Zara: Fast Fashion from Savvy Systems

Both Zara and The Gap are retail online clothing giants in the fashion s industry. Zara, now worldwide, was founded in Spain. The Gap, also now worldwide, is a US Corporation. Both companies made a critical strategic decision on the future growth of their companies, with Zara taking the lead to move their significant marketing online. Gap later followed. Both still make retail sales but are positioned on the Internet. Zara currently has over 1M hits on its website each month. Read this chapter to understand how early the use of IT, particularly data collection and analysis, helps gain a competitive advantage. How did Zara use data to make early decisions about its business operations? How did Zara's use of data compare to Gap's?

Don't Guess, Gather Data

Learning Objective

After studying this section you should be able to do the following:

  1. Contrast Zara's approach with the conventional wisdom in fashion retail, examining how the firm's strategic use of information technology influences design and product offerings, manufacturing, inventory, logistics, marketing, and ultimately profitability.

Having the wrong items in its stores hobbled Gap for nearly a decade. But how do you make sure stores carry the kinds of things customers want to buy? Try asking them. Zara's store managers lead the intelligence-gathering effort that ultimately determines what ends up on each store's racks. Armed with personal digital assistants (PDAs) - handheld computing devices meant largely for mobile use outside an office setting - to gather customer input, staff regularly chat up customers to gain feedback on what they'd like to see more of. A Zara manager might casually ask, What if this skirt were in a longer length? Would you like it in a different color? What if this V-neck blouse were available in a round neck? Managers are motivated because they have skin in the game. The firm is keen to reward success - as much as 70 percent of salaries can come from commissions.

Another level of data gathering starts as soon as the doors close. Then the staff turns into a sort of investigation unit in the forensics of trendspotting, looking for evidence in the piles of unsold items that customers tried on but didn't buy. Are there any preferences in cloth, color, or styles offered among the products in stock?

PDAs are also linked to the store's point-of-sale (POS) system. Cash registers and store checkout systems are examples of point-of-sale systems. These systems are critical for capturing sales data, and are usually linked to inventory systems to subtract out any sold items. - a transaction process that captures customer purchase information - showing how garments rank by sales. In less than an hour, managers can send updates that combine the hard data captured at the cash register with insights on what customers would like to see. All of this valuable data allows the firm to plan styles and issue rebuy orders based on feedback rather than hunches and guesswork. The goal is to improve the frequency and quality of decisions made by the design and planning teams.