Fast Fashion

“Conformity is a type of influence involving a change in belief or behavior in order to fit in with a group”. In relation to the fashion industry this need to change can be in response to imagined or real group pressure. Dating back centuries ago social groups used fashion as a way to express their identity through their clothing. Brand name clothing and the material the garment is made of tend to be associated with status. I attended a private kindergarten through eighth grade school that required uniforms. Although I didn’t enjoy being one of three ethnic students in the entire school, the uniforms created a solidarity between all students. Anytime I saw a child on school grounds wearing a navy sweater and plaid jumper, I knew they were a student who attended Our Lady of Guadalupe. That was our identity. As a 22-year-old female millennial, I now turn to social media as a means to pick trends that express my personal style. I am certain that most people my age do the same in regard to finding the hottest trends. Mainstream fashion is a growing tool used to express one’s status and self-expression through a filter called conformity.

Fashion is an ever-changing ideal that has grown conceptually in the last few decades. Georg Simmel ( German sociologist, March 1, 1858 – September 28, 1918), Herbert Spencer (English Philosopher, April 27,1820 – December 8 1903) and Ferdinand Tonnies ( German sociologist and philosopher, July 26, 1855 – April 9,1936), Thorstein Veblen (American economist and sociologist, July 30, 1857 – August 3, 1929) all argued that fashion is about the process of imitation. With its imitative nature, fashion is a crucial phenomenon in understanding society, and the social hierarchy embedded in the system. This implies that the imitators are the ones who are in the lower end of the social spectrum and the imitated ones are the ones in the upper level. This is a key principle of a “trickle-down” theory of fashion. Fashion is a symbol of the relationships between superiors and inferiors that functions as a social control. There are various expressions of respect and deference through badges, titles and costumes that express domination and submission. Fashion represents one’s social rank and status. Fashion is an expression of the wearer’s wealth. What people wear is the evidence and the indication of economic wealth at first glance. What is not expensive is considered unworthy or inferior. The less practical and functional a dress is, the more it represents high class. It is an indication that one does not need to earn one’s living or is not engaged in any kind of productive physical labor. The dress may require help to put it on. Elaborately elegant, neat, spotless clothes are also a marker of the leisure class.

“Truth always rests with the minority,” wrote the philosopher Soren Kierkegaard, “and the minority is always stronger than the majority, because the minority is generally formed by those who really have an opinion, while the strength of a majority is illusory, formed by the gangs who have no opinion.” In other words, according to Mr. Kierkegaard, there’s no way all of you actually like Drake, Louis Vuitton bags and pumpkin spice lattes. At least some of you would prefer something entirely different, if only you gave yourself the chance to deviate from popular opinion. The conformity paradox in fashion looks something like this: Say you are an individual in the truest sense, and everything you do, and wear is so unique that everyone who sees you acknowledges that you are different and interesting, a real trend-setter. As a result, your Instagram photos routinely get Pinned across the cyber planet and end up featured prominently in trend analysis reports by mega-retailers like Zara. In a matter of months your quirky unique style becomes everyone else’s. You are forced to evolve or become just another clone of yourself. So, you evolve, again and again, until the only thing that makes you appear an “individual” is the fact that your style keeps evolving. The paradox lies in the fact that being “an individual” doesn’t seem to be possible in fashion. Eventually, we all end up dressing the same, liking the same things, and posting the same Instagram photos. Dr. Jonathan Touboul, a neuroscientist at the Collège de France, theorized the phenomenon called the “hipster effect.” He found that even people who identify themselves as nonconformists will ultimately conform to the norms of a group simply because of the impossibility of keeping up with rapidly changing trends. Have you ever wondered why as people get older they stop pushing the envelope on what they’re wearing? Their style becomes easier and less outside the box. Not only does it take an incredible amount of work to be a nonconformist, it eventually becomes impossible.

According to Market Line, a business information company, the global apparel industry has been growing at a 4.78% yearly rate since 2011. It is now valued at nearly $1.4 trillion dollars in sales for 2017. The industry shows no signs of slowing as the market is projected to experience 5.91% yearly growth over the next three years. The market size of the apparel industry is expected to reach a mind-boggling $1.65 trillion sales in US dollars worldwide by 2020. I was surprised when I discovered this amounts to an enormous 60% increase in the market size since the $1.05 trillion-dollar pool in 2011. Simply put, this rapid growth means that the average consumer in the world is now buying more than 1.5 times the amount of apparel they did just 6 years ago. Personally, I believe it has to do with the way that fashion is evolving.

I believe that if we want to understand why sales figures keep getting higher and higher, we must learn from examining the emergence of fast fashion in the 21st century. Fast fashion: the place where cheap and trend-heavy outfits are king. Fast Fashion retailers produce clothes that embody the style and fashion trends of the modern world. They transform the designs of high society brands such as Prada or Louis Vuitton into their own mass-produced items that are less expensive for consumers and bear a strong aesthetic resemblance. Companies like H&M, Forever 21, Zara and Uniqlo fit this mold as these category of brands tend to produce low-cost mimics and basic essential pieces that rotate company shelves frequently.

In the fashion world, body image plays an enormous role. Society and the media constantly create limits on what is and is not acceptable. You’re too fat, you’re not tall enough, your body is not proportional. Companies switch models because their look is “too dark” for an African woman, they prefer a lighter shade of brown. Plus-size companies post pictures of a skinny model next to a plus-size model with the caption “real women have curves”, as if skinnier women with less curves aren’t actually “real women.” The requirements on our physical appearance are at an all-time high, the discrimination is present, and the separation is real.

With the phrase ‘body posi’ (“Body Positive”) seeming to eclipse its predecessor ‘thinspo’ (“Thinsperation”) in terms of social media hashtag popularity, these days it would be easy to assume the fashion industry’s ideologies are slowly shifting to that of a more inclusive standpoint. Social media is making it increasingly easy to build a platform to speak out on issues. Industry insiders have used their online leverage to campaign for change throughout all facets of fashion. Models such as Charli Howard and Leomie Anderson have shown that they are far more than “clothes hangers”, appearing more outspoken than ever on the issues that matter. Charlie Howard is challenging modeling agencies sizeism, while Anderson is taking to Twitter to contest the lack of suitable shades of make-up for darker skin tones at fashion shows). However, when push comes to shove and the statistics roll in after each fashion week, the reality is far more bleak. Despite the fact that models existing outside the perimeter of fashion’s skinny, white norm consistently walking on runways, The 2016 Spring Summer fashion season showed over 70 per cent of models at New York Fashion Week were white. And with diversity pning many facets of body image including, size, gender identity and race, it can often feel a case of one step forwards, two steps back.

Doesn’t it seem peculiar that an industry trying to get you to buy expensive clothes and accessories, chooses to market them via semi or fully nude models? The short answer to this; sex sells. The fashion industry and mainstream media’s narrative of women tends to place their value on their sexual appeal that should be for the man’s gaze. This not only adds to the warped perception of female beauty but also adds to the impossible pursuit of perfection. Whether it’s the whole body or just parts of it, this kind of objectification results in stripping women of dignity and ends up playing a role in the mistreatment of women usually for sexual gratification. One 1998 study found that girls made body-conscious by wearing swimsuits while they did a math test in an empty room did worse on the test than girls completing the same test while wearing sweaters. There were no differences in test-taking performance between boys wearing swimsuits and boys wearing sweaters, suggesting a link between self-objectification and shame and anxiety in girls. The pressure to conform for girls starts out even younger than boys, and there is a real negative mental impact.

