Co ntrast this with zara where 85 percent o f pro

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Unformatted text preview: every two weeks.”M. Helf t, “Fashio n Fast Fo rward,” Business 2.0, May 2002. Seco nd, limited runs enco urage custo mers to buy right away and at f ull price. Savvy Zara sho ppers kno w the newest items arrive o n black plastic hangers, with sto re staf f transf erring items to wo o den o nes later o n. Do n’t bo ther asking when so mething will go o n sale; if yo u wait three weeks the item yo u wanted has almo st certainly been so ld o r mo ved o ut to make ro o m f o r so mething new. Says o ne twenty-three-year-o ld Barcelo na sho pper, “If yo u see so mething and do n’t buy it, yo u can f o rget abo ut co ming back f o r it because it will be go ne.”K. Capell, “Fashio n Co nquistado r,” BusinessWeek, September 4, 2006. A study by co nsulting f irm Bain & Co mpany estimated that the industry average markdo wn ratio is appro ximately 50 percent, and until recently, less than 1 percent o f JCP enny revenue came f ro m items bo ught at f ull price.B. Tuttle, “In Majo r Shakeup, JCP enney P ro mises no mo re ‘Fake P rices,’” Fo rtune, January 26, 2012. Co ntrast this with Zara, where 85 percent o f pro ducts are so ld witho ut a disco unt.D. Sull and S. Turco ni, “Fast Fashio n Lesso ns,” Business Strategy Rev iew , Summer 2008; and K. Capell, “Fashio n Co nquistado r,” BusinessWeek, September 4, 2006. The co nstant parade o f new, limited-run items also enco urages custo mers to visit o f ten. The average Zara custo mer visits the sto re seventeen times per year, co mpared with o nly three annual visits made to co mpetito rs.N. Kumar and S. Linguri, “Fashio n Sense,” Business Strategy Rev iew , Summer 2006. Even mo re impressive—Zara puts up these numbers with almo st no advertising. The f irm’s f o under has ref erred to advertising as a “po intless distractio n.” The assertio n carries particular weight when yo u co nsider that during Gap’s co llapse, the f irm increased advertising spending but sales dro pped.P . Bhatnagar, “Ho w Do Yo u Ad(dress) the Gap?” Fo rtune, Octo ber 11, 2004. Fashio n retailers spend an average o f 3.5 percent o f revenue pro mo ting their pro ducts, while ad spending at Indi...
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This document was uploaded on 01/31/2014.

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