Unformatted text preview: dseaso n f ashio n shif ts o ccur. And in the f ace o f reco rd-high co tto n prices in
2010, Zara was able to reto o l o f f erings away f ro m mo re co stly f abrics, preserving margins. By
co ntrast, rival H&M saw pro f its dro p 10 percent largely due to margin pressure.M. Jo hnso n,
“Investo rs Relieved as Inditex P ro f it So ars.” Financial Times. March 21, 2011. Af ter cutting and
dying, many items are stitched to gether thro ugh a netwo rk o f lo cal co o peratives that have wo rked
with Inditex so lo ng they do n’t even o perate with written co ntracts. The f irm do es leverage co ntract
manuf acturers (mo stly in Turkey and Asia) to pro duce staple items with lo nger shelf lives, such as
t-shirts and jeans, but such go o ds acco unt f o r o nly abo ut o ne-eighth o f do llar vo lume.N. To katli,
“Glo bal So urcing: Insights f ro m the Glo bal Clo thing Industry—The Case o f Zara, a Fast Fashio n
Retailer,” Jo urnal o f Eco no mic Geo graphy 8, no . 1 (2008): 21—38. All o f the items the f irm sells end up in a f ive-millio n-square-f o o t distributio n center in La Co ruña,
o r a similar f acility in Zarago za in the no rtheast o f Spain. The La Co ruña f acility is so me nine times
the size o f Amazo n’s wareho use in Fernley, Nevada, o r abo ut the size o f ninety f o o tball f ields.M.
Helf t, “Fashio n Fast Fo rward,” Business 2.0, May 2002. The f acilities mo ve abo ut two and a half
millio n items every week, with no item staying in-ho use f o r mo re than seventy-two ho urs. Ceilingmo unted racks and custo mized so rting machines patterned o n equipment used by o vernight parcel
services, and leveraging To yo ta-designed lo gistics, whisk items f ro m f acto ries to staging areas f o r
each sto re. Clo thes are iro ned in advance and packed o n hangers, with security and price tags
af f ixed. This system means that instead o f wrestling with invento ry during busy perio ds, emplo yees
in Zara sto res simply mo ve items f ro m shipping bo...
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This document was uploaded on 01/31/2014.
- Winter '14