Retail industry
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Retail Industry. Consists of the sale of goods merchandise from a very fixed location ; departmen stores , boutique . Very competitive Fashion & Trends. Fashion.

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Retail industry

RetailIndustry

  • Consists of thesale of goodsmerchandisefrom a veryfixedlocation; departmenstores, boutique.

  • Verycompetitive

  • Fashion& Trends


Fashion

Fashion

Fashion is the imitation of a given examples and satisfies the demand for social adaptation… The more an article becomes subject to rapid changes, the greater the demand for cheap products of its kind”

Georg Simmel, “Fashion”, 1904


Fast fashion

FastFashion

  • Strategybyretailers;H&M, Topshop, and Zara

  • Democratizingcoutureandbringingtrendyaffordableitemstomasses

  • Cheap

  • Frequency


Fast fashion1

FastFashion

TraditionalRetailers

FastFashionLeaders

Designerdictites “in”, retailersrespondtoshifts in the market.

Fewweeks

Heaven

Shell life= days

Averagemarkdownratio 15% on sale

Profitmargin 7 %

  • Designer-push model

  • Average 6 months

  • Hell

  • Shell life = months

  • Averagemarkdownratio 50% on sale

  • Profitmargin 7%


Zara background

Zara Background

  • 1963 byAmancio Ortega Gaona

  • Lowpricelook-a-likehighfashionclothing

  • 1975, firstretailoutlet

  • Experiencedrapidgrowth(500-3000)


Competitors

Competitors

  • H&M

  • Topshop

  • Benetton


Strategic decisions on

Strategic Decisions on…

  • Production

  • Supply Chain management

  • Operation


Strategic decisions production

Strategic Decisions - Production

  • Production

    • Heavy capital investment i.e. computer guided cutting

    • Outsourcing of labour intensive operations to local subcontractors; produce half of its products near its core market

    • In-house prototype production


Strategic decisions supply chain

Strategic Decisions – Supply Chain

  • Supply Chain Management

    • The involvement of the whole supply chain and shares information with the Zara Headquarter


Strategic decisions supply chain1

Strategic Decisions – Supply Chain


Retail industry

  • Operation

    • Marketing – no flashy and extravagant advertisings, relies on in-store and point-of-sales promotions to convey the brand image

    • Retains 90% ownership to avoid disputes between Corporate decisions and Franchises

    • Emphasis on teamwork


Competitive advantages

Competitive Advantages

  • The strategic decisions lead to

    • Respond to fast-changing trend quickly - lead time of 15 days and flexibility

    • 50% of its new products introduced on an ongoing basis

    • Ability to spot opportunities and anticipate likely trends

    • Ability to create and maintain shared situation awareness


Competitive advantages1

Competitive Advantages

  • 15 Days of Lead time

    Day 1: Designers design the product

    Day 3: Fabric cutting

    Day 11: Subcontractors manufactures the clothes

    Day 13: Delivery of products by trucks in Europe and by aircraft in Asia and the USA

    Day 15: Sale of the product


Strategy situation awareness

Strategy: Situation Awareness


Step 1 raw data

Step 1: Raw Data

  • Absorb Real time Data

    • Hand held devices

  • Store Managers

    • Incentives provided for accurate sales forecasts and growth

  • Regional/Country managers

    • Get on the floor

  • Closing time: Unsold Merchandise data

    • Patterns?


Step 2 hypothesis

Step 2: Hypothesis

  • Find Patterns in the data

  • Identify Present Opportunities and Threats

  • Face to Face discussions

    • Break the corporate structure

    • Avoid group think

  • Design Blueprints


Step 3 testing hypotheses

Step 3: Testing Hypotheses

  • The final step

    • Place the items on with the rest of the collection

    • Observe consumer behaviour

    • To cull or not cull? That is the question

  • About 25,000 mock ups are made but 60% are culled before production


Zara s success

Zara’s Success

  • A company that can respond quickly to changing demands

  • Developed a competitive advantage through

    • Operations Management

    • Human Resources

    • Financial Structure

  • Situation Awareness

    • Strategic key to success


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