Executive Summary
In recent times in the fashion industry has been able to attain fast growth in the world. It is apparent that the fashion industry is undergoing a massive transformation in terms of technology and management. Considerably, being one of the most competitive and profitable industries of the time, large brands operating under this industry are leading in competition and innovations. With regards to changes in consumer preferences, the fashion industry has to ensure that it focuses on the development of new products and innovation of new designs as well as fashion trends in order to fulfill the demands and needs of the consumers
Introduction
Zara, one of the largest fashion retailers as faced challenges in maintaining constant innovation in their focus for the development of new and innovative products. These challenges in maintaining constant innovation have been as a result of difficulties in supply chain management and continued innovations and creativity within the business. Therefore, in order to maintain constant innovativeness, it’s important for Zara to take into consideration strategic measures; disruptive innovation, consumer engagement, innovative supply chain management, and management approaches. Through this, Zara will effectively remain innovative and thus maintain constant innovations in their brands.
Background Context
Size and Growth
Zara SA is a Spanish fast fashion retailer with several stores around the world. Zara forms a major part of the retail group known as Inditex (Lopez and Fan, 2009). Zara has had numerous innovative strategies to achieve global expansion making it top in the moneymaking brands. Zara uses swift responses and is always set to come up with new fashion styles including the offering vast new clothing’s with unique designs and at affordable prices. The productions of the new design are consistent and this makes the company provide healthy competition in the fashion industry. This promotes the company’s capacity to predict the market’s needs. Zara has a well-defined structure of office that foresee its working and effectiveness.
Structure
Zara is controlled by the mother industry of Inditex, moreover, Zara’s structure is functional. Its organizational structure is a hierarchical flow of office in regards to the power of an office. Work is made easier at Zara as all employees know who they are supposed to report to. Zara is managed by the Inditex big company. The company head office is the company’s chairman, and under the chairman are two deputy chairmen with the first acting as the CEO and then comes the secretary of the company. Under the top management, there are some smaller managers including store managers and country managers. Organization culture is teamwork where all the offices work together as a team to produce the best.
Trends
Zara has had a mix of demographic, geographical and psychographic segmentation strategies in order to serve the needs of the many customers of the Zara company (Ghemawat, Nueno and Dailey, 2003). Due to the companies stores in the world, selective targeting approaches are used to make the products available in large quantity and quality in the market. The positioning strategy is used by the company in order to identify where the company’s items are highly needed and how to reach the high market areas. The mother company of Inditex provides Zara a strong base helping Zara nature its brands. Also, Zara company uses the shortest time possible to supply any new innovations to the market, referred to as turnaround time. Zara is also advantaged by the stronghold parent nation. The company’s stores are well located to enhance profitability. For instance, stores in Spain are located in big cities where the market is readily availability. Zara applies many trends as a way of outshining other competitors. For instance, for the summer Zara is embracing high saturated colors such as pink. Adding smaller details to already existing designs is also a way of attracting the market.
Positions of the company
The positioning of Zara in the fashion industry is the speed of production of new innovations and the affordability of its productions. Zara also targets the population from the age of twenty to thirty-five years as that age group is more alert to the fashion trends and is always in search of new trends in the market (Cuc and Tripa, 2007). Everyone in that age group always has a desire to look fashionable. Generally, Zara company is doing all in its capability to turn out as the best fashion company.
Nature of the problem
Technology and innovation have almost affected all industries. Ideally, the main purpose of each industry is to maintain a responsive change to trends in consumer tastes through the quick invention of new innovative products that are suitable for the consumers in the market. The fashion is already experiencing the digital transformation which has undergone profound changes over the years. Ideally, clothing is not only characterized by the traditional representational and protective functions but also the digital and technological features that have evolved offering an opportunity for the fashion industry is one of the biggest economic sectors (Macchion et al 2017).
Since the innovation of wearables, there has been intelligent apparel that has been appearing in the market recently (Fletcher, 2012). For instance, the biometric body analysis in health care and sports, assistance systems for muscular activities and sensory organs, as well as digital services via interactions, are just to mention but a few of the product concepts that contain intelligent items. From a business perspective, it is evident that the developments have made it important for brands to reconsider their products and development techniques, collaborations and business models in order for the companies to beat the challenges and assess opportunities for smart clothes. Ideally, many brands have embraced changed and have increasingly kept their customer loyalty growing through constant technology. Technology and innovation are intersecting and meeting to make a big disruption in the fashion industry. Through choosing to move with the latest advances, an innovative company is able to steal a larger market share.
