Wednesday, November 05, 2008

A Vertically Integrated Clothing Retailer?

Business Week had an article about Zara, the Spanish apparel retailer, a few weeks ago. I actually just taught a case study about Zara, as I often do in my MBA strategy course. It's a fascinating company. While many clothing retailers outsource all production to low wage nations, particularly in Asia, Zara actually produces a substantial percentage of their clothes in their own factories in Europe.

Their vertical integration strategy is designed to enable them to react very quickly to market trends, and to produce fashionable clothes very quickly as part of their "fast fashion follower" strategy. The fast replenishment model and massive flexibility means Zara makes fewer mistakes, and when they do make a fashion error, it is less costly becuase they haven't ordered a huge shipment of the item from Asia. Because of this, they have fewer markdowns, and their markdowns tend to be smaller. That helps create higher operating margins.

Vertical integration always has its risks, but in this case, Zara has found a way to make it very profitable. It also has helped to create a unique business model that is very hard to imitate.


Affordable Luxurious Wedding Dress Blog said...

cheap wedding gowns,
discount bridal gowns,
China wedding dresses,
discount designer wedding dresses,
China wedding online store,
plus size wedding dresses,
cheap informal wedding dresses,
junior bridesmaid dresses,
cheap bridesmaid dresses,
maternity bridesmaid dresses,
discount flower girl gowns,
cheap prom dresses,
party dresses,
evening dresses,
mother of the bride dresses,
special occasion dresses,
cheap quinceanera dresses,
hot red wedding dresses

Peter McCaughan said...

Thanks for nice blog. SizeGenie is your personal body scanner. Quickly and accurately take your measurements so you always get the perfect fit when buying clothes online. Body-Cloud is the creator of SizeGenie, with a Kickstarter campaign on the way aiming to change fashion shopping for good.

Jack Men said...

Howdy! Pleasant stuff, do update me as often as possible when you post again something like this! nighty

pitbull said...

I would never like to fail out any chance to read out your listings. quality wordpress themes

ExclusiveStore.PK said...

Thanks for sharing fashion updates, shopping online women's latest collection on Exclusive Store.
online shopping with cash on delivery