In a newly published study, researchers went through the children’s offerings of 15 national retailers. High end stores such as Neiman Marcus to inexpensive stores such as Kmart and Target were all participants. All of the clothes were sized and marketed for toddlers and pre-teen children. The researchers asked a random selection of adult raters to judge 5,666 clothing items. They were required to determine whether the clothing items revealed or emphasized a sexualized body part such as the chest or buttocks and whether they had sexy characteristics such as sexualized writing, slinky material or leopard print etc. The raters also looked for childlike characteristics such as frills or butterflies. Of all clothing items, 31 percent had sexualizing features, the researchers found. Most of these, about 86 percent, had childlike characteristics combined with sexy characteristics. Abercrombie Kids was the worst offender, with 72 percent of clothes featuring a sexualizing aspect. Neiman Marcus boasted about 38 percent sexualized clothing. Conformity in fashion is nearly impossible to ignore, but the negative aspect in the culture of over sexualization of women, is now trickling down to young girls who want to express their independence.

I find it difficult to believe that 4 out of 5 people think it’s a must to own at least 15 articles of clothing with the Nike Swoosh depicted in bold, because it’s that irresistible. Conformity is the tendency of an individual to change their thinking and behavior to the social norms. The most apparent effect of conformity is shown in fashion and style. The history of fashion shows a direct distinction between social classes. As our timeline moves forward, with help from big clothing companies mass producing high end retail look-alikes, the middle class started to imitate high class trends to display the illusion of wealth. This type of sale has been increasingly popular amongst young individuals who are mainly restricted to using fashion to express themselves. The many pressures of fitting in for us young adults seem imperative as we find our way in the world. Celebrities and public figures are plastered across every avenue of advertisement. Their totally toned bodies and flawless makeup and outfits, praised by popular social media create a completely unobtainable goal for normal people. The fear of looking different than what society tells us is beautiful shames the individual into conformity. There was a time in my life when expressing myself would alienate me into shame and isolation from my peers because I had a different idea to represent than the normative. My ideas eventually grew quiet, and later became silent. The pressure to conform is inevitable and hard to fight. To be this age and live in our era, it is completely impossible to escape conformity. This silent epidemic affects society as a whole and almost every aspect of each individual.

Who am I?

My name is Chan Joi Yan Joanna. I was born and raised in Hong Kong. Although I come from a Chinese background, my parents educated my brother and I in a westernized way. We rarely follow Chinese traditions like other traditional Chinese families. My parents have very different viewpoints because both of them grew up and were educated in foreign countries.

From a young age, I learnt classical musical instruments such as the flute, piano, french horn, ballet and different forms of western painting. My parents treated my brother and I in very different ways. My elder brother was very introverted and was encouraged to be an archetypal sportsman while my parents encouraged me to follow a more of an artistic path. My secondary school, Heep Yunn School served as a hospital for Japanese soldiers during the second world war (skylinesofourcity.com, n.d.). The school is committed to carry out preservation

of its Chinese historical construction and cultures. The school uniform is also a traditional Chinese blue qipao. At first, I resisted the traditional Chinese school cultures and the blue qipao uniform. However, over time I developed my own interest and discovered the beauty of Chinese culture which I was never taught growing up. I shared my new love for the Chinese culture and tried to bridge the gap between my westernized family back to where they originated from.

Early Professional Life

From an early age, I was taught and encouraged to be an artistic person, developing my own sense of taste. My love for fashion began when I was 10 years old. Growing up as part of Generation Z, I witnessed H&M launch its first store in Hong Kong in 2007. As a loyal customers who shopped impulsively for vast amounts of fashionable clothes at affordable prices, I started to pay more attention to the latest fashion trends. I took interest in fashion illustrations, designing and developing my own unique clothing styles. In February 2009, I bought my first issue of Vogue Magazine. This was my first glimpse into the high fashion industry, which has influenced me in seeing a marketing gap in Hong Kong, selling apparels in a different way, while managing a brand.

In 2017, I registered at Raffles International College Hong Kong while applying for part-time roles in numerous fashion brands. Although it was hard to find the right balance between being a student and employee, I still managed to maintain my career working for brands such as Topshop, Tiffany & Co., Coach and Valentino. I extended my social network in the fashion industry. Furthermore, I was able to develop and refine an in-depth knowledge concerning how to manage a brand beyond the somewhat superficiality of glamorous campaigns. Indeed, I discovered that the business models are very different between fast fashion and high-end luxury brands.

During the period of time working as a sales associate in Topshop, it was crucial to help the visual merchandisers to update the dummies everyday to showcase outfits related to the latest fashion trends. In addition, little customer service needed to be provided since customers shop independently in a fast fashion store due to the low prices, and therefore low consideration. However, when it came to high-end luxury brands, such as jewellery brand Tiffany & Co. and Italian luxury fashion brand Valentino, I worked as a sales assistant to help maintain the visual merchandise standards which would not be updated very frequently, provide professional customer services and to create an ideal shopping environment for loyal customers. These actions are in contrast to the roles and responsibilities of workers in fast fashion. In high fashion, not only is stimulating the buying intention of customers imperative, but also generating great business from specific circumstances of product details to internal structures.

Following the above working experiences, I was honoured to secure an internship at one of the best international clothing companies in the world, the PVH Corp. I worked with the product development team for the brand Tommy Jeans. This internship allowed me to gain practical experience on negotiating with manufacturers and product design procedures in real-life setting. Overall, the vast pool of knowledge developed from all these working experiences has significantly helped my academic study in fashion marketing and deepened my interest immeasurably. Therefore, I would like to apply what I have learnt to develop my designer brand SHI professionally which aims to be the bridge linking Hong Kong people who are fully immersed in foreign cultures, to reconnect with where they originated from.

Core Values

Growing up in Hong Kong, has allowed me to see that there are a lot of Hong Kong citizens who have already forgotten who they really are. With the fact that Hong Kong was originally a village in the southern part of China, throughout the years and the constant encroachment of foreign cultures, Hong Kong is no longer a place containing true Chinese culture. The city has lost its own identity as it has been diluted by many foreign cultures.

The vital factors for the survival of a city should include both international communication and, most importantly, preserve what they originally have. Apparently, Hong Kong has gradually forgotten its true identity by focusing too much on raising its international prestige, as do their citizens. Coming from a westernized Chinese family, I believe I am able to influence these Hong Kong citizens to recognize their sense of belongings of being a traditional Chinese. The message of SHI is to remind the crowds of the golden era of past Hong Kong that they should want to long for this era, the old ways and culture should be persevered. By applying elements, fabrics and details of past Hong Kong aesthetics on to modern designs, I would like to speak up for Hong Kong by using fashion as a tool. Therefore, with my love and passion, SHI is the representative of myself, appealing the citizens to this situation.

My Vision and Mission

My vision is to create a designer brand of women’s wear apparel that reflects the past of Hong Kong, bringing light to a faded collection of memories and identifying a society. The aim is to influence people to reflect on their origins. In order to maintain the idea of sustainability, SHI will endeavour to support environmental protection in its choices of raw material, manufacturing processes and sales procedures. My mission is “to become a fashion designer who can raise people’s awareness of their beliefs, self identities and environmental protection through my designs, advocating the idea of being a unique woman.”

