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Retail Industry

Retail Industry. Consists of the sale of goods merchandise from a very fixed location ; departmen stores , boutique . Very competitive Fashion & Trends. Fashion.

december
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Retail Industry

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  1. RetailIndustry • Consists of thesale of goodsmerchandisefrom a veryfixedlocation; departmenstores, boutique. • Verycompetitive • Fashion& Trends

  2. Fashion Fashion is the imitation of a given examples and satisfies the demand for social adaptation… The more an article becomes subject to rapid changes, the greater the demand for cheap products of its kind” Georg Simmel, “Fashion”, 1904

  3. FastFashion • Strategybyretailers;H&M, Topshop, and Zara • Democratizingcoutureandbringingtrendyaffordableitemstomasses • Cheap • Frequency

  4. FastFashion TraditionalRetailers FastFashionLeaders Designerdictites “in”, retailersrespondtoshifts in the market. Fewweeks Heaven Shell life= days Averagemarkdownratio 15% on sale Profitmargin 7 % • Designer-push model • Average 6 months • Hell • Shell life = months • Averagemarkdownratio 50% on sale • Profitmargin 7%

  5. Zara Background • 1963 byAmancio Ortega Gaona • Lowpricelook-a-likehighfashionclothing • 1975, firstretailoutlet • Experiencedrapidgrowth(500-3000)

  6. Competitors • H&M • Topshop • Benetton

  7. Strategic Decisions on… • Production • Supply Chain management • Operation

  8. Strategic Decisions - Production • Production • Heavy capital investment i.e. computer guided cutting • Outsourcing of labour intensive operations to local subcontractors; produce half of its products near its core market • In-house prototype production

  9. Strategic Decisions – Supply Chain • Supply Chain Management • The involvement of the whole supply chain and shares information with the Zara Headquarter

  10. Strategic Decisions – Supply Chain

  11. Operation • Marketing – no flashy and extravagant advertisings, relies on in-store and point-of-sales promotions to convey the brand image • Retains 90% ownership to avoid disputes between Corporate decisions and Franchises • Emphasis on teamwork

  12. Competitive Advantages • The strategic decisions lead to • Respond to fast-changing trend quickly - lead time of 15 days and flexibility • 50% of its new products introduced on an ongoing basis • Ability to spot opportunities and anticipate likely trends • Ability to create and maintain shared situation awareness

  13. Competitive Advantages • 15 Days of Lead time Day 1: Designers design the product Day 3: Fabric cutting Day 11: Subcontractors manufactures the clothes Day 13: Delivery of products by trucks in Europe and by aircraft in Asia and the USA Day 15: Sale of the product

  14. Strategy: Situation Awareness

  15. Step 1: Raw Data • Absorb Real time Data • Hand held devices • Store Managers • Incentives provided for accurate sales forecasts and growth • Regional/Country managers • Get on the floor • Closing time: Unsold Merchandise data • Patterns?

  16. Step 2: Hypothesis • Find Patterns in the data • Identify Present Opportunities and Threats • Face to Face discussions • Break the corporate structure • Avoid group think • Design Blueprints

  17. Step 3: Testing Hypotheses • The final step • Place the items on with the rest of the collection • Observe consumer behaviour • To cull or not cull? That is the question • About 25,000 mock ups are made but 60% are culled before production

  18. Zara’s Success • A company that can respond quickly to changing demands • Developed a competitive advantage through • Operations Management • Human Resources • Financial Structure • Situation Awareness • Strategic key to success

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