Patricia Kowsmann wrote a terrific article about Zara today. Zara, as many of you know, is a highly successful Spanish apparel retailer. In the article Kowsmann explains how quickly Zara can bring a new design to the retail floor, ready for customer purchase. Here's an excerpt:
A black, high-collar women’s wrap coat, fastened with a metal ring, was hung out for sale one recent morning at Zara’s flagship store in New York. “Customers asked for hardware this season,” the manager said, holding out the ring. That kind of feedback, he added, can inspire a new style that reaches his store within weeks. This coat took 25 days.
Recall that I blogged about The Gap's troubles several days ago. The Gap finds itself in trouble for several reasons. One cause of the company's problems is its inability to cope with fast fashion competitors such as Zara. Kowsmann's article points out that many competitors, including the Gap, have emulated Zara's strategy of bringing manufacturing closer to its retail stores. This supply chain strategy enables Zara to move more quickly and to adapt more easily to changing customer preferences. However, Kowsmann explains that simply matching the location strategy that Zara has employed for its manufacturing facilities won't provide the winning formula for many of these retailers. Why? Here's Kowsmann:
But experts say it would be hard for competitors to replicate the Inditex model without a more thorough overhaul of the way they design, manufacture and distribute their products. The Spanish retailer’s rivals might move production closer to home, but they “just don’t have an organization set up to react quickly to what is trending,” said Liz Dunn, founder of Talmage Advisors, a retail consulting firm.
In short, Zara's competitive advantage does not come simply from its sourcing strategy. It entails an entire integrated system of activities. The New Yorker's James Surowiecki once wrote about the company, and he explained this very point. Zara has a whole package that is very hard to imitate. Placing factories closer to stores may have some benefits, but that doesn't mean these rivals can match Zara's fast fashion success.