So what's their secret? Do they operate like other popular clothing retailers, or is there something else happening behind the scenes?
Zara's unconventional strategy
The best way to describe how Zara operates is 'fast'.
Normally, clothing brands release the same collections in one year: one for spring/summer and another for fall/winter. Traditional retailers try to predict fashion trends a year in advance.
They spend a large amount of time and resources designing, planning, and launching their collections. Unfortunately, this presents a high risk for brands.
If the designs resonate with buyers, then sales go well. But if they miss the mark, it means markdowns and cutting into profits for the season. Zara eliminates this risk with its approach.
Zara designs, produces, distributes and sells its collection in only four weeks, as opposed to the several months that its competitors take to do the same thing. This also means updating the stores with two new designs a week and keeping low stock levels.
As a result, Zara's approach has a few benefits:
- Less clothing in stock means lower storage costs and fewer markdowns.
- Shoppers will frequently stop by Zara to see fresh and trending designs.
- Since merchandise is limited, there's a frenzy to grab clothing before it's gone.
With a rapid production process and people clamoring to snatch up merchandise, how exactly does Zara get its clothing design and inspiration? Hint: it's not from thin air.
How to create frenzied buyers
Most clothing brands operate using a top-down approach, where their designs are based on what they predict will become popular next season.
In other words, it's a speculative method that may or not may pay off. Decisions are made at the top by the companies, and they flow down onto the consumers, who decide which merchandise they want.
Zara takes the opposite approach. They constantly collect information about consumers right from the source. Scouts go onto the streets and in the malls of cities to see what people are wearing. Store managers take note on what customer tastes are like, which are reported back to headquarters.
This bottom-up approach means designs are created based on instant feedback, and is tailored according to regional preferences. Its strategy has allowed the retailer to become popular worldwide and cater directly to what people want.
Zara's form of advertising is also part of its reverse strategy. Instead of dedicating budgets into commercials and billboards, the brand relies on consumers to advertise on their behalf through word of mouth -- and that is the most powerful form of marketing.
How we can apply Zara's method
Zara's growth strategy and success contains a few lessons that we can use:
1. Listen to feedback
Zara collects a lot of consumer data from different places: streets, malls, and customers. Not all of it will be useful, of course, but the data lets them know what people like, dislike, and how Zara can cater to their needs.
Anything you will do will result in feedback. When you deliver a service, people's responses and behaviors provide useful information for improvement. Feedback lets us know how we're doing and whether adjustment is needed.
2. Reduce uncertainty
Uncertainty in any decision increases the risk that something will go wrong. Zara studies consumers continuously to decide what direction it should take its designs before starting the process. Getting merchandise as close as possible to current trends means sales will likely increase.
Whenever you need to make a decision, you have to consider the information at hand. Missing information can be critical to knowing whether to move towards a direction. Before making big decisions, it's best to learn more from different sources to reduce uncertainty.
For instance, talking to students and graduates of a program before dropping thousands of dollars on further education will potentially save you the risk of entering a program and realizing it's not right for you.
3. Be willing to change course to adapt
Zara's success is based on its ability to adapt quickly. Unlike many clothing brands, whose designs are stagnant for the season, Zara is constantly assessing and reacting to the environment in a matter of weeks.
The brand designs new styles and pushes them into stores while the trend is still at its peak. As a result, other brands are feeling the pressure to release multiple collections each season and become more flexible in their operations to compete.
Sometimes our environment changes faster than our plans. Yes, plans are important so we know where we're heading. But it's also important to stay flexible and be willing to reassess the situation frequently.