1.

BUSINESS PROCESS ANALYSIS OF TRADITIONAL FASHION RETAILERS

THAT COMPETE WITH ZARA. THE ANALYSIS SHOULD INCLUDE, PROCESS,
ACTORS AND TASKS
Zara is knownby its successful business strategy to be the leading on fashion retailer. It uses
modern process by implementing information system and technology to sell items in short
lead time. How about Zara's competitors achieve their success?
H&M, a fashion retailer based in Sweden, is ranked the second largest global clothing
retailer, just behind Zara. It has more than 3.500 stores located across 57 countries. Their
creative brain work happens in the Sweden office where designs are finalized by
approximately 150 designers and outsources production to 800 factories, 60% of the
production takes place in Asia, the rest in Europe. There are two main collections each year,
one in spring and one in fall. The primary collections are traditional timeless items and the
sub-collections are trendier items with short lead times. Some of its seasonal collections
collaborate with other professional designers, singers, or actresses. One of the most
successful collaborations is an exclusive collection by Karl Lagerfeld the head designer and
creative director of the fashion house Chanel as well as the Italian house Fendi and his own
label fashion house also collaboration with Stella McCartney, Jimmy Choo, Madonna,
Alexander Wang, Beyonc, etc.
This shows how H&M as one of Zara's competitors, traditionally design and manufactures its
products, whereas Zara doesn't have any exclusive design or collaboration with well known
people. Zara prefers imitating the fashion trend rather than guessingon the next hot style.
Both fashion retailer have almost the same amount of revenue (in 2013 Zara had $22.4
billion, H&Ms was $22.9 billion), but they do have contrast main business process. For Zara,
reacting to consumer desires is a core component of its competitive advantage, while H&M
focuses on researching and predicting emerging trends. This supported by working with both
the buyers and suppliers in Sweden and in national offices around the world, reviewing
samples, checking quality, and choosing the suppliers, which will handle each order.In result,
H&M is enabled to react quickly to both supplier and customer needs.
In todays highly competitive fashion retail market, it is appropriate to concern how
consumers will react to products well before they are launched.

2. BUSINESS PROCESS ANALYSIS OF ZARA. WHY ZARA IS SO SUCCESSFUL?

WHAT ARE THE DIFFERENCE BETWEEN ZARA AND OTHER FASHION
RETAILERS? HOW COULD ZARA DO THAT?
Zara, the leading fashion retailer based in Spain, has built its strategy around consumer
trends, embracing the fast-changing tastes of its customers. It delivers new products twice a
week that adds up to 30,000 new designs each year. It takes the company only 10 to 15 days
to go from the design stage to the sales floor.To do this successfully, Zara has developed a
highly responsive supply chain that enables delivery of new fashions as soon as a trend
emerges. Because of this streamlined model, Zara is not forced to be ahead of the guessing
the next trend. Rather, they exist on the curve, evaluating trends first, then following.Data on
what sells and what customers want to see goes directly to The Cube outside La Corua.
When others manufacturing to Asia due to cheap labors, Zara built automated Spanish
factories, where robots work around the clock cutting, dyeing fabrics and creating unfinished
gray goods the foundations of their final products. These automated factories use a just
in time inventory approach pioneered by Toyota Motor Company, which is used by Uniqlo
as well. Zara has also created a partner network of more than 300 small shops outside La
Corua Portugal and Galacia to handle the finishing work where the gray goods are
transformed into dresses and suits. By following this approach, if an item looks like a winner,
Zara can quickly ramp up manufacturing and get items to their stores in a matter of days.
Zara believes that speed and decentralized decision making are essential which can lead to
shorter lead times and offer more fashion styles. Zara can sold items in as little as two weeks.
The company spends almost nothing on advertising and uses the savings to support higher
cost of producing. The tight integration of design, planning, merchandising and production in
La Coruaenables the company to be flexible and able to respond quickly to consumer need.
Last but not least, the implementation of information technology (IT). Information from
stores to headquarters is combined human intelligence and IT, such as their PDA (Personal
Digital Assistants) Zaras business modelhandheld computing devices meant for mobile use
outside an office settingto gather customer input, staff regularly chat up customers to gain
feedback on what they would like to see more of.
3. AN ANALYSIS ON HOW ZARA USE TECHNOLOGY TO IMPLEMENT
THEIR INNOVATIVE BUSINESS PROCESS