My Personality and Brand’s Personality

As a designer, my inspiration came from the current situation in Hong Kong. Being an adventurous person who is not afraid to express my own opinions and vision, despite it being distinct from the masses; I like to explore new values without hesitation. It is my true feelings of many Hong Kong citizens have lost their identity, therefore, that is my resolute ambition to show them their true identities. Being a person who passionately loves animals and the environment, I would strongly avoid the situation of prioritising convenience over ecological well-being.

“The brand SHI, ’S’ for ‘She’; ‘H’ for ‘History’ and ‘I’ for ‘Identity’”

SHI is the first Hong Kong fashion brand which truly prioritizes environmental protection and expression of opinion. With the unique aesthetics of the brand, it is merging old with new. Therefore, it is not hard to recognize vintage details as well as avant-garde design. Without hesitating in expressing my own opinions, the brand is creating unexpected designs along with market-friendly aspects. The inspiration and aesthetics come from a strong sense of masculinity merged with femininity. Naming quality and functionality, every product can be tested over a duration of time. It will continue to embrace the future while identifying who Hong Kong citizens truly are, exploring new ideas to reflect societal issues along with inspiring people. My Target Market and Customers

The goal of my fashion brand SHI is to help customers evoke pictures, flashbacks and recognise true self-identity by recalling the elements they missed from the past Hong Kong. The women’s wear brand carries out a collection of romantic, vintage, yet modern silhouettes which are full of Chinese aesthetics, that can be stood out for talking-point outfits, calling up the golden era of Hong Kong. Target customers have their memories built during the British Hong Kong era, their age is around 25 to 40 years old. Research shows that explicit memories are begun to form from two- year-olds, which means a period or place can be recalled directly (Scheinbaum, 2017). Since the era was ended in the year 1997, they own three to eighteen years of explicit memories. SHI target customers are Asians who were born in China, Hong Kong or from the other parts of Asia. Raising awareness from target customers who understand the disappointment of the fact that Hong Kong has lost its identity, is always the desire of SHI. They have already had previous knowledge of Hong Kong’s history, are inspired or simply felt interested in the aesthetics of the brand. Chinese customers have strong financial power comparing to customers from other parts of the world in shopping for luxury products. They are more open-minded in accepting new fashion labels. They are from first tier Chinese cities including Shenzhen, Guangzhou and Shanghai.

Primary customer of SHI is the business women, who are in their thirties. They have a strong financial power because they have been working for a long period of time. A unique sense of style which is feminine, contemporary, chic, modern and vintage-tinged is developed. With monthly income around £2,000 or more, they would love to spend quite a large sum of money of around £500 or above, on a singular piece of fashion item that they perceived as worthy. They are into a calm and minimalistic colour tone of outfits, such as greys, blacks and browns. They love details on an outfit and commercial designs in avant-garde style. Furthermore, their job categories could be freelancers in the fashion and art industry, office ladies or entrepreneurs, hoteliers, fashion buyers, artists, designers, models or photographers.

It is crucial for business women to show up in meetings and events since they have been working seven years or more. Despite the fact that they have a limited time to spend on planning complicated outfits, wearing the feature piece on top of simple outfit is an option for them to look striking as talking points to impress others. For their daily shopping behaviours, second-hand stores and shops selling vintage luxury goods are their favourite shopping spots. They understand the charm of vintage antiqueness, appreciate the ideas of sustainability in fashion They, therefore,would love to show their supports by mix and  match their outfits with used fashion items. With their interest in exploring special fashion items and tight schedules, they usually do online shopping. Online and social media platforms, such as Instagram, WeChat, Vestiaire Collective and Farfetch, are popular among them. Shopping in luxurious large shopping malls is their second choice. Secondary customer of SHI is the Chinese ‘Tai Tai’. In their daily life, it is unnecessary to work.

Their main interest is to look beautiful and stylish. Marrying to affluent powerful husbands or inheritances allow them to get a huge amount of income. Their hobbies are showing up in cocktail parties, traveling around the world and hanging out with other socialites and wealthily-married wives. On a daily basis, they love showing off their unique fashion sense, social status and wealth on social media. With the plentiful of wealth and time, they shop whenever and wherever they want, mainly on luxury fashion e-commerces, including mytheresa.com, Matchesfashion and Net-a-Porter, and high-end shopping malls.

http://mytheresa.com/

Regarding the psychographics of both primary and secondary customers show interest on discovering self-identities, they also supports the idea of environmental protection and would love to show practical actions. However, their aim on gaining appreciation and recognition from peers is the main reason of spending such a large sum of money on clothes. They see the importance of standing out from the crowds, looking imposingly different at the same time. They do not care about the high price of goods they perceived as worthy. Therefore, outstanding quality, innovative design of goods, high reputation of brand are their focal points. The way of how the silhouette itself reveals their beauty is also important. Despite the fact that customers are naturally more inclined to purchase during promotions or discounts, the desire of SHI customers to purchase would not be affected so much by discounts. It is totally relied on how much they like the product itself.

Final Conclusion and Reflection

SHI is the first women’s wear designer label founded based on my own sense of style, opinions and personality. It is a representative of myself, a tool to express my disappointment and an alert to raise public awareness for the sake of Hong Kong’s future. Not only am I creating apparel, but I am also building an influential brand to make a positive impact on both the fashion industry and society as a whole. The most important aspect of my brand is the message behind the products. I hope an affinity can be built between the brand and every customer who loves SHI’s products, to create togetherness and build a stronger Hong Kong community. With the passage of time, I believe that the brand can make great improvements on both product design and marketing strategy, broadening the customer base.

Reference

1. Skylinesofourcity.com. (n.d.). 協恩中學主樓 Heep Yunn School, Main Building | Skylines of Our City 我城側影. [online] Available at: http://skylinesofourcity.com/heep-yunn-school-mainbuilding/ [Accessed 14 Jan. 2020].
2. Scheinbaum, C. (2017). Your Preschooler Actually Will Remember Their First Vacation, Just Not How You Think. [online] Fatherly. Available at: https://www.fatherly.com/health-science/ when-do-memories-start-what-do-kids-remember/ [Accessed 31 Oct. 2019].

Introduction The clothing industry, as one of the most globalizes industries in the world (Fibonacci et al 1994), is currently undergoing a restructuring, especially the fast fashion sector. Fashion markets are synonymous with rapid changes and short product life cycles. Therefore, changes in consumer demand for newness and fashion trend force the emergence of fast fashion’ strategy in retailers like Ezra and H;M and shifts in the focus of competitive advantage from price towards quick response.

That is to say, clothing firms, which are adopting global or offshore sourcing strategy, are not noninsured to have more competitive advantages as before. However, the question is: should fast fashion retailers adopt quick response strategy instead of overseas sourcing strategy immediately, or adopt both strategies? In the first section, a literature review of the nature of fashion market and related arguments will be introduced. The overseas sourcing strategy and the quick response strategy will be explained with examples of existing clothing firms in the second and the third section.

The fourth section will compare and contrast the advantage and disadvantages of these two strategies. Combining theoretical knowledge with empirical case studies, it is argued that companies could reach the maximum profit by adopting overseas sourcing strategy as well as quick response strategy. 1 . Literature Review Fashion retailers, such as Ezra, H;M, Benton and Marks ; Spencer have revolutionized the fashion industry by creating a concept of fast fashion’.

