
How Zara Grew Into the World’s Largest Fashion Retailer - nikunjk
http://www.nytimes.com/2012/11/11/magazine/how-zara-grew-into-the-worlds-largest-fashion-retailer.html?_r=0
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eduardordm
Zara should be closed and owners go to JAIL. It used slave labor (including
minors) for YEARS in Brazil.

I've been to a 'camp' myself in 2011 just before the scandal broke. This is
how they did it: a coyote paid by Zara would go to Bolivia and give some money
to Bolivians that wanted a 'better life' in Brazil. They paid travel expenses
and brought them illegally to Brazil. After they were here they would work for
no salary - just for the promise that Zara would 'give the papers' to work
legally. It never happened.

To mask the operation they opened a number of ghost companies in Brazil and
hired those companies to manufacture their products. When hell broke loose,
they stated that those companies were guilty, not them.

I hope Zara burns in hell.

~~~
zalew
you can replace 'zara' with any fashion or electronics corporation.

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pi18n
And that makes the objection invalid?

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seanmcdirmid
No, it means that if you are going to police the morals of the industry, you
have a lot of work to do.

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hcarvalhoalves
There are immoral things, and there are illegal things. He's talking about
outright crime.

~~~
zalew
you should read about coke/pepsi wars in 3rd world countries.

when it comes to fashion, there are the companies that you hear they use bogus
companies to exploit the poor world to save 0.05c/item, and the ones you just
haven't yet heard they use bogus companies to exploit the poor world to save
0.05c/item.

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pinaceae
what isn't that clear in the article, is the speed advantage over chinese-
produced cheap fashion goods. the t-shirt might look the same, a sort-of copy
of a Lagerfeld piece. but the Zara one is in stores practically immediately
after the fashion show in say Milan is over, while the container ship from
China is leaving port.

speed kills, and fashion is a speedy business. your customers see what fashion
magazines show them, and they want it _now_. Zara has understood this.
awesome, awesome application of clear thinking and strategy.

Zara is being taught over here in EU together with Red Bull as one of the key
modern examples for smart business models.

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ImprovedSilence
Haha, funny that you point out Red Bull. Now THERE is a company that knows how
to brand. I don't even drink Red Bull, but I love the brand, love the things
they do, love the events the sponsor, and usually root for the teams they
sponsor, should I not already have an allegiance in that sport. They've
probably made tons off of somebody like me, who doesn't drink the drink, but
buys into a lot of the other stuff they do.

~~~
codewright
Agreed, although I use Redbull as my "I'm not in the mood for something hot"
coffee/tea alternative.

~~~
seanmcdirmid
Cold canned coffee is my new addiction, but I've been to Japan one too many
times. Red Bull tastes like some bland pop to me, but they've really
heightened their appeal by being the premier drink mixer (which ironically,
used to be coke!).

~~~
ImprovedSilence
Yeah, I'm a fan of the canned starbucks doubleshot expresso drinks. A bit high
on the sugar content for regular consumption, but I like the tasty treat every
now and then.

~~~
codewright
Zero calories/carbs is why I drink Redbull instead of the Starbucks stuff.

Japan has plain cold coffee, it's harder to find that here, otherwise I'd be
happy to drink it.

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kanamekun
What's striking is that the entire org is designed to listen to customers...
aka "Make something people want". Relevant quotes from the article below:

1\. STORE OPENINGS

“When we open a market, everyone asks, ‘How many stores will you open?’ ”
[Inditex communications director Jesus Echevarría] said. “Honestly, I didn’t
know. It depends on the customer and how big the demand is. We must have the
dialogue with the customers and learn from them. It’s not us saying you must
have this. It’s you saying it.”

2\. PRODUCT OFFERINGS

[Store managers] also monitor customers’ reactions, on the basis of what they
buy and don’t buy, and what they say to a sales clerk: “I like this scooped
collar” or “I hate zippers at the ankles.” Inditex says its sales staff is
trained to draw out these sorts of comments from their customers. Every day,
store managers report this information to headquarters, where it is then
transmitted to a vast team of in-house designers, who quickly develop new
designs and send them to factories to be turned into clothes.

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arbuge
That's what jumped out at me too. It's one thing to do a startup which listens
to customers - that's pretty much tablestakes. It's another to run a vast
multinational organization which does this across the board. Beautiful
execution on a large scale.

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mongol
I work for H&M, their competitor, in their IT HQ in Stockholm. It is a great
place to work. H&M is a success story as well, currently the highest valued
listed Swedish company. IKEA might be more valuable, but is not listed.
Ericsson used to be more valuable, but not any more.

The IT challenges are not always technically of the most interesting kind, and
rarely bleeding edge, but that is made up by the scale of things, by a good
atmosphere and people dedicated to doing a good job. It is an organization
that is suited to grow professionally in.

