 18, 2012 University, 18

Caro: “Inventory Management of a Fast-Fashion Retail Network”

Industry-Academia Collaboration
• Felipe Caro, UCLA Anderson • Jé é i G lli Jérémie Gallien, London Business S h l L d B i School • Miguel Díaz, Zara CFO • Javier García, Zara • José Manuel Corredoira, Zara Corredoira • Marcos Montes, Zara • José Antonio Ramos, formerly with Zara • Juan Correa, MIT LFM 2007
Caro: “Inventory Management of a Fast-Fashion Retail Network”

The Fast-Fashion Business Model selling season a assortme ent time Trad. Retailer
Vs.

Zara assortment Average # visits / customer / year = 17
Caro: “Inventory Management of a Fast-Fashion Retail Network”

Zara’s Continuous Business Cycle
Customer f db k C t feedback and fashion trends

Distribution

Stores

Global Warehouses

Design Team

Production and delivery

Suppliers

Production planning and specifications

Caro: “Inventory Management of a Fast-Fashion Retail Network”

Zara’s Supply Chain (2010) biweekly shipments 24 - 48h transit

Suppliers
45% Asia 41% Europe 9% Africa 5% Americas

4 main warehouses: A Coruña, León, Madrid and Barcelona

backroom

d sp ay display

1723 Stores: 29%  Spain 44%  R. Europe 11%  America 16%  R. World

Source: Annual Report, 2010.

Caro: “Inventory Management of a Fast-Fashion Retail Network”

Retail Industry Benchmark
Inditex/Zara Gross Margin 59.3% 57.1% 56.7% 13.8% 11.9% 13.3% -7.8% -7.7% 7 7% -6.5% 4.36 4.25 4.39 17.6% 15.8% 17.7% 6.34 5.65 5 65 5.74 3.0% 0.0% 5.0% H&M 62.9% 61.6% 61.1% 17.2% 16.2% 17.3% 9.0% 8.4% 8 4% 8.4% 4.12 4.09 4.08 31.6% 30.1% 32.6% 7.00 6.56 6 56 6.40 5.0% -5.0% 5.0% The Gap 40.2% 40.3% 36.1% 8.2% 7.8% 5.3% 8.3% 7.5% 7 5% 7.2% 5.05 5.34 5.14 17.0% 13.8% 10.6% 3.39 3.61 3 61 2.90 1.0%