Zara’s fashion supply chain holds a unique edge, allowing the company to bring new designs from the sketchpad to the store in just two weeks. This quick turnaround is due to a vertically integrated model, which sees 60% of Zara’s products manufactured in-house. Unlike other retailers that outsource to Asia, Zara’s production is primarily based in Spain, Portugal, and Morocco, allowing for faster response times.
The company’s ‘fast-fashion’ approach enables it to adapt swiftly to changing trends. It produces small batches of each design, which not only reduces the risk of unsold stock but also creates a sense of urgency among consumers. This strategy, coupled with minimal advertising, has led to strong sales growth, even amidst a challenging retail environment.
Zara’s supply chain model is not without challenges, though. High labour costs in Europe and the environmental impact of rapid fashion cycles are significant issues. However, the company is investing in sustainable practices and technology to address these concerns.
In 2014, Zara’s strategy will continue to focus on speed and flexibility, with plans to expand its online presence and open new stores in emerging markets. Despite potential challenges, the company’s unique supply chain model is expected to keep it at the forefront of the fast-fashion industry.
Go to source article: http://www.bloomberg.com/bw/articles/2013-11-14/2014-outlook-zaras-fashion-supply-chain-edge