The change in the culture of fashion from haute couture to fast fashion has attracted numerous researchers to identify and explore the nature of fast fashion market (Tokomak 2008, p. 22, Christopher et al 2004, p. 367, soul and -raccoon 2008, Tactile et al 2008). Accordingly, short life cycles, rapid prototyping and high volatility are identified as the key features of the fashion market. Compared to other industries, apparel product manufacturing has unique features, for instance, numerous SKIS (stock keeping unit) in a season, hard to estimate customers’ demand and wide range of products for basic to fashion items Non 2004).

All these unique characteristics require a different approach to production sourcing, Soul and Turn-on (2008) pointed out that fast fashion retailers prefer using an opportunity-pull approach to the traditional designer-push model. By adopting the new approach, retailers could respond to the shifts in the market as quickly as possible. As a result, the more continuous production schedule (eight to twelve fashion ‘seasons’) has substituted for the traditional two to four ‘seasons’ calendar (Tactile et al 2008, p. 264, Dickens 2011, p. 316).

In relation to global production networks, Dickens (2011) identified the ‘core’ of a global production network as the circuit of four basic operations, which refers to inputs, transformation, distribution and consumption. Theoretically, the quicker the production circuit flows, the higher the gross margin the company can gain. When we apply the theory into the clothing industry, the cost of production and the speed to response to changes in consumer demand are equally important. Both of them could contribute to the flow of production circuit.

Since numbers of studies have elaborated the benefit of production relocation, the implementation of quick response strategy by fashion retailers has attracted the interest of researchers in recent years (Bristle et al 2003, Perry and Shoal 2000, leer and Bergen 1997). However, results of an exploratory study (Bristle et al 2003) shows that the advantages of quick response strategy have not been fully understood by fashion retailers. They tend to implement quick response strategy for internal supply chain management.

Moreover, leer and Bergen (1997) tried to use formal model to examine the impact of quick response strategy on fashion retailers. Although there is companies already adopted both strategies, limited attention has been paid to the combined effect of these two strategies by researchers. Hypothesis: In an era of fast fashion, companies that adopt both global sourcing strategy and quick response strategy have better chance to succeed in the fashion looting market. 2. Cost, the most basic consideration. In order to have higher profit margin, one of the most effective ways is to cut down production costs.

In view of the low labor cost in developing countries, global sourcing seems to be a good choice to reduce costs. With the development of global production networks and the increasing competition, fast all fashion clothing firms have shifted their manufacturing operations to low lost locations over the past decades. The shifts in the Shares manufacturer Levi Stratus’s global strategy could vividly demonstrate how global sourcing strategy works and affect its supply chain. At first, the company was created in the USA.

As it developed and became a global company, they began to employ workers all over the world. However, in face of fierce competition, Levi Strauss started to shift its operation to lower-cost countries in the late sass. By the year 2003, Levi Strauss closed the last four plants in North American and ‘has become an entirely offshore producer’ (Dickens 2011 p. 318). The German fashion company Hugo Boss also provides similar example. In face of high production cost, namely high labor cost in domestic market, more and more fashion retailers choose to outsource their production.

Moreover, some fast fashion retailers even have no manufacturing competency (Tokomak 2008). The representatives of this kind of retailers are Gap, H&M and Mango. As they do not own any factories, the only way for them do produce their products is outsourcing. The success of these retailers without factories proves the feasibility of global sourcing strategy. By contrast, when most retailers were busy outsourcing their production to lower cost countries, some fast fashion retails still insist on domestic sourcing strategy, for instance, Ezra, Benton and Marks & Spencer.

They held the view that ‘market legibility and lean inventories may be more important than cheap labor’ (Tokomak 2008). However, could efficiency really overcome the lost in higher production cost? Maybe no one could answer this question. If we take Ezra as an example and find out where Ezra produce the products, we could develop our own view. As a Spanish company owned by Inedited, Ezra produce its products mainly in Spain and Portugal (Wood 2010). Whereas their competitor found suppliers from worldwide low-cost countries, Ezra choose to produce products near its domestic market.

That maximizes time efficiency. In fact, the unit labor costs in these two countries were low enough in the sass (Tokomak 2008), therefore, there is no need for Ezra to outsource its productions to other locations. It has the similar competitive advantage as other companies have, besides, by domestic sourcing and producing Just-in-time, Sara’s production cycles are much faster than its competitors. In this respect, it is better for Ezra to adopt the domestic sourcing strategy. However, recent years, the geography of Sara’s production network has become diverse.

Ezra started to outsource and 34 percent of its production was carried out in Asia (Dickens 2011). Similar situation have also occurred in Benton and Marks & Spencer. On one hand, the unit labor cost among European countries has increased in recent years. On the other hand, the supplier firms in countries like Turkey, India and Asia have gained the ability to meet the higher requirement of flexibility and speed. It is inevitable for fast fashion retailers sourcing from these countries. However, companies should also be aware of the potential risks and hidden cost brought by overseas sourcing.

Global sourcing strategy requires close coordination of R&D, manufacturing, and marketing activities on a global basis. Managing geographically separated R&D, manufacturing, and marketing activities, those companies face difficult coordination problems of integrating operations and adapting them to different legal, political, and cultural environments in different countries (Daniels et al 2013). Furthermore, separation of manufacturing activities involves an inherent risk that manufacturing in the value chain will gradually becomes neglected.

Such neglect can be costly as continued involvement in manufacturing tends to lead to pioneering product design and innovation over time. An effective global sourcing strategy calls for continual forts to streamline manufacturing without sacrificing marketing flexibility. 3. Time, the growing consideration. With the wide spread of fast fashion’ principle, fast fashion retailers are aware of the importance of efficiency. They notice that consumer demand is changing more rapidly and customers more discerning about quality and choice.

Although a substantial cost advantage can be gained by adopting overseas sourcing strategy, it cannot compress time in the supply system. To solve this problem, companies tend to choose the quick response strategy, which focuses on providing shorter lead times. According to Bristle et al (2003), quick response strategy was first developed as a result of the need to compete with offshore manufacturers in the USA. The quick response strategy emphasizes on flexibility and product velocity and relies on a measure of trust in sharing information (Barnes and Lea-Greenwood 2006 p. 63). In addition, while maximizing the diversity of products, quick response could minimize lead-times, expenditure, cost and stock of inventory. Quick response is not merely about reducing lead-time by the use of domestic or nearby sourcing strategy, it also involves the ability to gather latest information and use real-time data to understand the needs of the consumers. To some extent, quick response help to shorten the product cycle times and decrease risks and inventories at each stage of manufacturing and retailing operations.

The Spanish Ezra, as mentioned before, is ‘an excellent example of a vertically integrated retailer using quick response methods’ (Bristle et al 2003). Despite successful application of the concept “fast fashion” in H;M and Top Shop, Ezra utilizes the “fast fashion” strategy in all aspects dominant, fast fashion in Ezra meaner, within only two weeks from concept to sales faster than any other company. Unlike most of its competitors, Ezra still produces most of the products in Spain and Portugal and only outsource basic items in lower cost countries.