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raheemm
_The managers field calls from China or Chile to learn what’s selling, then
they meet with the designers and decide whether there’s a trend. In this way,
Inditex takes the fashion pulse of the world._

So big data (and associated systems) is not always needed to detect patterns
and trends.

~~~
codewright
Non-sequitur.

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mitchdumke
I've already heard comments about quality going down. I feel like once H&M
started blowing up their quality declined. Not saying it was the highest
quality to begin with but my older H&M hold up better than my newer purchases.
Zara is destined for the same dilemma.

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eliza1wright
Yes, but quality is going down _everywhere_. Walk into any clothing store in
any mall and take a look at the seams. Brands that used to be known for
standard, quality pieces are jumping on the fast fashion train, but their
prices aren't coming down.

I think the more interesting part of this article was this statement by Prof.
Fraiman, "And what is the problem in America? They don’t fit in the clothes.
So why do it? Having to make larger sizes makes production so much more
complex.”

I've heard that SO many times from high end designers, but which fast fashion
brand is making money hand over fist? Forever 21. And they're also the ones
offering lots of options for plus-size women. Bigger women are begging for
cute, trendy clothes and whoever delivers it will hit pay dirt.

~~~
ImprovedSilence
>> And what is the problem in America? They don’t fit in the clothes.

This. So America gets completely different cuts of clothes. If you're not
overweight, or huge, most clothes sold in America suck. I didn't realize this
until I spent some time studying in Italy, where even the cheap t-shirts they
give away at 5ks races fit so much better and look so much nicer on me. It
wasn't until then that I realized the cut of the clothes, not just "size" or
"style" make a huge HUGE difference in appearance. That, and when you would
walk into a store, the employees will say "don't buy that, this here fits your
body style soo much better" and they are right. In the states, I've noticed
people just buying whatever is trendy, with zero understanding of what
actually looks good on them, and what doesn't....

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antr
I've come across this same "issue", specially with suits and shirts - for some
reason in the US these are more "baggy".

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eliza1wright
Yup. In my experience, designers don't want to explore proportions beyond that
of the standard fit model. So if you don't have a "normal" (not necessarily
average) body as determined by the designer, you're outta luck. And if you're
plus size, you have to be the right kind of plus size.

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confluence
Ha! Zara is the HFT of fashion.

Constant demand feedback from random, irrational and finicky customers who
want cheap liquidity (the latest fashion) now is used to front run the
competition with supply side flexibility and incredible production speed,
allowing them to capitalize upon short term market dynamics (fashion fads) and
grab easy alpha (cash money).

> _“Prada wants to be next to Gucci, Gucci wants to be next to Prada. The
> retail strategy for luxury brands is to try to keep as far away from the
> likes of Zara. Zara’s strategy is to get as close to them as possible.”_

\-- <http://en.m.wikipedia.org/wiki/Hotellings_law>

Game theory FTW! Zara is using other people's clout, clothing designs,
advertising and foot traffic to free ride and not pay the advertising or
branding taxes most brands need to pay to stay competitive. They are
commoditizing high fashion with volume, speed and ruthless efficiency.

> _Echevarría said that is because the customer is always determining
> production — not the other way around. Every piece of clothing the company
> makes has, in a way, been requested. A business model that is so closely
> attuned to the customer does not share the cycle of a financial crisis

...

The managers field calls from China or Chile to learn what’s selling, then
they meet with the designers and decide whether there’s a trend. In this way,
Inditex takes the fashion pulse of the world. “The manager will say, ‘My
customers are asking for red trousers,’ and if it’s the same demand in
Istanbul, New York and Tokyo, that means it’s a global trend, so they know to
produce more red pants,” the P.R. person said. _

Just like traders at a desk. Or computers watching lines move. Supply is now
meeting demand when it exists, thus reducing inventory, waste and maximising
both consumer happiness and Zara's profits. This is an example of big data +
lean manufacturing running at scale to meet random and short term thundering
herds that really, really want the latest in whatever is hot. It's a little
like Akamai and popular videos - find the probabilistic trends of content
demand (aka Cat videos :), cache the files at edge nodes - reduce backbone
bandwidth waste via local file streaming - profit.

> _“To the luxury brands, they are copycats, they are like mushrooms feeding
> off the main body of fashion,” Golsorkhi says. “I was of the same mind
> myself, but I have grown out of that because I realize that the fashion
> companies also copy each other. In the end, no one’s original.”_

Why isn't this obvious :D. Everything is a remix - and anyone who denies it
doesn't pay enough attention to how things are made. Zara, like Samsung, is
bringing things that people want, at the prices they can afford, when the
people want them. Supply is matching demand and that's a good thing. It's good
for the consumer - and funnily enough - it's good for the brands they copy.

If people want Gucci they'll get Gucci - not Zara. For everybody else - they
just want to social signal to others that they are fashionable, good looking
and wealthy - let them for pete's sake! Each knock-off Gucci just adds to
Gucci's brand recognition as _THE_ brand other brands copy.

