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Unformatted text preview: f Justice needed to pro vide a special exemptio n
and had to be co nvinced the ef f o rt wo uldn’t be used by buyers to co llude and f urther squeeze
prices f ro m co mpetito rs (the system is f ree o f pricing data). Suppliers acro ss industries no w reco gnize that if they behave irrespo nsibly the Fair Facto ries
system will carry a reco rd o f their misdeeds, no tif ying all members to avo id the f irm. As mo re
f irms use the system, its database beco mes bro ader and mo re valuable. To their credit, bo th
Gap and Nike have jo ined the Fair Facto ries Clearingho use. K E Y TAK E AWAYS
Z ara has used technology to dominate the retail fashion industry as measured by sales,
profitability, and growth.
Excess inventory in the retail apparel industry is the kiss of death. Long manufacturing lead times
require executives to guess far in advance what customers will want. Guessing wrong can be
disastrous, lowering margins through markdowns and write‐offs.
Contract manufacturing can offer firms several advantages, including lower costs and increased
profits. But firms have also struggled with the downside of cost‐centric contract manufacturing
when partners have engaged in sweatshop labor and environmental abuse.
Firms with products manufactured under acceptable labor conditions face multiple risks,
including legal action, brand damage, reduced sales, lower employee morale, and decreased
appeal among prospective employees. QU E S TI ONS AND E XE RC I S E S 1. Has anyone shopped at Z ara? I f so, be prepared to share your experiences and observations with
your class. What did you like about the store? What didn’t you like? How does Z ara differ from
other clothing retailers in roughly the same price range? I f you’ve visited Z ara locations in
different countries, what differences did you notice in terms of offerings, price, or other factors?
2. What is the “conventional wisdom” of the fashion industry with respect to design,
manufacturing, and advertising?
3. What do you suppose ar...
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This document was uploaded on 01/31/2014.
- Winter '14