By adopting quick response strategy, Ezra focused on creating a short, flexible, tight and innovative supply chain and tried to balance the higher labor cost by shorter (3-6 weeks) lead times. As a result, Sara’s short deliveries have made it ‘as much as 12 times faster than the competition’ (Newsweek 2001, p. 36, cited in Tokomak 2008, p. 30). Ezra launches almost 11000 new products in a year, which meaner the update speed is about two or three times a week. In 2005, sales grew by 21 percent over the prior fiscal year in Ezra, which makes Inedited ahead of H&M for the first time (Daniel et al 2013).

The good result indicates that domestic sourcing still works as long as the company finds out a way to compensate for the losses in production cost. Having witnessed the successful experience of Ezra, competitors started to follow the lead of Ezra. For instance, Benton now replenishes stores once a week, Forever 21 Inc. And Unique are able to get new products in store thin 6 weeks (Ordered and Johnson 2008). Another example that worth to be mentioned is the Next brand in the ELK. Base on the quick response strategy, the company uses a limited edition approach to accelerate the update speed.

Moreover, in order to respond to the changes in demand as soon as possible, next has even purchased part of a multi-national clothing supplier to enable constantly changing ranges by reducing lead time (Bristle et al 2003). As we can learn from the case studies, time becomes a priority consideration in the fashion market. The adoption of quick response method should be able to make manufacturer to ‘adjust the reduction of different styles, colors and sizes in response to retail sales during the season’ (Seen 2007). 4.

Comparison between overseas sourcing strategy and quick response strategy One of the biggest differences is that overseas sourcing strategy uses cost as a competitive weapon while quick response strategy uses time. As we known, both cost and time are the keys for retailers to gain more market share and profit; The dilemma for fast fashion companies is: Whether fashion retailers should outsource production overseas for lower production cost or keep manufacturing nearby to facilitate speed. As highlighted earlier, the fashion market is volatile and unpredictable.

Quick response strategy emerges in such an environment. Compared to overseas sourcing strategy, which faces long transport times and difficulty in controlling over production, quick response strategy enables retailers to cope with uncertainty or changes in the fashion market. On the other hand, although domestic sourcing provides companies from paying for higher logistic cost and other hidden costs, offshore sourcing secures lower cost inputs, (Christopher et al 2004). It is argued that fast fashion companies need to adopt strategies that optimally mix overseas sourcing ND quick response to win the market.

The changes occurred in Marks & Spencer over these years could help us understand the advantages and disadvantages of both strategies. As a major British retailer, it chooses to use local suppliers for decades. However, in face of the downward pressure on price, it abandoned its domestic sourcing strategy and started to relocate production overseas (Christopher et al 2006). Accordingly, the average hourly labor cost in the I-J is nine times higher than in Morocco and even nineteen times higher than in China, Pakistan and Indonesia.

After adopting oversea suppliers, Marks & Spencer on noticed that they overlooked the related problems, such as the cost of transportation, the need to forecast styles, colors and volumes in advance and the risk of stock inventory. Facing the challenge of adopting global sourcing, Marks & Spencer tend to use “dual supply chains”. By combing global sourcing strategy and quick response strategy, “fashionable items” are manufactured in locations with a journey time no more than four days.

For “basic items”, for which demand is easier to be predicted, Marks & Spencer continue producing them in lower cost locations (Christopher et al 2006). Likewise, Ezra has also adopted both strategies for its supply chain. Today, price is no longer the determined factor that concerned by customers. Many companies consider not simply price but also quality, reliability, and technology of components and products to be procured. These companies design their sourcing decision on the basis of the interplay between their competitive advantages and the comparative advantages of various sourcing locations for long-term gains.

By contrast, they care more about the quality, design and the level of popularity. Therefore, companies have to find the balance between cost and time. If fast fashion tillers make good use of these two strategies, like M&S and Ezra did, the negative effect could be covered to a large extent. Conclusion Volatile markets, short product lifestyles and high product variety are the characteristics of today are clothing industry. This essay mainly discusses the adoption of two common strategies- global sourcing strategy and quick response strategy, in fast fashion clothing sector.

Although most companies already have chosen outsourcing strategy to maintain the competitive advantage, the nature of today’s fashion market forces companies to consider the importance of speed and flexibility. The analysis of both strategies with the help of real companies’ experience shows that both of them have positive and negative effects on fast fashion retailers. However, overseas sourcing strategy and quick response strategy are not mutually exclusive. In practice, the successful examples of M&S and Ezra have proved the feasibility of combing global sourcing with quick response strategy.

Zara is a Spanish fashion brand. It is the top of value worldwide. (Anon 2006) It is built in 1985. (Wen zhi chong, 2006.) Now Zara has stores in 68 countries and than 400 cities in Europe, the Americas, Asia and Africa. (Inditex, 2007) H&M is a Swedish Clothing company, also is fashionable clothing offerings. Today it has more than 1300 stores in 24 different countries and has more than 5000 employees. (Anon 2007)

The objective of this research is general Zara supply chain, fast fashion, experience and compares Zara with H&M. Part A1 How supply chain effectiveness delivers stakeholder value  Supply chain management is the organization transformation of raw materials or products into finished goods and distribution to meet customer demand of all the business processes. (Cox.P&Brittain.P, 2004)1.1 raw materials  Zara manages purchasing and production in a highly flexible way.

Managers can change decision and design of an existing product in one or two weeks. The company wants to create the highest level of freedom to act flexibly. They think that the purchasing source plays an important role in the whole company’s supply chain. (Anon, 2006) Zara’s management believes that this highly flexible way fits with their customers’ taste and is much more efficient and profitable than lower operating costs. It makes more customers like Zara’s fashion trends. (Anon, 2007)

Manufacture

Only half the Zara products are made in its own factories, the rest are not made in its own factories. This means Zara can reach fashion much more quickly. Zara provides its customers with many different designs. Each year, around 12,000 new products are made in Zara. (Anon, 2007) This manufacture model makes Zara stores’ products change quickly and customers will return to the shop to see fashion clothes. When customers see beautiful clothes, they will spend money to buy clothes. Zara shop will get more profit from customers. Customers also buy the latest clothes from Zara shops. However, Zara’s manufacturing costs run 15-20%, it is higher than other fashion clothes retailers. It is will reduce their profit.

Retailer

In the sales aspect, Zara reduces its advertising costs. They probably approach customer taste. Using this approach, it is will attract customers for purchasing clothes. Now, net sales growth rates are 20% per year, there is a net profit margin of 10%, return visit is higher than the same level retail shop. In 2004, two-thirds of Inditex’s total sales are source sale of Zara. (Anon, 2007) 2 Fast fashion concept ‘This “fast fashion” system depends on a constant exchange of information throughout every part of Zara’s supply chain- from customers to store managers, from store managers to market specialists and designers, from designers to production staff, from buyers to subcontractors, from warehouse managers to distributors.’ (Ferdows.K et al., 2005)

“Fast fashion” system increases profits. Even a little takes into account strategic consumers and knows what learn about demand, it is more regarding retailers to update product. It would mean that Zara would need a big warehouse for putting product. (Forbes, 2007) To keep fast fashion of Zara, it has a 9- million-square-foot warehouse. Every Zara stores possess its own space in the warehouse to assemble orders. (Anon, 2007) However, too big a warehouse would increase its cost and reduce profit.