> _“The reality is: a T-shirt is a T-shirt is a T-shirt,” Golsorkhi says. “It
> costs the planet the same thing whether you have paid £200 for it or £1 for
> it. It does the same amount of damage. A T-shirt is equivalent to 700
> gallons of water, gallons of chemical waste, so much human labor. But it
> used to be that we could do with three T-shirts a year. Now we need 30.
> Sometimes it’s actually cheaper to throw away clothes than to wash them.
> That has got to be wrong.”_

Perhaps. But that assumes that everything that went into the T-shirt just flat
out disappeared from the Earth. That water went back into the rivers. Those
chemicals were recycled (they're expensive). That human labor needs something
to do - or they'd starve to death on subsistence farming. The T-shirt ends up
being used for years, donated to charity, or recycled.

Globalisation, crass consumerism and funny T-shirts have saved the world and
brought billions out of poverty. It's the pointless things that keep things
running. Cat videos have done more for the internet than Wikipedia (I'm not
messing around). Indeed Wikipedia's dominance is directly helped by Cat videos
(reducing cost of bandwidth, getting more eyes online, reducing cost of
information access).

Non-cyclic thinking is really - well - short-sighted.

We need MORE consumption not less - our entire world economy is based on 75%
personal consumption - that means CONSUME.

Without it we're all fucked.

Discouraging consumption is ridiculous - how will people in poor countries get
out of poverty-subsistence cycle if Americans won't buy their shit. As much as
people hate to admit it - consumerist, debt laden Americans make the world
better off than thin, hard working, non-consuming Germans.

The Germans only live because the Americans consume. People only buy expensive
German cars to move their lazy asses around.

This is a good thing because, without lazy consuming people doing pointlessly
complex commuting and travelling - people wouldn't buy cars - period. And if
people don't need what you produce (starving artists anybody) - you don't
exist - no Germans. See what happened to Japan's economy - they killed
consumptions - and once you kill consumption, supply never comes back easily -
because no one is going to work for free or invest in an economy, unless they
know that in the end - they'll get paid by consumers.

Next time you watch Jersey Shore, really, really shallow consumerist people,
reality television, QVC or any of the other crass consumerism crap you see
everyday - don't denounce them, don't say the world has "jumped the shark".

Instead you must thank them for keeping your ass employed, and the world
economy running with their wasteful, arbitrary and pointless consumer habits.

~~~
seanmcdirmid
There are other ways to drive the economy beyond essentials rather than
through just consuming. Infrastructure is one, wars are another. But really,
we could focus our resources on getting to the moon, getting to mars, and just
lots of crazy R&D that would pay off greatly in the future. We could also
spend more time in cultural endeavors, supporting more artists, writers,
musicians, movies, and so on.

Buying a cheap shirt from Zara hardly does much more than buy someone's lunch
in a Chinese factory.

~~~
confluence
Buying that cheap T-shirt pays for your R&D through taxes and value produced.
The item at hand is irrelevant. So long as it is consumable, in demand, and
people are willing to pay for it - it will be supplied. The best you can do is
tax negative externalities, and invest any market surplus via taxation into
long term R&D.

All the crap that was produced post WWII paid for your cutting edge shuttle
program. That shuttle program subsequently helped the research of all the crap
that was subsequently produced.

It's a crap cycle. Embrace it. The cookie monster should be the cheerleader of
capitalism - he eats, and eats and eats, but none of it ever goes down because
he lacks the stomach to actually ingest any food - it all goes to waste - but
he enjoys it anyway.

We need more cookie monsters.

~~~
jonathanleane
How many cookie monsters until we see diminishing returns?

~~~
confluence
You can never have enough cookies - the only upper limit is that of the second
law of thermodynamics or the catastrophic end of civilisation.

If people want cookies - it's cookies we'll make - because the markets one and
sole purpose is to provide goods that people want, at prices they can afford,
at the times they want it.

The sole purpose of governments is to tax the negative externalities of said
cookies (obesity/health etc.) and invest those market surpluses into the
future safety and prosperity of said obese consumers through negative ROI R&D
and scientific research that will allow us to make cookies taste like whatever
we want on Mars.

Both governments and markets exist to serve consumer demand.

Everyone in the world is somebody's bitch.

Ignore consumer demand at your own peril. The world runs on french fries - tax
it for the health concerns, invest it into rockets that'll let people eat
those self-same fries on Mars.

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drumdance
Last year I happened to be in Sydney staying at a hotel around the corner from
their grand opening. _Huge_ crowds! I had never heard of them, but then I'm
not in their target demographic.

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comatose_kid
We recently did a case on Zara at my b-school (Ivey). Really pragmatic use of
technology and a very humble management team.

They really take the old maxim that 'fashion is fleeting' to heart in their
operations and manufacturing chain.

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mtgx
Does anyone know what software they use for fashion design?

