The most representative strategy between ZARA and H&M: Customers’ Relation

One of the most representative and interesting company strategies between ZARA and H&M is the relationship with their customers.

For example, when you walk into ZARA’s physical store, it is likely for you to see there are many video cameras around every corner and cashier, and the store manager brings his/her PDA all the time. If one customer says something about the designs of its products to the staff, they will report to the store manager immediately in detail. Then the manager will deliver this information to the designers in headquarter twice a day through ZARA’s inner network. After the top managers in the headquarter make the decision about the customer’s suggestion, it will be delivered to its production place right away to revise the designs of the product. However, it is not the end for ZARA to adapt its design to catering to its customers’ desires. After physical stores are closed, the sellers will settle the account, make an inventory of every product and compile statistics about the rates of returned purchase and sales volume on that day. With information of its cash flows, they can analyze today’s transactions and ranks of today’s hot selling products through the transaction system. Finally, all data and analyses will be delivered to ZARA’s warehouse system. And that’s all the procedures for ZARA to maintain the relationship between its customers.

For ZARA, the way to gather all customers’ advices and suggestions to make its production decisions lowers the inventory rates substantially. Besides, ZARA can analyze the similar regional trends about its designs by using all the information collected in physical stores, which will help ZARA to comply with the customers’ needs in the market segment in terms of colors and styles.

Nevertheless, H&M tries hard and implements the same way to improve production process by using a huge amount of data and information, but it does not have a significant effect on it. Why?

The most important reason is that the main purpose of using massive information is to decrease the production time and revise the design of products as soon as possible according to the customers’ advices. However, H&M’s inner procedures of its management cannot deal with the massive information. H&M needs to spend around three months from designing its new products to delivering them into the market; nevertheless, it takes two weeks for ZARA to do the same process. We think that is because H&M establishes its production to many different places, such as Asia and South America, but almost half of ZARA’s production process is located around the headquarter in Spain. For H&M, it takes a long time to communicate across countries and adjust the products to customers’ suggestions. Therefore, even if the massive information reflects customers’ advices in different regions, it still cannot improve the designs right away. The separation of information system and production places makes H&M have restricted effects on dealing with the customers’ needs and desires.

From this comparison, we can realize that the key to using the massive information is to combine the information system with decision-making procedures, which will shorten the time spending on communicating and revise the products according to customers’ advices and demands.


Sources:

http://site.douban.com/164373/widget/notes/8783337/note/279142077/

http://www.businessinsider.com/zara-is-dominating-hm-2013-6

http://fastfashiontrend.wordpress.com/2012/12/07/competition/