Zara, the Spanish fashion retailer, has been one of the top-selling apparel brands in the world. Amancio Ortega, co-founder of Zara, recently became the second-richest man in the world.
What is Zara’s secret to success?
Zara is one of the biggest names linked to the boom of fast fashion, a new retail model that revolutionized the apparel industry by doing away with long-established seasonal fashion cycles. Fast fashion retailers operate on short product lifecycles: stores are quickly restocked with new styles, allowing the retailer to react quickly to customer feedback and new fashion trends. Stock is also produced in smaller quantities, reducing capital binding for the retailer and creating a feeling of scarcity for the consumer (“I need to buy this coat now, there are only 3 in store and it won’t be reordered”). By stocking fewer products, which are often replaced with new and different ones, Zara and other fast fashion retailers manage to:
Keep their clothes relevant
Get customers to return more often to see the new merchandise
Tempt customers to buy now, as the same product may not be in store next week
Sell more products at full price
Be unaffected if some items prove unpopular, as they are stocked in limited quantities
Get higher net margins.
What should you do to be more like Zara?
Zara’s internal management and value chain reflect the company’s focus on speed and agility. In order to design, produce and distribute a large amount of products quickly, Zara uses a lean and agile methodology which focuses on speed, responsiveness, flexibility and elimination of waste.
Identify and eliminate waste
Where “waste” is intended as everything that does not add value to your operations, or to your customers. Do you move your products around unnecessarily, for instance from warehouse to store, or between locations? Is your storage filled with out-of-season, unsellable merchandise? Does your staff have to run around the store to complete task? Do they spend too much time waiting for merchandise to arrive? Identify all situations that decrease your ability to sell effectively, and solve them. Optimize your storage and machinery to make product movement quick and easy. Reduce delays and unnecessary waits. Use your staff’s skills: expert salespeople should not be stuck doing merchandising jobs; they should be on the floor, doing what they do best – sell.
Decrease variability (or increase flexibility) in your company
Are you ready for the unexpected? Make sure that your company can operate at full speed whatever happens. Cross-train your employees, so they can take on different tasks if the need arises. Establish business processes and tools that enable you to constantly update the sales floor, introducing new product lines fast and smoothly.
Be agile and responsive
Create an agile structure, so that you can always be ready to respond to changes in the market and customer feedback. Keep your ears open for customer demands and suggestions, and use this insight to make efficient decisions as regards both pricing and product ranges. Zara’s extremely quick production cycle - it takes them just 15 days to take a new line from the drawing table to the stores – enables them to respond rapidly and effectively to customer demand, increasing sales and customer retention.
Base your decisions on real business data
Do you know how long it takes you to perform your daily tasks? How long are the queues at your registers? How much time do you spend on serving each customer? How many of your staff members are occupied with goods receiving? Collect all key data on your business, and use it to optimize your operations. Once you know exactly how well you are performing you can create your baseline and metrics, and set your goals.
Determine best practices and standards, and follow them
Have a clear definition of your processes, roles and responsibility. Make sure that everyone in your staff knows what their job is, and the most efficient way to accomplish it. Identify the optimal ways to perform tasks and meet customer demands, share this knowledge with your staff members and make sure they apply these best practices.