No need for inventory design and production

Zara completed only 15% to 25% seasonal products in 6 months ahead of schedule.

It only locks 60% to 70% of the product at the start of the season, which means up to 50%.

It was designed and manufactured in the season.

Nelson Freeman (Nelson Fraiman), a professor at the Business School of Columbia University, has written a 2010 case study on Zara. According to his point of view, most of the clothing retailers have designed 40% to 60% products for their series in 6 months ahead of schedule.

At the beginning of each season, nearly 80% of the season's stock is finished, which means that many garments have been processed.

Planning ahead is also good.

When you pay in factory time in China and the factory does not belong to you, advance booking time ensures that the factory will have enough capacity to produce products for your company, not for your competitors.

At the same time, the production price is predictable and no extra cost is required for urgent orders.

But there are also disadvantages.

Once you make your own bet and do not need any action, you will be right to speculate about the trend of the season.

If they are not, then you have to be forced to accept large quantities of stock that can not be sold.

In addition to price cuts, there are not many ways that you can take to deal with these stocks.

If sales are not successful, then you have to continue to lower and spend more money on advertising to promote sales.

However, Zara completed only 15% to 25% seasonal products in 6 months ahead of schedule.

It only locks 60% to 70% of the product at the start of the season, which means that up to 50% of the clothing is in season.

Produced.

If lavender and velvet suddenly become popular, Zara can react quickly, design new styles, and introduce products into stores when the fashion trend is still at its peak.

Zara has such strength, because it has retained a large number of internal production to ensure that its factory reserves 85% of the productivity in season adjustment.

For long term products, Zara uses the same foreign factories as other companies, because the cost is relatively low, but for fast fashion products, Zara is internally produced, and it often relies on the exquisite fabric sources, tailoring and sewing settings near Spain's design headquarters.

European workers earn more than their counterparts in developing countries (Nelson Freeman says 8 euros an hour, not 50 minutes an hour).

But the turnaround time is incredible: it takes only two weeks from the idea to appear in the designer's mind.

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Small batch production is flexible.

Zara does not need to predict demand. It can respond to changes as it develops and new products can be delivered to stores two times a week.

This quick quarterly turnover is benefited from the production equipment near Zara's Spanish headquarters, allowing Zara to launch a small batch of products frequently.

The new product can be delivered to the store two times a week.

If we hurry to produce the lavender velvet in pursuit of the trend

Bad sales, small damage has been caused, but because of small volume, so there will not be a lot of inventory can not sell.

Moreover, due to the end of the failed experiment, there is still time to try another style, and even after that, we can try another different style, or double the production of the best seller, or raise the price.

Zara does not need to predict demand, and it can respond to needs as development changes.

A manager told Nelson Freeman that Zara moved the store inventory from the equestrian theme to the black theme within two weeks of the 9.11 terrorist attack.

Another advantage of small batch is that there is very little reduction in sales.

Zara did not avoid discount sales because there was no deal with a large number of stocks that could not be sold.

Nelson Freeman's case study estimates that 30% to 40% of the products sold by Zara competitors are not sold at full price, while only 15% to 40% in Zara.

Because customers know that every new product will be put on shelves every few days. If it is a best seller, it will soon be sold out because of a limited number. They have the power to shop in Zara stores, and each person goes to 17 times a year on average, compared with Gap or Gap in the us, only 4 or 5 times.

Uniqlo is another global clothing retailer famous for its affordable prices. It is worth noting that it has taken almost the opposite approach to Zara and has been very successful.

There is a recent report on UNIQLO in Japan: "the company's chief operating officer said that UNIQLO could lower its retail price because it did not change the sales plan based on the latest fashion trend. On the contrary, they also planned to produce their products in advance, making clothing at a relatively steady speed all year round, instead of rushing to produce tidal products from the special factories."

By producing well-designed basic clothing and trying to sell them at an incredibly low price, UNIQLO can maintain customers' needs without having to catch up with every trend.

Therefore, there is more than one way to achieve the purpose of operation. You only need to find products and market strategies that are suitable for the company, and you can succeed.

At the same time, remember that you must not order 6 months in advance for the purplish red linen short sleeved sweater.