Zara is not only considering the cost of the product but also considering the costs of delivery of the product to the customer. Many retailers would like promotional activities for developing alliances and partnership relationship. (Cox.P&Brittain.P, 2004)Advertising and marketing are important to Zara’s sales. Zara only spends 0.3% of its revenues on advertising and marketing. This number is significantly less then other retail stores. Zara has a cost advantage in advertising aspect. Zara uses a unique approach to sell its products. (Anon, 2005) When one person buys a Zara product, the people will influence their family. Customers in a purchase decision can help Zara to develop its retail strategy and sales promotion.

In the future, Zara wants to become a global brand. It is not only developing its European market, but also wants to replicate its manufacturing and distribution system on other continents. (Anon, 2007) 3 key elements of the Zara product and experience offer 3.1 Widow line display According to this picture, it can be seen that the latest fast fashion clothes or the most beautiful clothes are put into the window display. When some customers pass the Zara store, they will see the clothes through the window display. Fast fashion of Zara will affect customer for fast fashion’s definition and for understanding clothes. The second aim for the store is that they catch the customer’s eye. So a good display is important to customers choosing where to buy fast fashion clothes. (Cox.P;Brittain.P, 2004)

Types of store layouts

The basic arrangement of the selling, it affects all other design decisions. The type of store layouts are categorized into three basic types: grid, free flow, boutique. (Anon, 2006)
Differentiation strategy seeks competitive advantage by products or services, including design, brand image, or customer service. (Anon, 2006) Cost leadership strategy is low cost producer in an industry and has level of quality. The company wishes to gain more market share. If a price war happens, the firm can keep profitability while the competition suffers losses. If there is no price war, the company can keep its prices low for a longer period of time. (Anon, 2007)

H;M has a large inventory, items sourced from cheap Asian factories. However, Zara often is fresh designs and quickly through the stores. (Rachel Tiplady, 2006) H;M manufacture spend on labor and source is lower than Zara. However, H;M needs a large inventory for putting clothes. In contrast, Zara uses a successful method of doing business in the fast fashion by working. H;M and Zara’s key similarities are that they are lower price European fashion retailers.

H&M differs from Zara because they spend more money on advertising and are price-oriented. Zara chooses trendy clothing that they have designed based on the international level. However, H&M sells trendy cheaper styles. It uses more advertising to publicize its brand. Zara only uses the self business method to publicize. In the advertising cost, H&M has a higher advertising cost than Zara. Many of the customers have a deep impression of H&M. (Craig.A et.al, 2004)

Retail value equation

Customers’ consumption concept is changing. Today consumers have known the money and non-price traded off and moving into a new of value. Consumer’s perception and propensity to purchase is affected by many factors, including product quality, choice and availability, convenient opening hours, good service, pleasant environment, money, time, effort, stress, risk. (In Focus, 2006) 5.1 choice and availability and time Zara has stores in 68 countries and than 400 cities in Europe, the Americas, Asia and Africa. In the future, Zara will continue to extent stores in the world(Inditex, 2007) H&M is a Swedish Clothing company, also is offering fashionable clothing.

Today it has more than 1300 stores in 24 different countries. (Anon 2007) H&M’s target is increase the number of stores by 10-15% per year. (Bruno Zavrsnik, 2006) In the UK, H;M and Zara are very famous stores. Many customers all know these two brands and are a recognized brand. (Anon, 2006) Both stores are very convenient for customers. In Europe, customers can go to Zara and H;M stores near where they live for buying products. In contact, customers do not need too much time to buy products. Today customers think that time also is a cost.

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2,777 million for non-operating (fixed), which is purchase of new POS terminals, wireless router and wireless Ethernet. If they use Windows or UNIX, total initial cost will be million or ;? 3,175 million, respectively. This may be a very costly for the company, but it is a direct expense, which means the cost will depreciate over the years.

For example, the total operating cost for Linux, Windows, and UNIX will decrease to? KICK, and? KICK in the second year, respectively. The benefit of a new system will improve Sara’s efficiency, which will directly influence their revenue. With the smooth communication among the stores and the headquarters, Ezra can better predict the future needs of material, and save cost by hedging them at a low cost. The system will also allow them to make clothes prototypes at a quicker rate and get a faster response from the customers. Therefore, there will be more sales, less cost, more revenue, and ultimately more profit.

I would recommend Ezra to upgrade their current system gradually. In the short ERM, there is no immediate need to upgrade the system. However, they need to make the changes over a long period of time. First, senior management should develop a formal IT department by hiring a COT to set decisions. Second, the new IT team should develop a strategy for the change. Third, they should develop a budget for implementing the whole upgrade. Once they have the strategy and budget in place, they should stop any more investments in the current systems and conduct a pilot test at one of their flagship store to collect data of its outcomes.

Ezra should cake the investments in stages. For example, the current Pads used for ordering are inconvenient. They should be replaced with convenient equipment such as the PC’s. In addition, the Pads and POS are not connected. In order to improve the networking capabilities at each store, Ezra should switch from modem-based network to a broadband-based network. This will allow them to stay connected with the other stores as well as with the headquarters. POS terminals that operates on the outdated DOS system needs to be updated with a more modern and compatible operating system.

As a result POS should have the customer based functionalities that will record sales, returns, exchanges, etc. POS system should also handle functions such as inventory control, purchasing, and receiving and transferring of products to and the new systems side by side, until the new system is operating smoothly. Finally, Ezra should use the internet to make online sales, and take advantage of the social media to promote itself. This can enhance their operations and ultimately increase revenue. Also, it will give them more competitive edge with the new competitors and the existing competitors.

The global apparel market is a buyer-driven market. Along with the globalization and technology development, consumers are easier to access to fashion. As a result, the customers are changing and the companies are evolving to deliver customers satisfaction. Zara, the most profitable brand of Spain clothing retail group Inditex, has leveraged its unique strategy to achieve success and will be expected to maintain a sustainable growth in the fashion industry. Zara’s core competencies can be divided into four areas: process development, distribution, marketing and integrated business structure (referred to Appendix 1).

Zara’s unique process development allowed Zara to produce in a shorter cycle time and more quickly response to the customer’s needs than other competitors. When the fashion season started, Zara’s designers attended trade fairs and ready-to-wear fashion shows to translate the latest trend of fashion into their design. Zara’s product development staff, at the meanwhile, researched the market through different retail stores and university campuses to understand customer’s preferences.

Zara’s IT system, on the other hand, played a key role on the internal communications. This helped Zara’s managers constantly track the sales data and therefore capture the customer’s desire. Moreover, Zara’s centralized distribution facility gave the chain efficiency. Both internal and external products passed through the distribution center, and were inspected and shipped immediately. Then, to increase the delivery speed, Zara scheduled shipments by time zone. Products were shipped by truck or air and were usually delivered to worldwide stores within 24-48 hours.

In contrast to other companies’ outsourcing activities, Zara’s in-house manufacturing created a rapid product turnover since its products were limited and the inventories were strictly controlled. This rapid turnover created an opportunity to Zara’s retail stores and a sense of scarcity that “buy now because you won’t see this item later”. This increased the frequency of the customer visit and also allowed Zara to sell more products at full price. Zara’s business structure was very imperative to help the company develop its business strategy successfully.

Each business function under this structure could be narrowly defined and management teams could frequently communicate across the functional departments. In addition to provide training, Zara enhanced Managers’ performance on store operations by the use of standardized reporting systems. This allowed Zara to work horizontally in an open communication environment. Moreover, Zara’s country managers were almost selected from locals. They transferred the information between top management at headquarters and store managers and thus making Zara adjust to the market quickly.

