COMPARING ZARA WITH TOPSHOP COMPANY

Comparing Zara with Topshop Company

Comparing Zara with Topshop Company

Identification of the Problem/s or Issue/s

Zara, a Spanish-based chain owned by Inditex, is a retailer who has taken a new approach in the industry. By owning its in-house production, Zara is able to be flexible in the variety, amount, and frequency of the new styles they produce. With their unique strategy, Zara has the competitive advantage to be sustainable. In order to maintain that advantage and growth they must confront certain challenges that face traditional retailers in the apparel industry such as Hennes and Mauritz (H&M) and The Gap, who differ from Zara because they outsource all of their production, spend more money on advertising, and is price-oriented.

Although Zara has a successful business model that differs from that of traditional retailers, it also has problems that can affect its sustainable growth. Due to its centralized logistics model, Zara's weaknesses also differ from the traditional retailer. Zara holds big percentages of Inditex's total international sales, which are a significantly high number for an organization. With that, Inditex is putting all of their eggs into one basket by sinking a great deal of capital into Zara. Inditex has contributed their extensive international sales to Zara. If Zara fails in the future, Inditex will have to totally re-formulate their firm's strategies and may possibly face an internal meltdown.

The purpose of this essay is to discuss different supply chain management approaches taken by H&M, Benetton and Zara. It is first necessary to explain what a supply chain management means. Supply chain management involves planning, design, maintenance and control of the flow of materials and information along the chain in order to efficiently satisfy customer's requirements (Schroeder, 2000). Such an approach, of looking at the entire supply network helps organisations identify their competitive advantages and parts of their processes that contribute the most to the performance objectives that are of the greatest importance to the customers (Slack et al., 2007). It also helps to develop long-term strategies for the company based on the identified advantages(Kumar, 2006, 80).

H&M, Benetton and Zara are all garment retailers. Key stages in their supply chains that I will discuss are product design, manufacturing, distribution and retail. Zara and H&M are so called “fast fashion” providers. Their clothes do not have to be of an exceptional quality as the most important factor is to quickly deliver catwalk design to high street customers at an affordable price (Slack et al., 2007). Benetton clothes are of better quality and higher prices but they are at the same time less fashionable and not as trendy. Despite these differences in the target markets, all three companies operate in a very similar environment and all offer innovative products with a life cycle that is very short. Therefore, they need a responsive supply chain that will respond with flexibility to the uncertainties of the environment in which the three companies operate (Fisher, 1997). These uncertainties can be avoided by decreasing lead times, increasing a chain's ...