Managerial Success of Zara, a Spanish Fast Fashion Retailer Company

Published: 2021-09-22 01:10:09
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Zara is considered a fast fashion company. With more than 4,000 stores all over the world, Zara is known for their extraordinary approach to operation management that allows them to develop a new product and have it delivered to stores in just two weeks. In comparison, other retailers take up to six months to do the same (Forbes, 2015). This is also the key to Zara’s success. In order to understand why fast fashion companies are so profitable and why Zara is able to dominate the market by constantly adapting to and creating fashionable and trendy clothes it is important to look at the way Zara manages its operations and what they do differently from their competitors. By understanding these matters it is possible to see if there are any flaws in the system and improve it.
For the consumer low prices are fantastic, and nowadays there is plenty of cheap clothes that look good, thanks to fast fashion companies. These cheap clothes look good and are quite good quality because cheap clothing is trendier than ever and trendy clothing is cheaper than ever (Oliver, 2015). Due to this, it is vastly profitable for Zara and other fast fashion companies that are close Zara’s competitors such as H&M and TopShop to use this type of operations management. Operations management is about how the organizations manage the different processes of designing, delivery and, service and product optimization for their customers (Slack, 2011). In order for Zara to achieve their current way of operating they had to deal with many tasks, issues and decisions of operations. The way Zara’s operation management actually works is that they have developed a continuous system. It is highly innovative as they collect market information and customer desires to create designs. The designs travel to their suppliers as production orders. Suppliers deliver finished clothes to warehouses and from there the merchandise go straight to stores. Their distribution infrastructure that ensures that creating designs that are similar to the expensive designs from fashion’s big names and fast production that can be shipped overnight. This allows Zara to create approximately 30,000 designs each year from their headquarters in Spain. These designs are locally targeted which means that the designs produced for the UK will be trendy there while the designs produced for Spain will be different. In order to ensure better quality control, Zara produces most of its production in-house. When Zara uses cheaper labour they primarily use local contractors within Europe instead of the much slower suppliers from developing countries as most their competitors do. After the merchandise is ready it is shipped from the two primary warehouses that are located in Spain. The lightning fast operations from the Zara’s global distribution centre moves 2.5 million items per week allowing new clothes to be delivered to the stores every two weeks. In order for the employees at the stores to require minimum time from the moment the new merchandise is received to the moment, it is up for sale Zara irons the clothes, packs them on hangers and attach the security and price tags before shipping. The main reasons why Zara with its fast fashion is so profitable is also the main difference between them and their competitors, for example, Levi’s is a company that practices non-fast-fashion. They try to make positive strides towards minimal carbon footprint and overall impact on the environment. They spend a fortune on researching trends and generating ideas that take a long time and once one of their designs become popular Zara takes the idea and uses it to make the same product that is on shelves within two weeks. The craziest thing is that to do this it doesn’t cost them anything. The constant flow of fast trendy designs that have affordable prices are enough to attract masses without even advertising and have achieved success for the company worldwide (ABC TV, 2011). Besides ripping off trendy designs Zara also produces much more designs as their competitors and because of their advanced operation management they send the new stock to their stores much faster than their competitors. In comparison on average, a company would produce around 10,000 designs in a year, where Zara manages to triple that amount. Another important difference is that most company’s stores have seasonal merchandise and they change it four times a year as each season passes. Instead of doing that Zara has a system in place that is called Dynamic Assortment with Demand it gathers statistics of all the clothes tried on, purchased, returned and sends them to the headquarters where the data is analyzed. This is done in order to revise the product assortment in the store during the selling season. This method allows Zara to learn about demand in different areas and help decide which products they will keep on the shelves the types of products sell the best in order to use similar designs in the future. It also helps with inventory allocation meaning that it can provide a number of how many units each store needs and is capable of selling across the whole network. The benefits of this model were increased sales and faster overall delivery (Caro & Gallien, 2007).
The advantages of this approach in operations management are easy to spot. They are the low costs to design fashionable and trendy merchandise in a very short period of time which, therefore, allows the continuous flow of cheap and desirable goods to be delivered to the stores in a short time period and the optimal quantity that will then be sold out with high profits and again replaced with the newest trendy designs. The fact that there are so many benefits in this approach to operation management there is also many flaws in the system that are covered by the advantages. The main flaws are constantly impacting the market. First of all the approach of fast fashion is highly reducing originality within the clothing industry as a whole. And this is due the fact that companies that practice fast fashion tend to use other people’s designs. As a result of this parasitic behavior Zara and other fast fashion, companies will suffer in the long term. But there is an even bigger issue with this type of operational management and this issue is environmental. The fast fashion industry is producing more and more waste, leaves a large carbon footprint on the environment and uses large quantities of water. Another issue is that the trends change so fast that the apparel that consumers purchase is estimated to be used for only two years before it is donated to charity or thrown out (Kozlowski, Bardecki & Searcy, 2012).
In conclusion, Zara is successful due to what they do differently from their competitors, which is producing high amounts of designs and producing the merchandise locally and having a system that helps keep the cycle of affordable and fashionable goods being delivered to stores just in two weeks with a help of a dynamic assortment with demand system. There are countless benefits but is it recommended that Zara starts another line of merchandise that is more environmentally friendly with their own original designs as other companies have done, for example, the H&M Conscious clothing line that commits to being more ethical and sustainable. This would help Zara look better in the eyes of people as they would be using corporate social responsibility approach.

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