This, in turn, would deliver customer’s satisfaction and boost the sales. Vertical integration, Zara’s distinctive business system, provided Zara with the competitive edge in the fashion industry. Zara manufactured its most fashion-sensitive products internally. About 11,000 distinct items were produced during the year, variations in color, fabric and sizes. This allowed the company to supply a broader product line into the market and to align with its business strategy. Furthermore, this vertical integration helped the company reduce the “bullwhip effect” in the chain.

Products took place in small batches, flowed into the central distribution center and were shipped directly from the central distribution center. This helped the company not only keep low inventories but also avoid the potential amplification of the final demand. More importantly, Zara’s vertical integration shortened its cycle time of entire design to four to five weeks and two weeks for modifications, compared with traditional companies’ up to six months and three months, respectively.

Such integration system provided Zara with the flexibility to constantly update its design and also reduced its working capital intensity, thereby maintaining a sustainable growth in the fast fashion market. Zara positioned its brand on the fashion-conscious market and offered fresh assortments of designer-style clothes and accessories with relatively low prices. Zara had a cost advantage over other competitors due to its low advertising costs. Zara spent only 0. 3% of revenue on the media advertising, compared with other retailers.

Zara promoted its brand by offering rapid changing product lines and creating customers’ positive word of mouth that resulted. In addition, to target at the ages between 18 and 34 with middle to middle-high income, Zara mainly relied on its attractive stores which located in highly visible locations to project its image. Zara’s frequent refurbishing of store, creative window display and varied staff uniforms also allowed Zara to position its image in the elegant, high-end and fashion-driven market. However, Zara implemented a different positioning strategy for Zara overseas.

In contrast to Spain, where all of Zara’s stores were company-owned, Zara used three different methods to enter into the international markets: company-owned stores for high-profile countries, joint ventures for important countries where there were barriers to direct entry, and franchises for small countries. This helped Zara reduce operational risks and gained a detailed insight into local demand. Although pricing was market-based, prices in other countries were higher than in Spain, for example, 70% higher in Americas and 100% higher in Japan. The higher retail prices implied a different positioning for different countries.

For example, while Zara targeted at 80% of Spanish citizens, it aimed at the upper and middle class in Mexico, and presented a high-end image in South America. It also implied that Zara promoted its image of “made in Spain” to emphasize the local produce, whereas built its image of “made in Europe” to emphasize its high-end and prestigious positioning. Although Zara had a successful business module in the fashion industry, its strategy also had some weaknesses to prevent its future growth. First of all, Zara’s vertical integration couldn’t create the economics of scale, which means, Zara couldn’t supply a larger quantity of products.

This, in turn, would increase its production cost. Moreover, the higher pricing in oversea markets was a barrier for Zara to gain more market share. H&M, Zara’s competitor, also focused on the fast fashion market and adopted a lower price strategy to the international market. In the end, Zara could not explore well in the U. S. and Asia markets. The U. S. is the key market to North America, which required a larger size on average and exhibited considerable internal variation. Therefore, the best way for Zara to maintain its sustainable competitive advantage is to re-position in the U. S. nd Asia markets. For the U. S. market, which was less fashion-forward than Europe, Zara can focus on the design that specifically caters to the American preferences, for example, emphasizing on the natural, casual style. In addition, Zara can seek the opportunities on the large emerging markets in Asia, like China and India. China has a large population and similar fashion preferences to Europe. Through opening flagship stores, Zara can build its image at the middle to upper class in Chinese big cities to create shopper traffic. Another way to expand its business is setting up internet retailing model.

More and more youngsters prefer to shop at home at anytime. Therefore, the form of direct retailing will help Zara to gain more customers and reach them faster. In conclusion, Zara’s unique business model demonstrates a strong success in the fashion market. By expanding internationally and focusing on different geographical preferences, Zara will maintain a sustainable competitive advantage in future and enjoy its increasing profit margins from oversea retail markets. Appendix 1. VRIN Valuable| Rare| * Rapid product turnover * Relatively low price| * H&M| Inimitable| Non-substitutable| Fast response * Short cycle time of entire design * Unique organizational culture (staff, communication, etc. )| * Process development (in-housing production, IT system, distribution, etc. ) * Vertical integration| 2. Value Chain * Inbound logistics * Zara’s designers attended trade fairs and global ready-to-wear fashion shows to translate the latest trend of fashion into their design; * Zara’s purchasing offices connected store managers to understand customer preferences; * The 100%-owned subsidiary of Inditex Comditel managed the entire dyeing process and supplied to production in only one week. Operations * Most fashionable items were produced in small lots or under contract by suppliers located close by, and recorded if they sold well; * More price-sensitive items were likely to be outsourced to Asia; * Zara’s factories were heavily automated and focused on the capital-intensive parts of the production process, finishing and inspection; * Unique IT system allowed employees to quickly transfer information and track sales record; * Long term relations with about 450 workshops. Outbound logistics * Distributed garments by a dual-shift basis and featured a mobile tracking system; * Scheduled shipments by time zone to increase efficiency; * Products were shipped by truck or air, and typically delivered within 24-48 hours to worldwide stores; * Started to build a second distribution center with a 120,000 square meters of warehouse space that had direct access to local airport, the railway and road network. * Marketing and sales Emphasized broad, rapidly changing product lines, relatively high fashion content and reasonable quality to be a quick fashion follower; * Spent limited revenue in advertising (0. 3%); * Created rapid product turnover and offered customers with limited products to create a sense of scarcity that “buy now because you won’t see this item later” * Expanded internationally and opened the flagship stores in worldwide main cities. * Service * Located stores in highly visible locations; * Invested more heavily in store refurbishing to provide customers with superior shopping experiences.

Zara: IT for Fast Fashion Identification of issues: The case study, Zara: IT for Fast Fashion, focuses on the retail giant, Inditex, and how its largest retail chain, Zara, has been so successful with their business model of high fashion, product variation, low cost, speed, and flexibility.

Several issues are identified in this case study. One glaring issue that is apparent relates to the fact that a long term Information Technology (IT) strategy does not exist. There is no formal system in place to plan and predict for their future needs, including operational and capital expenses.Another issue consists of the retailer not having a centralized distribution system in place, their stores do not share inventory counts, and the managers do not have a system in place to look up their inventory balances in their stores or other stores, (they accomplish this by canvassing the stores). Another significant current issue relates to the fact that their current IT system is unsustainable, as the equipment is obsolete and unsupported by Microsoft. Their IT system is not wireless, their screens are small, they are using styluses, which can be cumbersome, and older technology such as floppy disks and modems.The last issue involves a lack of shared knowledge of the current system in place; one person is relied upon and depended for knowledge of the systems functionality.

