Article in the Economist re: ZARA

I'm not sure if you read The Economist but there is a great article in this week's issue (june 18 to 24th 2005). The article is called "The Future of Fast Fashion." It's the success story of Zara. I encourage you to seek out the magazine and read the article.

The article talks to the concept of catering to instant fashion whims.

There is a section that outlines how this company is so successful. I believe what they do is a best practice. Here are some highlights:

"Zara studies the demands of the customers in its stores and then tries to deliver an appropriate design at lightning speed........All of Zara's shops use Point of Sale terminals to report directly [to HQ]. On top of that, [this is the interesting part], every evening store managers consult a personal digital assistant to check what new designs are available and to place their orders according to what they think will sell best to their customers. In this way, its store managers help shape designs.

The article does a good job comparing this company to H&M and the Gap. Some metrics that are interesting and indicators of Zara's success:

1. Zara spends less in advertising and discounts; 0.3% of sales compared to 3 - 4 % typically spent by rivals
2. Zara launches 11,000 new items a year where its rivals launch 2,000 to 4,0000 items.

Other retailers should follow this best practice.