Zara being one of the largest fashion retailers, they play a great role in shaping the fashion industry in terms of design and technology (Lopez and Fan, 2009). Zara aims at creating ethical, beautiful and quality products. Thus, with the need to bring responsible and attractive fashion and to improve the quality of customer services at Zara, there is a need for constant innovation. Zara has been one of the brands that have pierced the apparel market but there are challenges in implementing this concept. Large brands in the fashion industry have played a big role in the development of a sustainable future for fashion which has led to constant generation of new apparels (Ünay and Zehir, 2012). The need for constant innovation in Zara has been met by challenges in supply chain management and coping up with challenges of creativity and innovativeness with the business. The need for constant change has led to three main challenges in terms of their supply chain management. The first challenge is understanding the current supply chain strategy, the second challenge is being able to anticipate the future supply chain strategy and third is challenges of crafting the supply chain strategy for the company. The fact that the fashion industry is moving at a seismic shift, there is a need for the company to look ahead and unveil the fashion trends that are shaping the fashion industry. The demand for improved quality, efficiency and speed are on the rise thus affecting the production of the company.
Analysis of the problem
The intense competition in the fashion industry has led to the demands of increased innovation to find a better way to attract consumers. Innovation has been the most outstanding ways through which organizations have been able to differentiate from competitors and gain a competitive advantage. Like in most industries, it is evident that innovation has been the most crucial success factor for businesses. With regards to the problem of constant innovation Zara, it is important that the company takes into consideration measures that will improve its fashion technology.
Zara has been facing challenges in maintaining constant innovation and production of new clothes that will keep up with consumer demands. As new technologies are being seen in the fashion retail, there are a number of challenges that companies are facing while trying to cope up with the innovation in the fashion industry. In the case of Zara, some of the challenges in constant innovation include supply chain management issues, coping with creativity from competing brands. Thus, it is important for Zara to take into consideration the following measures to maintain constant innovativeness in the product’s design.
Disruptive innovation
Zara has relied on the disruptive innovation which entails a fast fashion model for the last few years. With this strategy, the company is able to bring modern trends in less than a month. With this kind of strategy, the company will be able to cope up with constant innovation within their fashion business. Ideally, this brings a fast turnover since they produce every product in small quantities (Skarzynski and Gibson, 2008). This offers the company an opportunity to quickly evaluate the successful designs. This, therefore, is important in reducing the risks of manufacturing large quantities that are not wanted by the consumers.
Look to technology to keep up with the faster fashion
To keep up with technology and innovations in the fashion business it is necessary for the company to develop new technologies through hooking up with tech firms as well as hiring talent from a startup in order to ensure they lower the level of competition from innovative companies. For instance, the company can absorb startups such as Misguided and Bohoo.com. Zara should also integrate its online sales with the physical store networks by focusing on most attractive stores where customers might want to try their items. Technology has been one of the greatest effective influences that shape the fashion retail business. Thus, the development of technology will offer opportunities to keep up with innovations for the company. Particularly, the interactive technologies which have impacted the market conditions should be integrated into the company strategies to keep up with technology (Dodgson, Gann and Salter, 2008). Some of the products include virtual products display, self-service technologies as well as information acquisitions. In terms of fashion retailing it is important for the company to integrate some approaches such as virtual try on, body scanning, augmented reality which will benefit the company in reaching its customers. In this case, they can be able to develop innovative business applications and as well offer improved shopping experience for their consumers.
Innovative supply chain management
Ideally, the supply chains are becoming more and more complex as the customer demands and uncertainties heighten in the market. Thus, there is a need for the company to develop a strategic framework for the supply chain in order to discover the leverage of innovation to effectively compete and succeed in the evolving market (Kim, 2013). With the ever-changing trends, it has been harder for Zara to predict their market and hence poor forecast for the required supplies and raw materials. In the past, the company has relied on the push model where the retailers push new outfits and styles to the market. However, this strategy has been doomed to fail due to increased competition and new entrants in the market thus brand being forced to listen to their customer. It has become important for the management to listen to the customers and respond quickly to satisfy their needs. What has increased the complexity of the supply chain is the fact that most of the materials approximately 30% are being imported to the country. Therefore, this has increased the cost involved in transporting the raw materials as well as the finished products. Zara needs to rely on the push model in its supply chain and inventory management. In this case, they can be able to create designs every month based on the current trends and sales to monitor and understand the types of designs in demand (De Felice and Petrillo, 2013).
Consumer engagement
Consumers have specific demands and needs thus being able to understand the customers will enable the business to keep up with innovations. Listening to customers is a better way of researching trends and what is actually selling in the market. Engaged customers offer opinions and reviews through which the business will capitalize on thus being able to get closer to the customer demands and trends. Constant innovation involves keeping up with changes that are in the market in order to remain relevant. Relatively, the Zara can capitalize on feedbacks as ideas to offer more innovative and competitive products in the fashion market.
