brand watch zara - third eyesight · © devangshu dutta, 2004 introduction to zara 2 zara is part...
Post on 15-May-2018
222 Views
Preview:
TRANSCRIPT
1
© Devangshu Dutta, 2004
BRAND WATCH
ZARA Images Fashion Forum
12 February 2004
© Devangshu Dutta, 2004
2
Introduction to Zara
Zara is part of the €4 billion Inditex Group. Over 80% of the group’s sales are contributed by Zara’s 600 stores.
Other labels include Pull & Bear, Massimo Dutti, Bershka, Stardivarius, Oysho, and the recently added Zara Home
Founded in 1963 by Amancio Ortega, with a small lingerie business.
The first Zara shops opened in 1975 selling low-priced imitations of more upmarket fashion houses.
Ortega thought that consumers would regard clothes as a perishable commodity – no different from yogurt or bread – to be consumed, rather than stored in closets.
Teamed up with José María Castellano, an IT buff who made Ortega's dream of freshly baked clothes a reality.
© Devangshu Dutta, 2004
3
On the Fashion Life Cycle
Time on a Fashion Product Life Cycle
Innovators
Early Adopters
Early Majority
Late Majority
Fashion Laggards Leading Edge
Mainstream Followers
© Devangshu Dutta, 2004
4
Key Success Factors for Zara
Business is built on quick response Production responds to trends
Deliveries are twice weekly, unlike most fashion stores’ weekly schedule
KSFs: Market research
Ready raw material base
Multi-functional quick decision making
Vertical integration to ensure control over supply chain, and proximity
Technology
Cost Control, despite flexibility
Technology and Infrastructure
© Devangshu Dutta, 2004
5
Product Execution
Feedback from the stores:
-Sales reports
-Qualitative comments
Market research on
university campuses,
discos and other
venues
At HQ regional managers collect
and analyse the feedback.
Commercial team sits with
designers to use the
information to create new
lines and tweak existing ones
- deciding with the
commercial team on the
fabric, cut, and price points
of a new garment
Fabrics from
stock
Dyeing/finishing
(if required) Production
Fleet to
stores
Line in
Stores
Close watch on trends & buying behavior
Quick decisions
Vertical integration & Proximity
Report to HQ
daily
Distribution
© Devangshu Dutta, 2004
6
Learnings: Product Development Process
Forecast Plan
Fabric
Buy
Sales
Trends
Fashion Dyeing
Finishing Style
Produce Stock
Colour
Fabric
Decision on Fabric Response to Demand
© Devangshu Dutta, 2004
7
Impact
Minimizes the risk of being saddled with unsold stock
Maximizes full prices due to low remainder stock.
It takes 10 to 15 days, on average, for a design to go from the drawing table to the showroom floor
Style variability: Produces styles in short runs with 20,000 different designs a year
Stores constantly refreshed (twice weekly deliveries), maintaining fashion edge
© Devangshu Dutta, 2004
8
Traditional Season for High Street Store
© Devangshu Dutta, 2004
9
Moving At The Speed Of Fashion
© Devangshu Dutta, 2004
10
Process Pointers
“Design and respond quickly” rather than “source quickly”
Buy continually rather than in batches
Develop “colour and fabric collections” Buying / stock plans based on that rather than apparel
collections
Design styles from in-stock fabrics (already in house or available with vendor)
Quick response manufacturing – “virtually owned” capacity
Standardisation is a major enabler to adopt a quick response approach
© Devangshu Dutta, 2004
11
Continual Product Introduction
Major Strengths
Each style is a response to a specific trend More accurate response to
market trend and inventory status – improved sales
Higher margins Lower risk of stockouts
Lower / minimal discounts as “poor” buy and overstocking is minimised
Based on investments / commitments in capacity and raw material that are of lower value than finished goods at stock or retail
Lower costs
Major Weaknesses
Repeats are a limited possibility unless standard fabrics and colours are used in the specific style; this means that styles that do well using other fabrics may not be able to maximise margins
Assumes some, probably a significant, amount of fabric and trim inventory in-house
© Devangshu Dutta, 2004
12
Zara’s Vertical Structure
18% of product related
inventory
* (Source: Zara Annual Reports)
© Devangshu Dutta, 2004
13
Trade-Offs
Repeat Order Limitations:
Repeats are a limited possibility unless standard fabrics and colours are used in the specific style
Hot styles using non-standard fabrics will be one-offs and will not maximise margins
Inventory Position:
Assumes about 15-20% of fabric and trim inventory in-house for providing base for quick design and manufacture.
© Devangshu Dutta, 2004
14
Learnings: Product & Capacity
Own design Control on specifications
Impact on fabric sourcing
Better margins
Controlled Fabric sourcing: Book loom and dyeing & processing capacity with +/-20% flex during season Flexible quantities
On-time deliveries
Cost control
Fabric sourcing mix includes 50-60% own design, balance are mill designs
© Devangshu Dutta, 2004
15
Learnings: Continuum of Control
Owned Outsourced
Control
Space Management
Finished Goods Logistics
Finished Goods Production
Finished Goods Capacity
Design
Parameters to Control
Raw Material
Raw Material Capacity
© Devangshu Dutta, 2004
16
Getting it Right
Right Product Design
Timing / Speed
Assortment
Right Price Full price sales
Cost Control
Low markdowns
© Devangshu Dutta, 2004
17
Questions for Emulators…
In what shape do we need to be?
Are we ready to do what it takes to get there?
Are we “genetically programmed”?
Are we “mentally prepared”?
Are we “physically ready”?
top related