Zara Fast Forward Workshop

Kristin Thoney-Barletta, College of Textiles
Lisa Hartman, ITT Graduate Student

The Zara Fast Fashion Workshop was held on October 21st, 2005, at the Fashion Institute of Technology in New York City. The workshop was sponsored by TC2, Industry Forum, the Garment Industry Development Corporation, and Kurt Salmon Associates (KSA). Jim Lovejoy of TC2 was the initial speaker. He explained the ingredients necessary to achieve fast fashion, including design and development technology. Ken Watson of Industry Forum then spoke specifically about Zara. A video entitled “The Zara Process”, which was produced by the Harvard Business School, was shown. David Busuk of KSA explained his views as a consultant on fast fashion. Laura Rowen of Brooks Brothers spoke about how Brooks Brothers had implemented some of Zara’s ideas into their business. The workshop concluded with a panel discussion of New York based entrepreneurs/designers who spoke about their business and the challenges they faced.

From the discussions, it was evident that the fast fashion approach taken by Zara is quite different than the approach taken by many U.S. apparel retailers. According to Jose Castellano, CEO of Zara, a key objective of the company is “to get the shortest time to market”. Zara chooses manufacturers than can provide speed over cost and is very customer focused. They monitor what is being sold and seek customer input. They try to capture lost sales and potential opportunities. Zara has very limited sales and no clearance racks. They try to create a sense of scarcity in the products they offer. The assortment changes 70-90% each month in Zara’s retail stores. They use no advertising and prefer to pick “great” locations for their stores.

Zara has a lead time of 4-5 weeks for new garments and 2 weeks to restock. They have twice weekly shipments of small batches to their 531 stores, and they have made substantial financial investments in information technology and logistics. Fifty Percent of the items Zara sells are manufactured in Spain, 28% in the rest of Europe, and 24% in Asia and the rest of the world. Most of their stores are in Europe. Zara owns 40% of their production facilities, and they have a very close relationship with their other manufacturers. Zara’s relationship with their manufacturers, proximity to market, and logistics skills, combined with their concurrent product development process, help them achieve short lead times. Because of their short lead times and small batches, they can correct most problems resulting from forecasting errors before they have a large impact. Another advantage of having short lead times is that their working capital requirements are reduced.

Although Zara has been very successful in Europe, they have not done quite as well in the U.S. More markdowns occur in the U.S. than in Europe. They are expanding in Europe but do not have plans for any additional stores in the U.S. It is unclear whether the fact that Zara has not done as well in the U.S. is a result of different behavior of U.S. and European consumers, that Zara’s supply chain is set up primarily in Europe, or if there are other reasons. Despite the problems Zara has faced in the U.S. market, elements of their business model have been successfully adopted by such companies as Brooks Brothers and Dell. Clearly fast fashion and its underlying principles can be successful in certain markets under certain conditions. But the specific circumstances under which they can best succeed need to be more clearly defined before there will be more widespread adoption by apparel retailers in the U.S.

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