Zara Clothing - Available Strategic Options and Methods of Implementation - Essay Example

?Zara Clothing - Available Strategic Options and Methods of Implementation Introduction Zara, a successful Spanish fashion house is basically a leader in providing trendy clothing items at low prices. Zara has an information system that enables its production process to be able to curtail inventory costs while allowing it to receive instant feedback on the existing market demand. The fashion industry, though, is going through transformations that will compel fashion houses such as Zara to make more changes in order to remain competitive. In the past, Zara’s main objectives consisted of realizing profits and becoming one of the most recognized fashion houses on a global scale. Its future objectives consist of expanding operations to all corners of the globe, ensuring increased visibility, and, most importantly, embracing more online options. Ecommerce When e-commerce was first used, it is mainly the predictable goods such as electronics and books that found market through online facilities. Fashion houses did not swiftly embrace the online options because they were aware that their customers preferred a physical experience when determining the clothing items that they wished to purchase (Zoratti and Gallagher, 2012). Though the prices offered through e-commerce were substantially lower, the customers still preferred to visit bricks-and-mortar outlets. However, when the customers were offered the option of returning undesired purchases as well as free shipping, they began to change their minds. In addition, online options allowed customers to order garments of different colours and sizes, and return them if they were not suitable. Consumers then began to purchase their fashion garments online. To remain relevant in the future, Zara has to ensure that it enhances the online options available for clients. In essence, fashion houses can only remain relevant by keeping abreast of technological developments used in online shopping. Zara will have to discover new ways of integrating the different channels to present consumers with numerous services. Most fashion consumers now purchase approximately 90% of clothing items after getting different reviews and recommendations from family relations and styling experts. In a sense, transportation and communication are both factors that are equally important determinants in buying decisions for fashion houses such as Zara. Analysis and Recommendations Zara’s key organizational strategy revolves around responding swiftly to customer demands. Zara identifies trends and delivers products to customers through its proficient value chain model as well as its autonomously planned structure. This model of business has been quite effortlessly maintained; causing the company’s executives to disregard any thoughts of change for the near future. Moreover, one of Zara’s biggest problems is in updating its approaches towards online sales. Upgrading the current system will contribute towards increasing the networking as well as functionality abilities of the fashion house. This will bring about additional improvements to Zara’s operational functions such as improved inventory replenishment and customer demand forecasting. Investing in new technology will provide Zara with the capacity to be a trend-setter in the fashion industry. A new and technologically improved system would permit real-time inventory management (O’Shea, 2013). This would contribute to the enhancement of the service level and increase the cross-selling functions between stores, thus giving better service to the targeted consumers. Zara’s other major challenge lies in containing its huge maintenance expenses. The main challenge that the firm may have to face in adapting to a technologically improved system would be in purchasing a readymade system or creating it. As the need for the new system is not immediate, creating an in-house system may be the financially responsible option. However, due to the lack of present workers who are skilled in this subject, purchasing the necessary software is the ideal option. Even though there are many functionalities that can be incorporated into the new system, Zara should not attempt to realize this option but to oversee a gradual shift that will call for the integration of only the minimum required functions first. Once the systems are reliable, the other operations can be incorporated in chronological order of priority. Some of the other retail trends that Zara can incorporate include: 1. In-store socializing: Zara can ensure that it creates an atmosphere in its different stores that encourage customers to remain for as long as possible. Zara should also be able to connect often with potential as well as existing through a variety of social media as this assists the shoppers in getting acquainted with the stores’ available goods. This means that people will be able to access their fashion segments when they wish to, resulting in improved sales. 2. Merging content with sales: Past researches have revealed that shoppers tend to purchase products while viewing the advertising videos of the product or perusing through any of the product’s reviews. Zara could increase the reviews of its different clothing items in order to increase sales online. 3. Collaboration is another factor that will ensure Zara’s survival. To function swiftly and with responsiveness, Zara’s supply chain partners will be compelled to collaborate directly in a demand-driven system. In addition, they will have to integrate two collaborative disciplines: • Collaborative planning, forecasting, and replenishment (CPFR): This is basically the implementation of data transfer instruments that contribute to the interactive and timely communication of inventory positions and demand expectations among an assortment of trading partners. It allows for distributors, channel retailers, manufacturers, and transportation providers to coordinate supply with the existing demand across different channels. It was just in the recent past when one-way forecasts, inventory systems and planning directed supply chains. This meant that there was a lack of timely as well as precise information demand; along with a lack of understanding in matters of the existing and potential trading partners. The CPFR system simplifies and unites demand planning with a singular supply and forecast plan. • Collaborative product commerce (CPC): This is a management ideology that can enable Zara’s supply chain to be able to design and manufacture products. Whereas the CPFR model merely supervises the supply chain from the standpoint of inventory practices, collaborative product commerce (CPC) carries out the same function from the product design perspective. CPC supports businesses in realizing product management procedures in relation to how they will affect the planning, production, and distribution of goods that is necessary for supply chain partners to cater to the existing customer demand. It basically enhances the established product management procedures for quality, cost, and features. Collaborative product and design management unite cross-functional groups at every product cycle level (Kapferer, 2012). The Internet is the ideal medium for instant collaboration even when the groups to hold discussions are located in different geographical locations. Shorter product life-cycles and mass customization will be significant business drivers in the implementation of collaborative systems, along with the requirement to cut down on time-to-profit. Other benefits are sharing information about customer demands, and sharing design resources as well as intelligence in order to steer through multifaceted market forces. Zara, in particular, may considerably benefit from this cross-cultural collaborative plan, as most of its customers tend to look for new and different apparel all the time. Such collaboration was not acceptable just some years ago. Business partners tended to engage in activities that showed that they considered each other as enemies rather than partners. Product design was a closely guarded secret whose use by a business partner might have had legal consequences. At present, however, technology has reached a level where it can sustain cost control as well as process calibration; and this allows for all business partners in a collaborative effort to be able to benefit. In addition, instant collaboration is made possible by the internet. Conclusion To put CPC and CPFR into practice, Zara will have to extend visibility across functional silos, upward to the executive management, and outward towards its partners. Furthermore, Zara will require more exact coordination practices in supply chain activities. It will also have to execute changes that the majority of companies that deal in textile, retail and fashion apparel still view as being too idealistic. Zara’s most pressing need is to build trust with its trading partners because without such a foundation, all collaborative efforts will be negatively affected. References Kapferer, J. (2012) The luxury strategy: break the rules of marketing to build luxury brands, Kogan Page Publishers, New York. O’Shea, C. (2013) The man from Zara: the story of the genius behind the Inditex group, LID Publishing, Inc, New York. Zoratti, S. & Gallagher, L. (2012) Precision marketing: maximising revenue through relevance, Kogan Page Publishers, New York. Read More