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Unformatted text preview: tex is just 0.3 percent.“Zara, A Spanish Success Sto ry,” CNN.co m, June 15,
2001, http:/ / editio n.cnn.co m/ BUSINESS/ pro grams/ yo urbusiness/ sto ries2001/ zara. Finally, limited pro ductio n runs allo w the f irm to , as Zara’s CEO o nce put it, “reduce to a minimum
the risk o f making a mistake, and we do make mistakes with o ur co llectio ns.”C. Vitzthum, “Zara’s
Success Lies in Lo w-Co st Lines and a Rapid Turno ver o f Co llectio ns,” Wall Street Jo urnal, May 18,
2001. Failed pro duct intro ductio ns are repo rted to be just 1 percent, co mpared with the industry
average o f 10 percent.N. Kumar and S. Linguri, “Fashio n Sense,” Business Strategy Rev iew ,
Summer 2006. So even tho ugh Zara has higher manuf acturing co sts than rivals, Inditex gro ss
margins are 56.8 percent co mpared to 37.5 percent at Gap.C. Ro hwedder, “Zara Gro ws as Retail
Rivals Struggle,” Wall Street Jo urnal, March 26, 2009. Fo r labo r co st co mpariso n, K. Capell, “Zara
Thrives by Breaking All the Rules,” BusinessWeek, Octo ber 9, 2008, repo rts that wo rkers in Spain
earn an average o f $ 1,650/ mo nth versus $ 206/ mo nth in China’s Guangdo ng P ro vince. While sto res pro vide valuable f ro ntline data, headquarters plays a majo r ro le in directing in-sto re
o peratio ns. So f tware is used to schedule staf f based o n each sto re’s f o recasted sales vo lume, with
lo catio ns staf f ing up at peak times such as lunch o r early evening. The f irm claims these mo re
f lexible schedules have shaved staf f wo rk ho urs by 2 percent. This co nstant ref inement o f
o peratio ns thro ugho ut the f irm’s value chain has helped reverse a prio r trend o f co sts rising f aster
than sales.C. Ro hwedder and K. Jo hnso n, “P ace-Setting Zara Seeks Mo re Speed to Fight Its Rising
Cheap-Chic Rivals,” Wall Street Jo urnal, February 20, 2008. Even the sto re displays are directed f ro m “The Cube,” where a basement staging area kno wn as
“Fashio n Street” ho uses a P o temkin village o f bo gus sto ref ro nts meant to mimic so me o f the
chain’s mo st exclusive lo catio ns th...
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