Being so dependant upon one person places the whole system at risk. Importance of the key issue: The key issue in this case study involves whether or not Inditex should upgrade the retailer’s information technology infrastructure and capabilities or whether they should continue using their current system. The problem that Zara faces now is that their current system, P-O-S (Point of Sales terminals), runs on DOS, which Microsoft does not support any longer.Any hardware change in the POS terminal would not be compatible with their current POS software. Without an upgrade, they risk that their current supplier could no longer support them. Investing in IT infrastructure is inevitable as Microsoft DOS is obsolete technology and there is no guarantee that their POS vendor will continue supplying the same terminal without changes to their hardware. Personal Digital Assistants (PDA’s) are currently used in all Zara stores, POS terminals are not connected with Zara’s headquarters or with other stores.

here is no system in place to link employees’ daily sales, causing employees to copy this information onto a floppy disk. Zara’s success and main business strategy is dependent upon their ability to respond very quickly to the demands of their customers. By upgrading their current system, they could add functionality and capabilities that could resolve other issues they face, such as sharing inventory, and being proficient at matching supply and demand. They can comfortably meet their mission by keeping current with fashion.Without the infrastructure to support it, it would be impossible to accomplish, as they would not have the security controls, and back up systems in place. This issue is more important than any other issue to resolve, as Zara’s mission, success and future depends on technology reliability and accuracy. If this issue is not resolved, it is impossible to address all of the other issues identified above.

Key Stakeholders: There are numerous stakeholders who are affected by the key issue of whether or not they should upgrade their IT Zara’s customers system want the latest fashions in stock, in their size and color, in a timey fashion.By having an upgraded, efficient IT system, Zara’s customers could experience better inventory controls to meet their needs. This in turn develops customer loyalty which equates to a higher volume of sales. Another key stakeholder is Zara’s employees. Employees want job security. A well defined, upgraded, efficient IT system can assist in sales volume, which turns into profit for the company. Employees also want to reduce their workload and redundancy.

Their current system does not take advantage of functional automation and communication, which can increase their work load.Another stakeholder, Zara’s IT vendor, certainly wants to maintain their business relationship with them, but may find it difficult to continue conducting business with a company who uses such an obsolete, unsupported, vulnerable system. Zara’s managers are also important stakeholders in the decision to upgrade. Their managers want the current POS system to do more, such as look up inventory balances in stores. This basic functionality is lacking. They want to be in a position to negotiate pricing and keep up with their competitors.Zara’s shareholders are interested in maintaining the financial success that Zara has experienced.

They want a system in place to assure that their current fashion demands are met, that a system is in place to account for and share merchandise. They want to be able to invest wisely and innovate themselves to stay fresh in the apparel industry. Another stakeholder, Zara’s suppliers wants a functional IT system to provide better lead time for orders and materials, and to be able to communicate in a timely, seamless manner. Causes of the issue:There are many causes that contribute to the situation that Zara faces at the moment. Having a mission and vision without having a strategic plan to get there is a contributing factor. Having a decentralized decision making system in place can also be a root cause. Having equipment that is obsolescence is a result of the above factors.

Not having staff and systems in place to effectively plan for the future, leads to antiquated equipment and manual, cumbersome, inaccurate, processes. Other factors responsible for the lack of strategic IT planning at Zara include their current business model and leadership complacency.Alternative solutions: There are three alternative solutions. The first would be to purchase the current POS terminals from their vendors so they can support their needs in case the vendor changes their machine to new technology, and continue functioning the way they have been. The second solution involves hire a consulting firm to review their situation and conduct a strategic financial analysis of their options. The third solution to the key issue identified is to proceed in upgrading their current IT system and add functional capabilities to meet the needs of their organization.Recommendations: I recommend the third solution, that Zara purchase and implementing a new POS networking system.

This recommendation would create a robust system that is more responsive to Inditex’s supply chain network. It also removes the risk of the system becoming obsolete and non- compatible with the vendor’s machine upgrade. It decreases their exposure for system failures, helps to maintain and improve efficiency of decentralization because information flow can be improved between stores, distribution chains and vendors.The most important aspect of Zara’s approach to information technology includes the ability to meet the needs of their customers, whether that involves accuracy, timeliness, marketing, demand, or communication. Their original business model involved linking demand to manufacturing, and linking manufacturing to distribution, this involves a reliable, compatible IT system. Upgrading the POS applications to include additional functionality, such as networking capability, and the ability to share inventory with other stores, only makes their corporation more productive and efficient.The use of larger screens, and keyboards, vs.

smaller screens and styluses would also be beneficial to the employees and customers. There are however pitfalls to this recommendation. Above and beyond the obvious capital expense of the equipment and software, implementing the recommended solution in the short term may require restructuring the IT department to include a Chief Information Officer (CIO). The CIO would also be responsible to conduct a comprehensive review of current industry technologies and determine which IT capabilities and functionalities will best support the company’s strategic mission.This person would also be responsible to initiate a formal IT budgeting process that is part of the broader capital budget, and create a formal process for selecting and prioritizing IT projects that includes both financial and non-financial metrics (Porter, M, 2001). In the medium term, Zara may consider an outside team to initiate this IT change. It is questionable if Zara currently has the time and internal talent to effect the change.

An outsourced professional team may accomplish this task, while allowing personnel to focus on their day to day operations.Zara can cross train a few IT personnel to work closely with the implementation team, to assure a seamless transition. A “train the trainer” may be beneficial. This may mean that they may have to hire replacement personnel on a temporary basis. In the long term Zara should develop a “long-term IT renewal plan” as recommended by Feld and Stoddard, 2004, to develop a plan to maintain and sustain their new system; this requires time, money and talent. Incorporating the three principles in executing IT effectively: A long termIT renewal plan linked to corporate strategy, a simplified unifying corporate technology platform and a highly functional, performance-oriented IT organization would benefit Zara (Feld and Stoddard, 2004). Keeping up with technology allows Zara to focus on future fashion trends, with effective IT they will be able to stay ahead of the curve and keep their leadership.

They will sustain their business model based on short deadlines, decrease quantities, and updated styles and fashion.If Zara anticipates opening up new stores in the future, they would need to upgrade their system anyway. If they opened up new stores with new technology, their current technology would not be compatible and the stores could not communicate effectively with one another and share information. The second solution mentioned above, which involves hiring a consulting firm to review their situation and conduct a strategic financial analysis of their options is not in the best interest of the corporation.Hiring consultants takes time and energy and are expensive. They are not familiar with the organizations structure, strengths, weaknesses or capabilities. Financial resources would be better spent on the purchase of new upgraded equipment vs.

putting off the inevitable. The first solution described above, purchasing the current POS terminals from their vendors so they can support their needs in case the vendor changes their machine to new technology and continuing to function they way they have been is not an option, if they want to remain viable.Change is unavoidable, as this profitable, highly reputable company cannot continue to function with obsolete equipment. Obsolete equipment sets them up for failure in the event the equipment fails or needs repair. It does not allow them to implement a systematic plan to move the organization forward, instead it stagnates their capabilities. The likely outcomes of my recommendation would be an efficient, accurate, timely IT infrastructure that communicates well with all stores, accurately accounts for all inventory, allowing manual processes to dissolve.This creates greater efficiencies on the part of the staff.

Changing and upgrading their IT system would compensate for their internal communication weaknesses. Upgrading the POS terminals to modern inventory management software, would allow orders to be made on a daily basis instead of twice a week. This would allow the demand and supply to be matched more accurately, making the production process leaner. Inventory management software would lso allow designers to follow the sales of garments more closely, instead of relying on manual orders from store managers. Store managers could send new fashion or fabric ideas over the internet to headquarters. This constant monitoring and updating can give designers an advantage over the competition in developing new styles and keeping up with the latest fashions. Updating their communication and IT system sooner, rather than later would overall sustain viability of the corporation and enhance their business success.