Zara : IT for Fast Fashion
Zara : IT for Fast Fashion
Zara is a leading brand in the fashion retail industry. It is a vertically integrated retailer, a pioneer of the Just-In-Time Inventory system. It becomes important to define the critical success factors for this industry in the analysis presented through the following three questions:
1. How can you differentiate Zara’s use of IT?
Technology investment should be targeted at the points in the value chain where the impact is most significant. If we look at the value chain of the fashion retail industry(considering a manufacturing value chain), the key activities or the high value adding primary activities are:
Marketing and Sales(it’s a customer facing industry and it doesn’t matter how efficient the operations are if the sales don’t happen): Zara doesn’t advertise its products -> the advertising expenditure is only 0.3% of revenue as compared to the industry norm of 3%-4%. So, Zara has to resort to other means in order to attract customers and maintain steadily growing sales. In the fashion retail industry, it is of utmost importance to stock apparel that would appeal to the public. In this regard data becomes extremely significant in order to ensure that stores carry the kinds of things customers want to buy. Zara’s store managers can perform the task of collecting information by interacting with customers about their preferences and what they would like to see more of. PDAs which are operated by the store managers and used for collecting customer inputs can be connected to POS systems, which collect sales data, through wireless networks. This would save the time and effort of walking around the store, counting garments and talking to salespeople to figure out what has been selling in the store. Data Mining for pattern recognition in this collected data would lead the commercials to better decisions by better cognizance of customer’s preferences.
Operations: Zara is known for its speed and frequency of delivery of new designs.
Zara is a leading brand in the fashion retail industry. It is a vertically integrated retailer, a pioneer of the Just-In-Time Inventory system. It becomes important to define the critical success factors for this industry in the analysis presented through the following three questions:
1. How can you differentiate Zara’s use of IT?
Technology investment should be targeted at the points in the value chain where the impact is most significant. If we look at the value chain of the fashion retail industry(considering a manufacturing value chain), the key activities or the high value adding primary activities are:
Marketing and Sales(it’s a customer facing industry and it doesn’t matter how efficient the operations are if the sales don’t happen): Zara doesn’t advertise its products -> the advertising expenditure is only 0.3% of revenue as compared to the industry norm of 3%-4%. So, Zara has to resort to other means in order to attract customers and maintain steadily growing sales. In the fashion retail industry, it is of utmost importance to stock apparel that would appeal to the public. In this regard data becomes extremely significant in order to ensure that stores carry the kinds of things customers want to buy. Zara’s store managers can perform the task of collecting information by interacting with customers about their preferences and what they would like to see more of. PDAs which are operated by the store managers and used for collecting customer inputs can be connected to POS systems, which collect sales data, through wireless networks. This would save the time and effort of walking around the store, counting garments and talking to salespeople to figure out what has been selling in the store. Data Mining for pattern recognition in this collected data would lead the commercials to better decisions by better cognizance of customer’s preferences.
Operations: Zara is known for its speed and frequency of delivery of new designs.