MANAGING STORES FOR FAST FASHION

POINT OF VIEW

PABLO ISLA ALVAREZ DE

TEJERA, DEPUTY CHAIRMAN
AND CEO OF INDUSTRIA DE
DISEO TEXTILE S.A

COMPANY BACKGROUND
INDITEX IS ONE OF THE WORLD'S LARGEST FASHION RETAILERS WITH
EIGHT BRANDS AND MORE THAN 7,000 STORES THROUGHOUT THE
WORLD. WE ARE INSPIRED BY A RESPONSIBLE PASSION FOR FASHION
AND, ABOVE ALL, BY OUR CUSTOMERS.

MISSION:

" ZARA WALKS AT THE PACE OF SOCIETY, DRESSING IDEAS,

TRENDS AND TASTES THAT SOCIETY ITSELF HAS MATURED.

VISION
ZARA IS COMMITTED TO SATISFYING THE
DESIRES OF OUR CUSTOMERS. AS A RESULT,
WE PLEDGE TO CONTINUOUSLY INNOVATE OUR
BUSINESS TO IMPROVE YOUR EXPERIENCE. WE
PROMISE TO DELIVER NEW DESIGNS MADE
FROM QUALITY MATERIALS THAT ARE
AFFORDABLE

BUSINESS MODEL

FAST FASHION AT AFFORDABLE PRICE

PROBLEM STATEMENT

HOW WOULD ZARA IMPROVE OPERATIONAL

EFFICIENCIES IN MANAGING ITS STORE?

AREAS TO CONSIDER

SWOT MATRIX
PORTERS FIVE FORCES
EFE
IFE

PORTERS 5 FORCES
MODEL
NEW ENTRANT:
MODERATE

RIVALRY: HIGH

BUYER:
MODERATE

SUPPLIERS: MODERATE

SUBSTITUTE: MODERATE

SWOT
1.
2.
3.
4.
5.
6.
7.

Strengths
Cost Leadership Strategy
Strong Distribution Network
Fast fashion and latest Fashion
trends
Strong revenue growth
Low employee turn-over
Prime locations of the store
Autonomy of store managers

1.
2.
3.
4.
5.

Weaknesses
Centralized distribution system
High operating cost for Labor
Absence of Inventory store
system
In-store logistics activities are
time-consuming
Stores closed on Sunday

Opportunities
Threats
1. Global market penetration
1. Global competitors such as
2. Expand online market
H&M,
Japanese
Uniqlo,
3. Increasing demand for women
American Forever 21
collection
2. Rising labor cost
3. Economic crisis

EXTERNAL FACTOR EVALUATION (EFE) MATRIX

Key External Factors
THREATS
Global competitors such as H&M,
Japanese Uniqlo, American Forever 21
Rising labor cost
Economic Crisis

OPPORTUNITIES
Global market penetration
Expand Online market
Increasing demand for women collection
Total

Weight

Rating

Weighted
Score

0.25
0.25
0.10

0.15
0.10

3
4
1

3
3

0.75
1.00
0.10

0.45
0.30

0.15
1.00

0.45
3.05

INTERNAL FACTOR EVALUATION (IFE) MATRIX

Weight

Rating

Weighted
Score

Cost Leadership Strategy

0.05

0.2

Strong Distribution Network

0.20

0.80

Fast fashion and latest Fashion trends

0.15

0.6

Strong revenue growth

0.05

0.2

Low employee turn-over

0.05

0.15

Prime locations of the store

0.05

0.15

Autonomy of store managers

0.05

0.15

Centralized distribution system

0.05

0.1

High Operating cost in stores

0.15

0.15

Absence of Inventory store system

0.07

0.07

In-store logistics activities are time-consuming

0.08

0.08

Stores closed on Sunday

0.05

0.05

Total

1.00

2.70

Key Internal Factors

STRENGTHS

WEAKNESSES

EVALUATION OF RECOMMENDATIONS

SWOT MATRIX
QSPM

ALTERNATIVE COURSES OF ACTION

Proposed Strategy

Create distribution center

in Asia
Outsourcing of process
delivery to third-party

Invest in information
technology to track
inventory

Reduced number of sales

associates in the store

Advantages
Low transportation cost

Faster distribution of products in Asian

market

Disadvantages
Capital requirements for
distribution center

Functions could be done quickly at a

cheaper cost

It would allow section managers/sales

associates to have more time to work
at other task

Lose control of logistics functions

Communications issued may arise
Store employees are more familiar
with the product, hence, third-party
workers may take up more time in
removing and shelving the product

