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

Questions and Exercises

  1. In what ways is the Zara model counterintuitive? In what ways has Zara's model made the firm a better performer than Gap and other competitors?
  2. What factors account for a firm's profit margin? What does Gap focus on? What factors does Zara focus on to ensure a strong profit margin?
  3. How is data captured in Zara stores? Using what types or classifications of information systems? How does the firm use this data?
  4. What role does technology play in enabling the other elements of Zara’s counterintuitive strategy? Could the firm execute its strategy without technology? Why or why not?
  5. How does technology spending at Zara compare to that of rivals? Advertising spending? Failed product percentages? Markdowns?
  6. What risks are inherent in the conventional practices in the fashion industry? Is Zara susceptible to these risks? Is Zara susceptible to different risks? If so, what are these?
  7. Consider the Prada case mentioned in the sidebar "Technology ≠ Systems". What did Prada fail to consider when it rolled out the technology in its flagship location? Could this effort have been improved for better results? If you were put in charge of this kind of effort, what factors would you consider? What would determine whether you’d go forward with the effort or not? If you did go forward, what factors would you consider and how might you avoid some of the mistakes made by Prada?