Zara: IT for Fast Fashion Case Study

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Zara: IT for Fast Fashion Case Study

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A brief summary of the case

How would you advise Salgado to proceed on the issue of upgrading Zara’s POS systems?

• Should the company upgrade the POS terminals to a modern operating system?
• Should the company build in-store networks?
• Should the company give employees the ability to look up inventory balances for items in their own stores and other stores?

What is the Zara “business model”? How is it different from the business model of other large clothing retailers? What weaknesses, if any, do you see within this business model? Is it scalable?

In your opinion, what are the most important aspects of Zara’s approach to information technology? Are these approaches applicable and appropriate anywhere?

본문내용

Zara is the flagship brand and the major growth driver for Inditex, one of the world`s largest fashion retailers. Zara established its first store in 1975 in Spain, today it is present in more than eighty countries globally (Inditex Group, 2012). The main product lines are Women’s, Men’s and Children’s clothing. Zara’s Stores are located in prime retails districts targeting price-conscious young people who are very sensitive to the latest fashion trends.

Zara’s business model is simple and focuses on fast response to changing customer demands. Zara has positioned itself as a unique, vertically integrated company with a strong value chain which enables the company to deliver the latest designs at an affordable price in the shortest possible time. Zara is an outstanding example of vertical integration and quickly makes smart decisions to adjust their strategy based on market trends. The result is a fast, agile and flexible operating model, thereby reducing costs and increasing profitability.

Zara has been efficiently used IT to its advantage. Its unique software and automated processing added value to their business. However, their present IT infrastructure although efficient for past operations, is no longer sufficient to deal with current modern technology. Moreover, it will not be sustainable in the future as the firm continues to grow and expand globally. In particular, the Point of Sale (POS) terminals used by Zara retails stores would no longer be compatible. Clearly, upgraded POS software will improve functionality and network capabilities. On the contrary, Zara’s current system works very effectively and easy to maintain. Upgrading the system is a big project, with possibly large ramifications that could be expensive and detrimental to Zara’s current business structure.

참고 자료

Inditex Group. (2012) http://www.inditex.com/en/who_we_are/concepts/zara.
McAfee, A., Dessain, V. & Sjoman, A. (2007). ZARA: IT for Fast Fashion. Boston: Harvard Business School Case (9-604-081)

Porter, M.E. (1985). The Competitive Advantage: Creating and Sustaining Superior Performance. The Free Press, New York, NY.