Why Does ZARA Keep Growing And Going Farther And Farther?

Once inspired the whole people clothing Consuming enthusiasm Fast fashion brand It is experiencing an unprecedented profit test.

According to the results of the first half of fiscal year 2016 announced by fast fashion brand, H&M group's pre tax profit dropped by 22% to 1 billion 240 million US dollars, although its turnover increased by 5%, but it was obviously lower than that of the same quarter last year. The net sales of GAP group fell by 6% to 34 billion US dollars as of April 30th. At the same time, it announced that it would close 75 other Old N avy and Banana Republic stores outside North America, and the fast selling group of UNIQLO parent company also released the first half of the fiscal year of 2016, with the first half year net profit decreasing in the past 5 years, while the J.Crew group's net loss was 8 million dollars in the first 3 months of this year, and the total revenue of the company was down.

Unlike most of the fast fashion brands who are experiencing a profit test, the ZARA of the fast fashion brand is still maintaining a high level of revenue in the market environment of weak economy and insufficient consumption power.

According to the annual report released by ZARA group Inditex group at the beginning of the year, in the 2015 fiscal year, the Inditex group opened 1 years or more of the store sales (accounting for 78% of net sales), recorded an increase of 8.5%, a substantial increase in speed compared with 5% in the 2014 fiscal year, and the group added 56 new markets to 330 new stores during the year. At the same time, the group maintained a strong growth momentum in the 2016 fiscal year. According to the data released in the first quarter of the group, Inditex group achieved a net sales of 4 billion 879 million euros, up 11.5% from 4 billion 374 million euros a year earlier, and increased 17% after excluding the exchange rate effect.

Inditex's excellent revenue results make the gap between ZARA and other fast fashion brands eager to catch up with them. In this regard, in the rapidly changing consumer market, how does ZARA defend the status of the king?

ZARA's rapid reaction supply chain system has always been a benchmark for many fast fashion brands. In the apparel industry is still in the two quarter of a year, the launch rate of new products, ZARA will strive to create a fast supply system, to achieve two weekly product updates, 15~20 products each year. This fast fashion renewal speed and supply system have been regarded as the core competitiveness of ZARA by many brands.

Fast supply system allows brands to follow the trend of the market and introduce products that satisfy consumers' current purchasing desire. Although speed is one of the key factors that ZARA can win in the market, it is not the only reason.

Take H&M, the largest competitor of ZARA, for example, it also has a faster update speed in terms of goods renewal cycle. At the same time, H&M is even better than ZARA, who lacks publicity power in brand promotion. In addition to inviting celebrities, supermodels and net red to carry out brand endorsement and film promotion every year, H&M's joint product line with well-known designers has been popular in the market and has become a highlight of brand promotion. This brand operation method is also emulated by many clothing brands such as UNIQLO. But these big promotion investment still did not let H&M win in the starting line.

A senior expert in the industry said that the series of brand names introduced by various brands had a positive effect on brand image, but the contribution to brand performance was relatively limited. Because the frequency, style and quantity of joint series are relatively limited, they are not the main products of brand marketing.

Unlike other fast fashion brands with high investment in marketing, ZARA hardly invites celebrities to endorse products, and brands spend only 0.3% to 0.4% of their total marketing cost each year. In contrast, the cost of investment in marketing is generally maintained at about 3% to 4%.

Without the brilliant marketing "tricks", ZARA's investment in all aspects of the supply chain is no mercy at all. This is also the reason why many brands know that ZARA can maintain the high rate of product renewal, but the reason why it can not surpass in practice is.

Unlike conventional clothing brands, such as land and sea transportation, ZARA is mostly transported by air freight to ensure a fast pace. In the warehouse of ZARA headquarters, all garments will not stay for more than 3 days. The store will replenish the order two times per week. ZARA inventory turnover is 3~4 times higher than other brands.

At the same time, ZARA also has a powerful system to control the sales of terminal stores in real time, and headquarters can adjust production and replenishment according to these data. Strong control over terminal sales allows ZARA to maintain high product sales and only 15% discount products a year. The data of other brands generally remain at around 50%.

At the same time, ZARA's adhered to the design idea is also the key factor to win the market. Although ZARA has been criticized by the industry, the seamless connection with popular trends and customer preferences, rather than overemphasizing the style and style of the brand, really reduces the risk of ZARA's product development to a large extent. Relying on the design team's annual "fashion collection" in fashion week and the understanding of the trends in various areas, the popular pop money has been launched quickly to ensure that the brand achieves a higher sales volume in the terminal market. At the same time, around the market demand for product development, so that consumers maintain a high ZARA consumption stickiness. It is reported that the average customer goes to ZARA17 times a year, and the consumption of other brands is only 4 times.

The reason why ZARA can go further is to save the fancy "routines" and direct consumption demand.