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Fast Fashion: Jim Fisher Strategy - RSM 5001 Emba 31

Zara is a fast fashion retailer known for its quick response capabilities. It has several advantages over competitors like H&M and The Gap, including lower working capital at 25% of sales compared to 10% for competitors, lower markdowns at 2.5% versus 10%, and no advertising expenses unlike competitors that spend 3% on advertising. Zara is able to achieve quick response through a system of frequent small batch production close to stores, local and European sourcing, direct-to-store small shipments, and a young fashion-focused design team that makes quick in-season decisions. By 2009, Zara had grown its unique quick response system to include 4530 stores globally, demonstrating its operational success.

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Hardeep Saund
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212 views6 pages

Fast Fashion: Jim Fisher Strategy - RSM 5001 Emba 31

Zara is a fast fashion retailer known for its quick response capabilities. It has several advantages over competitors like H&M and The Gap, including lower working capital at 25% of sales compared to 10% for competitors, lower markdowns at 2.5% versus 10%, and no advertising expenses unlike competitors that spend 3% on advertising. Zara is able to achieve quick response through a system of frequent small batch production close to stores, local and European sourcing, direct-to-store small shipments, and a young fashion-focused design team that makes quick in-season decisions. By 2009, Zara had grown its unique quick response system to include 4530 stores globally, demonstrating its operational success.

Uploaded by

Hardeep Saund
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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ZARA Fast Fashion

Jim Fisher
Strategy - RSM 5001
EMBA 31
Four Retail Strategies
ZARA (Inditex) H&M The Gap Benetton

Revenue (Millions) 3250 4269 15559 2098

Working Capital 0 1036 1.116 602


- turns 4x 15x 3.3x

PPE 1.228 661 4695 720


- turns 2.6x 7x 3.3x 3x

Assets 2505 2183 8566 2821


-turns 1.25x 2x 1.8x 0.75x

Net Income 340 410 - 148

ROA 13.1% 18.8% - 5.2%

ROE 22.9% 24.8% - 11.9%

2
ZARA (Inditex) Advantages

ZARA Good Competitor

Working capital - 25% of sales

Markdowns 2.5% 10%

Advertising - 3%
Large young team Close to
stores

Fashion conscious Quick test


Quick
followers In season Dependent
decisions on external
Design suppliers
Great Small batch
locations production

Limited
advertising QUICK RESPONSE

retail Sourcing &


LIMITED manufacturing
MARKDOWNS
Frequent
Limited shopping In season
Stock Distribution response
(scarcity)

Local & European


Direct to store suppliers
Close to Highly
manufacturing automated
Small
shipments

ZARA (Inditex) Activity System (partial) 4


ZARA (Inditex) Activity System

V ALUABLE
Asset productivity invested in stores

Low inventory cost

R are Unique system

I nimitable Lots of parts to replicate

O perable
By 2009 had grown to 4530 stores
from 1284 in 2002

5
ZARA (Inditex) stock chart

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