The biggest problem with brands getting goods to market faster is the brands themselves.
Sure, increasing efficiency, digitizing the supply chain and moving manufacturing closer to consumer markets helps, but many brands don’t realize their own corporate culture is what’s keeping them back.
The “if it ain’t broke, don’t fix it,” doesn’t apply to retail today, because it is broken.
Online has put a wrench in things, consumers are changing their behavior and immediacy is king. Brands are being faced with demand for goods closer to season and straight from the runway into stores—and many really can’t keep up.
The fix most retailers seem to fancy is “be like Zara,” which has nailed the speed to market concept by producing closer to home, keeping things lean and empowering the right employees to make speedier decisions, eliminating the excessive and unnecessary delays bureaucracy can cause.
Unfortunately for brands that aren’t Zara, mimicry likely won’t work.
Why brands that aren’t Zara will never be Zara
Inditex, the Spanish parent company of Zara, is more than a retailer—it’s a digital company.
For one, their points of sale at retail around the world are all connected, meaning they have access to data in real time that allows them to see what’s selling well and what isn’t, and to make quick decisions about what to make more of and what to ditch. That also means Zara can sell much more of its goods at full-price, not sharing in the markdown misery so many retailers are reeling from in this overly promotional market.
What’s best about the whole model is that no retailer has yet been able to copy it.
“It’s not a mathematical equation, it’s a culture,” Robert Sinclair, COO of Li & Fung’s sourcing business, said. “I’m not going to move to France and by being there, become more French than the French.”
Whether someone spends 20 years living in France, or 50, soaking up the culture, learning about the customs, doing what the French do, they will still never become French. No matter how close they may get. It’s the same way a retailer can’t become Zara.
“Based on what I understand about Zara, it’s a mindset, it’s a culture, it’s a way that organization has taken on a life of its own that’s near impossible for anybody to mimic,” Sinclair said. “They don’t seem to be worried about other companies doing what they do because cultures are very difficult to mimic or copy.”
Zara’s model is also one of inventory avoidance. They don’t keep excess stock of product, they make some, send it to market, see how it does and react accordingly. They keep fabric on hand that they know they can use and turn to when they want to cut into something and get it to stores quickly.
While that model may sound ideal for today’s market, brands and retailers need to learn to take the best elements and adapt it to their own companies.
“Defending, chasing, imitating or duplicating Zara is not a strategy,” said John Thorbeck, chairman of Chainge Capital and conveyor of the Zara Gap concept that shows how much of a lead Zara has on the rest of the market and why. “This is simply reactive management, letting a new competitor define your actions. It is like saying, ‘We’re going to do what we do, only faster.’”
What is it that brands don’t get about speed to market?
Zara has turned itself into more than just a supply chain, and while the company’s identical model can’t be copied, Zara can still be a source of learning if retailers can fit the supply flexibility takeaways to their own distinct strategies.
“I think they treat it like an operational issue, delegated to the supply chain team,” Thorbeck said of how retailers approach speed to market. “In fact, the challenge is speed of decision-making and how inventory risk is shared across the enterprise and partners. That is a different way to do business, and cannot be solved by a functional approach to change.”
Retailers need to learn to empower the right people in their organizations to make the kinds of quick calls that can get the right product in front of the right consumer faster, without going through 17 different approval process and getting the product to stores just in time to mark it down.
“Zara doesn’t check the checker,” Sinclair said, adding that reports and research on Zara indicate the reason for that is trust.
If someone at Zara tells someone else to order an item in green, they trust that the person orders that item in green and they move on. That people empowerment means a reduction of process triplication, also known as saving time.
“Trust is economically extremely efficient,” Sinclair said. “Each needs to decide who does what, share the info and trust each other. You empower people to make decisions on your behalf.”
Some brands think the problem is just that their models aren’t lean enough or efficient enough or cheap enough to compete with fast fashion, and that they have to do markdowns because that’s the nature of this promotional market.
What many are missing, however, is the fact that their product just isn’t relevant.
Zara is able to sell more of its merchandise at full-price for two major reasons: it has trained its shopper to buy on the spot because the goods may not be there later, and the stores simply have product the consumer really wants to buy.
“Relevant product is what’s missing,” Sinclair said. “If you’ve got relevant product that consumers want, then it doesn’t necessarily have to be cheap or the cheapest.”
What brands and retailers should do instead of copying Zara
Since copying Zara isn’t a strategy, what is it that brands can do to hit the levels of efficiency and success that the Spanish retailer has achieved?
According to Thorbeck, “I think they should be careful to define their opportunity as management of risk, and reduction of inventory uncertainty. These goals are achievable, but may get lost in all the talk about fast fashion, as if it had a standard definition. It does not.”
Disruptive innovation has almost gotten lost in the fray of buzzwords and PR phrases, and companies are confusing being creative with being disruptive, Thorbeck explained.
“Retailers are investing in countless apps and collaborations to re-define the customer experience and the results are dismal, with rare exception,” he said. “U.S. retailers have too many stores, too much inventory and too much risk. That seasonal model built on price, promotion and volume is not working.”