React rather than predict
Hot fashion retailer Zara has one plaudits for the way it taps into fashion trends and converts them into hot clothes that are affordable - amazingly fast.
A Zara design can go from concept to store within 30 days. Zara employs over 200 staff in its Spanish design and development team. The team churns out an amazing 1000 styles a month.
The mantra in Zara is react rather than predict. Zara’s designers don’t attempt to predict or share the market like most of their competitors. Zara reacts to what they in the night clubs, on the streets and on the catwalks and tests them in their shops. What sells is replaced quickly. The sale dogs are cut.
Its a magic formula. Customers love it. They get the latest fashions, fast and cheap.
Zara’s short lead times means it continues to deliver more fashionable clothes. Thats why customers return to the store - on average an amazing 17 times a year (most competitors average 3). The lower quantities mean the fashion items are often in short supply. Low surplus stock means Zara doesn’t have to regularly purge its stock with massive end of season sales - so margins remain high.
The huge range of styles gives the customer more choice and improves the odds of Zara getting it right. Because Zara customers know Zara is always updating its stock, Zara spends very little on advertising. Zara’s hot fashion creates massive word-of-mouth among it’s target customer base.
When Ortago Gaona, the founder of Inditex, the owners of Zara, is asked what Zara does, he replies “Zara provides freshly baked clothes.” For the staff this translates into: react rather than predict.
The Zara formula also suggests that before long we will find that a lot more fashion brands will have to own and run their own retail outlets. Zara’s “fast fashion” is built on getting daily feedback from its own stores and using it’s sales associates and store managers as “trendspotters.”
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