Alert managers when inventory is low

and needs to be replenished

Saves employees time to work on

other task

Easy tracking of garments, history of

sales and forecasting

Expensive in setting-up of the system

Complications may occur during dry
run of the system
Time consuming in inputting all the
inventory information in the system

May have a negative effect on the

other store employees such as
productivity
May affect employee turn-over rate
Smaller workforce

Reduce labor cost

Improve
efficiency
competitiveness

and

the

new

SWOT MATRIX
Vision: ZARA is committed to satisfying
the desires of our customers. As a result,
we pledge to continuously innovate our
business to improve your experience. We
promise to deliver new designs made
from quality materials that are
affordable

Mission: ZARA walks at the pace of

society, dressing ideas, trends and tastes
that society itself has matured

Business Model: Fast Fashion at

affordable price

Opportunities

1. Global market penetration

2. Online Market
3. Increasing demand for women
collection

Threats

1.Global Competitors
2. Rising labor cost
3. Economic crisis

Strengths

1. Cost Leadership Strategy

2. Strong Distribution Network
3. Fast fashion and latest Fashion
trends
4.Strong revenue growth
5.Low employee turn-over
6.Prime locations of the store
7.Autonomy of store managers

Weaknesses

1. Centralized distribution system

2. High operating cost for labor
3. Absence of Inventory store
system
4. In-store logistics activities are
time-consuming
5. Stores closed on Sunday

S-O Strategy

W-O Strategy

1. Create distribution center in

Asia (S4,S2,O1)

S-T Strategy

1. Invest in Information
Technology to track inventory
(S4,S2,T2)

1. Outsource process delivery to

third-party (W4,O1)

W-T Strategy

1. Reduced number of sales

associates in the stores
(W2,T2,T3)

QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)

STRATEGIC ALTERNATIVES

Create distribution center in

Asia

Outsource process delivery to

third party

Invest in Information
Technology to track inventory

Reduced the number of sales

associates in the stores

Key Factors

Opportunities

Global market penetration

0.15

0.00

0.00

0.00

0.00

Expand Online market

0.10

0.00

0.00

0.00

0.00

Increasing demand for women collection

0.15

0.45

0.30

0.60

0.15

Threats

Global competitors such as H&M, Japanese Uniqlo, American Forever 21

0.25

1.00

0.75

0.50

0.25

Rising labor cost

0.25

0.25

0.25

0.75

1.00

Economic Crisis

0.10

0.00

0.00

0.00

0.00

1.00

Strengths

Cost Leadership Strategy

0.05

0.00

0.00

0.00

0.00

Strong Distribution Network

0.20

0.80

0.60

0.40

0.20

Fast fashion and latest Fashion trends

0.15

0.00

0.00

0.00

0.00

Strong revenue growth

0.05

0.00

0.00

0.00

0.00

Low employee turn-over

0.05

0.00

0.00

0.00

0.00

Prime locations of the store

0.05

0.00

0.00

0.00

0.00

Autonomy of store managers

0.05

0.05

0.20

0.10

0.15

Weaknesses

Centralized distribution system

0.05

0.00

0.00

0.00

0.00

High Operating cost in stores

0.15

0.15

0.45

0.30

0.60

Absence of Inventory store system

0.07

0.07

0.21

0.28

0.14

In-store logistics activities are time-consuming

0.08

0.24

Stores closed on Sunday

0.05

1.00

Weight

AS

TAS

AS

0.08

2.85

TAS

3.08

AS

0.32

TAS

AS

0.16

3.09

TAS

2.73

RECOMMENDATION
WITH THE SUM TOTAL OF 3.09, THE ANALYSIS INDICATES THAT ZARA
SHOULD INVEST IN INFORMATION TECHNOLOGY SYSTEM TO TRACK
INVENTORY.
INVENTORY TRACKING TECHNOLOGY RESULTS IN A BETTER BOTTOM LINE
AND A MORE PROFITABLE BUSINESS. EFFECTIVE INVENTORY
MANAGEMENT COUPLED BY TECHNOLOGY, HELPS ZARA KEEPS TRACK OF
THEIR INVENTORY, ESPECIALLY IN THE INDUSTRY WHERE FASHION
PRODUCTS CHANGED DRAMATICALLY.

IMPLEMENTATION STRATEGY