By Patricia Kowsmann
A black, high-collar women's wrap coat, fastened with a metal
ring, was hung out for sale one recent morning at Zara's flagship
store in New York.
"Customers asked for hardware this season," the manager said,
holding out the ring. That kind of feedback, he added, can inspire
a new style that reaches his store within weeks.
This coat took 25 days.
The garment's journey from design workshop in Spain to retail
display rack in Manhattan, traced by The Wall Street Journal,
offers an inside look at the fast-fashion model that has made
Zara's parent company, Inditex SA, the world's biggest fashion
retailer by sales.
A designer and pattern maker at the Spanish company's
headquarters, in the small industrial city of Arteixo, took five
days to fashion a prototype of the loose-fitting winter coat, based
on discussions with Zara store managers of what women were
seeking.
A second pattern maker, cutters and seamstresses then worked 13
days to produce 8,000 of the coats. Over the next six days they
were ironed, labeled, tagged, checked for quality, then trucked to
Zara's logistics center in Zaragoza and from there to Barcelona's
airport. The next day one of the coats was on a truck from John F.
Kennedy Airport to the Fifth Avenue store, to sell for $189.
The company's ability to respond quickly to customer taste has
long been the subject of industry study. Now its American rivals
are emulating some of the short cuts that have helped Inditex
expand to more than 7,000 stores in 92 countries and earn EUR20.9
billion ($22.1 billion) in sales last year, double what it earned
in 2008.
One way that Inditex speeds production is by making 60% of its
garments in Spain and nearby countries. Retailers such as J.C.
Penney Co. are now turning to closer suppliers in Central America,
relying less on those in Asia. That, along with some streamlining
in design and logistics, has cut delivery time of some J.C.
Penney-brand items from nearly 10 months to about eight, the
company said. Former industry leader Gap Inc., whose annual sales
have been stagnant for the past decade, is moving some of its
manufacturing from Asia to the Caribbean. It is also speeding up
conception of some garments, sometimes approving new items for
production within 24 hours.
A spokesman for J.C. Penney said it doesn't comment on other
retailers. Gap declined to comment on Inditex.
But experts say it would be hard for competitors to replicate
the Inditex model without a more thorough overhaul of the way they
design, manufacture and distribute their products.
The Spanish retailer's rivals might move production closer to
home, but they "just don't have an organization set up to react
quickly to what is trending," said Liz Dunn, founder of Talmage
Advisors, a retail consulting firm.
"Simply put, the reason for Inditex's success is short lead
times: the ability to offer designs to the customer that other
retailers do not yet have," Société Générale analyst Anne Critchlow
said, adding that this allows the company to charge more than
competitors. "Think of Zara not as a brand, but as a very speedy
chameleon that adapts instantly to fashion trends."
Every creative decision about the women's wrap coat--as all
other Zara garments--flowed quickly from impromptu discussions at
Inditex headquarters, in an open workspace slightly bigger than a
soccer field.
Designers and commercial staff sit side by side there, in
electronic and telephone contact with Zara store managers around
the world. Store managers, often flown in to consult, viewed a
mock-up of the coat and helped shape its design. There were no
formal meetings.
As a result of Inditex's speedy conception and nearby
production, it can get new clothes to stores in as fast as two
weeks. By contrast, at Sweden's Hennes & Mauritz AB, known for
its trendy H&M designs, 80% of its garments are ordered several
months in advance, according to Société Générale. H&M declined
to comment.
Inditex says its centralized distribution ensures that once
produced, a garment will reach the store that ordered it. Other
retailers' products are often sent in bulk to warehouses, then
distributed to stores, increasing the chance that unsold items will
get stuck somewhere, retail analysts say. Inditex uses warehouses
only for online sales.
"Since the beginning, the idea has been to understand what the
customer wants first and then have an integrated manufacturing and
logistics system to be able to deliver it to them quickly," Inditex
Chairman and Chief Executive Officer Pablo Isla said in an
interview.
Analysts say the Inditex model will come under strain as the
company expands its global reach, especially into China's growing
retail market. "You are not going to be as close always to your
sources of supply," Ms. Dunn said.
While Inditex is constantly analyzing ways to become more
efficient, Mr. Isla said the company will never abandon its
centralized-inventory system.
The women's wrap coat is one of more than 50 of its kind shipped
to the Fifth Avenue store in small batches this fall. They are
selling briskly, the manager said. As they go, he orders more from
headquarters.
To give shoppers a sense of exclusivity, Inditex says no more
than 25,000 of the coats will be made, even if they sell out.
Besides, stores must make space for newer items that arrive from
Spain twice a week throughout the year.
At the Fifth Avenue store, the manager pointed to the newest hot
item, a red and black flannel shirt with a pussy bow. "Customers
said they want the rocker look with a touch of femme," he said.
Imani Moise in New York contributed to this article.
Write to Patricia Kowsmann at patricia.kowsmann@wsj.com
(END) Dow Jones Newswires
December 06, 2016 10:21 ET (15:21 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.