ZARA vs. H&M, BMS model

Although ZARA and H&M are both in the fast fashion industry, the perception of ZARA and H&M are different. To understand the differences between these two global brands, we use BMS models to analyze.

Stage 1: awareness & quality

H&M and ZARA both dedicate in fast fashion industry, selling stylish clothing worldwide. They both have high brand awareness, spreading fast and winning great recognition. Considering their fashionable design and the low price, the quality is good. Consumers can own those fashionable items and dress themselves as super stars without spending much budget.

Stage 2:

A)   Differentiation

Although ZARA and H&M are both selling fast fashion clothing, their positions are different. ZARA focuses more on the fashion items like the luxurious brands, for example, LV and CHANEL. ZARA dispatches young designers to participate in those fashion shows and sketch the latest design. Then ZARA can produce those designs by itself with the fastest movement, even in advance of the luxurious brands.

Regarding to H&M, its design style is more for street fashion. Consumers can wear H&M’s clothing in everyday life. H&M also hires designers to create original pieces, and sometimes invites famous designers to collaborate together.

B)    personal relevance & appropriate for consumer

ZARA’s black and white logo symbolizes its cool, individualistic character. ZARA targets on 25-35 years old people, and it provides fashionable clothing which is very suitable for business dressing or elegant party look.

Regarding to H&M, it focus more on young people and teenagers instead. It focuses on 20-35 years old people, providing street fashion. H&M is very close to consumers. It sells not only daily dressing like basic sweaters but also the chic party look.

Stage 3:

A)   social esteem

By the images, websites, communication ways, ZARA creates a cool and fashionable touches to consumers. The images of ZARA always are a person wearing modern clothing standing in front of clean, pure color wall. Without creating situation of wearing ZARA’s clothing, ZARA uses its modern, fashionable products to attract the public. Wearing ZARA is equal to fashion.

In H&M’s communication way, consumers can see people in trendy clothing having fun together. The people in the pictures can be a very normal person like you and me, and that means H&M is suitable for everyone in everyday occasion. Consumers feel comfortable and stylish when they wear H&M.

B)    personal emotional bonds

ZARA gives consumers an emotion that you are the one who is keeping up with the latest fashion. You are unique and superior. However, H&M releases the messages that you can be stylish and popular. With much more atmosphere of happiness and fun, H&M is trendy also friendly. Both of them seize the consumer needs that they want to be as fashionable as the celebrities and want the latest trendy look with best price.

The most representative strategy between ZARA and H&M: Supply Chain Management

The most different part in the supply chain management between ZARA and H&M is that ZARA has its own factories to produce its collection, but H&M does not.

ZARA

(1)   ZARA has followed a pull model because it creates more than one thousand designs every month according to sale volumes in physical stores and current and the latest trends. As in the “Customer’s Relation”, ZARA monitors its customers’ spending in the store to evaluate and understand what kinds of designs will be accepted and bought by customers and then the ideas will be considered in the next designs.

(2)   ZARA has a fast turnover because each good is produced in a few quantities, which can make it realize that what kinds of designs are attractive and accepted for its customers. Moreover, it is also a good chance for ZARA to create new designs in the market and lower the inventory rates.

(3)   Since ZARA has its own factories to produce its collection, the only thing is to find the suitable supplier which can provide raw materials with high quality for ZARA. In order to avoid that it will be over-dependent on some supplier, ZARA tries to find as many suppliers as possible; this strategy also shortens the reaction time for the suppliers to deliver materials and decreases purchasing costs, which contributes to ZARA’s features of low prices and fast distribution.

(4)   ZARA has very strong IT systems for its good distribution. All the finished products are shipped back to Spain, the central location and headquarter, and then these goods are distributed to different countries.

Note: In this analysis, we only focus on the production and distribution of ZARA. As for the rest part of ZARA’s supply chain strategy, please take a look in “The most representative strategy between ZARA and H&M: Customers’ Relation.”

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/