Zara Can "Predict" The Popular Color Of The Next Season With Two Tricks, And Is Looking Forward To It

Before the new season, Fashion retailers It is difficult to predict whether black is still popular or whether other colors will become popular. In fact, even in the current season, customers' preferences often change. In the past, most retailers relied on prediction to decide what clothes customers wanted to wear. However, most retailers will make wrong predictions, thus bearing serious consequences - at least half of their inventory will be sold at half price every year.

The holding company of Zara, Tizeno Textile Industry Company, was very dissatisfied with this loss and decided to implement an adaptive strategy in production and retail. The holding company introduced fast fashion when Zara launched the market in 1975 fashion industry Zara does not predict the clothing style that customers may want, but responds faster according to the clothing style that customers actually buy.

Zara has achieved this in two ways.

First, Zara has shortened its supply chain, moved its production plant closer to customers, and is willing to invest in higher production costs for greater flexibility. Among various measures, the company reallocated garment factories to the U.S. and European markets, moving them from East Asia to places closer to the end market - such as Mexico, Turkey and North African countries. Close supply is the key factor for the success of Tizeno Textile Industry Company's organizational model. The shortened supply chain reduces the time from the design studio to the main street retail store to only 3 weeks, which is 5 months shorter than the average supply time of the industry.

Second, Zara will only produce clothes of certain style in small quantities. In fact, all clothes are experimental products that participate in the market in real time. Successful styles that are quickly snapped up will be selected for mass production. Compared with competitors, Zara retail stores have tested more styles to ensure the active participation of customers, and are ready to continue production. Zara is used to develop 15%~25% of the products of the current season six months before the start of the new season. At the beginning of the new season, Zara only focuses on producing 50%~60% of the products, while the average productivity of the industry is 80%. Therefore, about 50% of Zara's clothes are produced in the middle of the season. If Harun pants and leather pants suddenly become popular, Zara will quickly respond, design new styles, and deliver them to the store before a certain trend reaches its peak or declines.

The effect of this method is very obvious: in 2010, Zara's reduced price goods accounted for only 15%~20% of the inventory, in sharp contrast to the industry average of 50%. In addition, although the direct production cost of Zara is higher than that of competitors whose production centers are basically located in the Far East, the profit margin in a certain period is twice the industry average, and the inventory turnover of retail stores is quite high, which brings huge Return on investment 。