Zara has used new technology since 2014 to get their business operation faster. Zaras
chairman and CEO unveil the Radio Frequency Identification (RFID) Technology on July
15th 2014. RFID is a technology that allows the brand to track every garment from
factory to final sale. RFID chips can store information about item they are attached to,
when prompted, and scanner receive the data via radio signal. Inditex is burrying the
chips inside its garments plastic security tags, an innovation that allows the fast fashion
chain to reuse them after the tags are remove at checkout.
The chips can improve inventory management by showing which stock needs reordering. RFID also allows every store to restock sizes and styles speedier. it means that
store is a much more reactive whenever the products customer looking for are sold out, so
they can replenished with speed. The important thing is the faster Zara get the popular
items and size to the shop floor, the more money the can earn.
If you can not find an item you are looking for, the new RFID technology will make
sure it soon reappears. Its also good news since the new technology can locate the
whereabouts of other items easier. The system provides shopping experience allowing
customer service assistants to identify the availability of particular item as requested size,
and if not, it points the consumer get another identical one at the nearest store or online.
Its common whether customer cant find something they like for the right size at a shop
but available at other shop.
Because the chips save time, Zara carries out the inventories every six weeks, getting
a more accurate picture of what fashions are selling well and any styles that are
languishing. And each time a garment is sold, data from its chip prompts an instant order
to the stockroom to send out an identical item. Previously, store employees restocked
shelves a few times a day, guided by written sales reports.
The new technology that Zara holds now shows significance impact to the sales
number. The income increased 26 percent in first half year. The faster they operate the
logistics, the more money they can make. The technology implementation also increases
the customer trust for their integrated system because of faster services and availability of
requested item.

4. WHAT ARE THE STRENGTHS AND WEAKNESSES OF ZARA BUSINESS

PROCESS? WHAT CAN STUDENT RECOMMEND TO INCREASE ITS
STRENGTHS AND LOWER ITS WEAKNESSES?
Zaras concept is using what is trending now. Instead of doing some research to
predict the fashion, Zara prefer analyze what their customers need. They eleminate the
risk of missing fashion. If they can meet what the consumers want, Zara can earn the
income even faster.
Because Zara concerns about what customer needs, they can adjust the fast-changing
tastes. One of the strategy is following consumer trends after evaluating the trend. It can
be strength and weakness at the same time. Even though they can meet what consumer
needs, Zara can not be the first to launch the newest fashion trend.
Zara also has highly supply chain that enables delivery of new fashion as soon as
trends emerges. It delivers new products twice a week that adds up to 30,000 new designs
each year. The Speed and decentralization decision making lead Zara to get shorter lead
time and offer more fashion styles. It means Zara can be more productive.
Zara almost does nothing on advertising and choose to save the cost for producing
more. Zara is still one of the most succesful fashion retailer even they do not promote
their products by fashion show like other fashion industry. But Zaras in-store
advertisement model may not work going forward. Zara should do another kind of
advertisement to keep the sales grow. Website as an e-business can also connect to
customer directly. Zara might develope system that can interact with customer more
intensively, so they can recognize whats new on Zara. It also makes the income increases
by bringing the products anytime via online. Chatting up with customers to gain feedback
and know what they want is a value that Zara got. This can keep their customer
relationship and catch the trend. Zaras employee in every country has to be trained to
extends more kindness to customer, so they will be comfortable while shopping at the
store.
Sources:
http://www.inditex.com/en/sustainability/managing_sustainability

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11172562/
How-Inditex-became-the-worlds-biggest-fashion-retailer.html
fashionista.com/2015/09/inditex-first-half-2015
http://www.theindustrylondon.com/fast-fashion-gets-faster-with-zaras-newtechnology/
http://www.independent.co.uk/life-style/fashion/news/high-street-giant-zaralaunches-new-tagging-technology-to-make-fashion-even-faster-9614955.html
http://www.inditex.com/media/news_article?articleId=150174
http://www.wsj.com/articles/at-zara-fast-fashion-meets-smarter-inventory1410884519