Design management approaches
For constant innovation, it’s essential for the company to incorporate design management approaches. Ideally, design management entails the business decisions, ongoing processes, and strategies that will enable innovation and creation of effectively designed products (Simchi-Levi et al., 2008). This will be important for the company in managing the quality of the brand thus increased success in constant innovation.
Current position
Zara employs the strategy of disruptive innovations as a way of overcoming the problem of open innovations (Ferdows, Lewis and Machuca, 2005). This strategy involves disrupting the industry through its model of fast fashion. Zara brings the up-to-date trends from the streets and other fashion exposes to its stocks in the shortest times possible which is usually in less than 4 weeks. Zara is involved in designing clothes for men women and kids. The distribution is done in its many stores in many markets and also expanding its online working as a way of improving distributions of the products. By 2014 Zara had achieved the notch of 26 countries.
Also, Zara working strategy is distributing the modern trends at cheap prices. Zara comes up with new clothes design every two weeks. Zara involves its local designers rather than hiring already established designers, a strategy already in use by other companies. Zara spends a very low amount of money and funds in advertising which is approximately 0.3% of sales. Despite that fact, the company is able to produce major sales by the medium of precise store location and the fast product offering. Its stores receive new merchandise two times a week. This, in fact, encourages customers to make many visits to the stores in search of the new products. The fast production removes the risks of any products becoming cliché in the streets. An added advantage is that Zara produces what its customers want. The disruptive innovation strategy is obviously working for the company and this increases the effectiveness of the company in the fashion industry and hence Zara provides healthy competition in the industry. By having that approach, the company lowers inventory cost in its stores. The distribution of the firm’s products has erased the need of local distributors. The strategy is set to succeed because of many factors. First of all, the strategy is unique to Zara as a fashion retailer. Being the only company in the industry that embraces the strategy, the process will be successful. Also, the strategy promotes teamwork as the designers work together to achieve more and the suppliers also work together to achieve the goal.
Alternative approaches
Ecological Sustainable Fashion
The strategy of ecologically sustainable fashion can be effective for Zara in the fashion industry. This strategy involves coming up with fabrics from eco-friendly resources. This involves products such as sustainably grown fiber crops and recycled materials (Fletcher, 2012). This also involves the recycling of already used clothes. This upholds three ‘Rs’ of the environment; reduce, reuse and recycle. By eco-friendly resources, one can refer to plants such as cotton. Cotton is a plant that is a major source of apparel fiber. The fiber can be used to come up with new designs by Zara fashion company. Soy fabrics can also be used in the process. They come from the undersides of soybeans and is greatly biodegradable and hence has very little side effect or impact on the environment. Hemp crop is also regarded as a sustainable crop. The innovation can also be helpful to increase the production of Zara company. Other sustainable crops include bamboo.
Constructing Bridges
Zara company should also try to build bridges. This involves straddling cultural boundaries and consulting the thoroughfares and the creams for inspiration. This also involving invading other cultures and examining their trends from way back their previous generations. The fashion designers in Zara may use this opportunity to try and bridge gaps between a range of people and fashion traditions. The inventions that will come from that will connect groups of people in regards to their social way of life and cultural way of life. This will also act as a way of storing cultures through fashion. Older fashion brought to newer fashion will create very unique designs that will take the market by storm.
Recommendations
Wearable and smart clothing
Wearable and smart clothes is also an innovative technology that can be used by Zara to increase production. This technology involves the creation of fabrics that enable digital constituents to be entrenched in them. This process also involves the manufacturing of synthetic fibers in laboratories.
Open innovation
The company can also apply open innovation as an alternative strategy of innovation. The process involves using internal opinions and ideas and also other external bodies ideas including other company’s ideas. The ideas are put together and new innovation is created. This will increase the production of the company due to the new innovation. All the three alternatives cited may increase the effectiveness of Zara company in the fashion industry.
Conclusion
With the increased consumer demands for innovative products in the fashion industry companies are facing a great challenge in maintaining constant innovation and production of new products. Zara has faced challenges while trying to maintain constant innovation which includes difficulties in supply chain management and maintaining creativity and innovativeness in their operations. To keep up with the latest fashion trends and to stay competitive in the fashion market Zara company has to make alterations and improvements to their current strategies such as relying on design management approach, consumer engagement, fast fashion (disruptive innovation) and innovative supply chain management. Embracing these techniques will enable the company to cope with consumer demands as well as maintain constant innovation thus the production of new products gaining a competitive edge in the fashion industry market.
