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/

Identity & Positioning of H&M

Source:
http://heroinandmoss.blogspot.fr/p/product-strategy.html

Identity & Positioning of ZARA

Sources:

http://en.wikipedia.org/wiki/Zara_(retailer)

http://www.teba.org.tw/upload/Image/epaper/B-paper-05/images/ZARA.pdf

Brand Personality of ZARA and H&M

Brand Personality means that what the brand is when it becomes a person.

For ZARA, it is one of the largest fashion retailers in the world, so it must be a stylish and fashionable person. Besides, due to its outstanding performance in the fashion market, it is considered to be aggressive but clam. With high quality design, ZARA can be regarded as mature and confident for its customers.

        H&M is a cool brand. Just like ZARA, H&M is trendy and unconventional because it is also a fashion retailer in that market. Moreover, it is innovative and filled with the latest fashion. However, one of its target markets is teenagers, so it is full of youth in its spirit, which is different from ZARA.

Sources:
http://books.google.fr/books?id=a_F2yzdi-AIC&pg=PA333&lpg=PA333&dq=brand+personality+zara&source=bl&ots=7z2sPAT3pO&sig=JisUz11GxZ5PB3WmHjJ04N005c0&hl=en&sa=X&ei=FA1YUsLRCaTt0gXNk4C4DQ&redir_esc=y#v=onepage&q=brand%20personality%20zara&f=false
http://www.jkrglobal.com/design-gazette/a-limited-edition-without-legs/
http://blogs.york.cuny.edu/wp/advertisingandmarketingconsumerbehaviorlink/

H&M's Brand Identity Prism

        For H&M, the relationship with its customers is much more functional. This is because it must be sure to make its design more appealing and attractive due to offering the best prices for its customers. Therefore, H&M provides the wide variety of products, in terms of the length and depth of its collection.

Source:
http://dealingwithbrands.blogspot.fr/2008/09/brand-identity-analasis-of-h.html

ZARA's Brand Identity Prism

        ZARA benefits from its strong brand identity with high quality and the latest fashion, which is strengthen by its main touch points, decoration in its stores and so on. Therefore, it is easy for ZARA to attract and gather customers to form its own community on an emotional and psychological level.

Source:
http://zarafashion2013.wix.com/zara#!brand-identity/c1xbv

H&M's Brand Identity

H&M’s Brand Identity

        H&M is the largest fashion retailer in Europe at the present. Like ZARA, fashionable designs, high quality, affordable prices and its distribution system are keys to its success and rapid expansion worldwide. However, fast fashions, the most important factor of ZARA’s success, is not the one to make H&M more thriving in the market.

        H&M’ physical stores are also located in the largest cities around the world. Its strategy is quite similar to ZARA’s; that is, H&M tries to let its customers have an image that it is a brand focusing on stylish designs with good quality at the affordable prices. In fact, H&M’s prices are lower than ZARA’s because it provides its products to all people who want to be fashionable without any scruple about the prices. H&M has a mission that it is possible for everyone to find his or her own dressing style in its collection.

        To maintain a good relationship between its customers, H&M tries to provide the collections including everything from basic but modern clothing to high fashion, which reflecting the international trends in the fashion market. Whenever it creates a new collection, H&M’s mission is to satisfy people with different tastes, desires and demands.

↑        H&M Store in Barcelona

↑       H&M Winter Sales

Sources:
http://www.theconfessionsofaproductjunkie.com/tag/hm/
http://dealingwithbrands.blogspot.fr/2008/09/brand-identity-analasis-of-h.html

ZARA's Brand Identity

ZARA’s Brand Identity

ZARA is one of the largest fashion retailers all over the world due to its famous instant fashions and strong ability of its creativity. Fast fashion, innovation, stylish design, high quality and rapid distribution system are the most important factors for ZARA to sell its new products and expand around the world at such a fast pace.

       

        ZARA’s physical stores are located in the largest cities all over the world. In fact, it tries to situate its stores as closely as possible to any other luxury brands such as BURBERRY and PRADA; however, at the same time, ZARA still maintains its affordable prices for its customers. This strategy can help ZARA not only to build up its brand as fashionable designs with high quality but also attract those who have limited budgets to buy stylish goods. Even if its prices are not as expensive as other luxury brands, ZARA has tried hard to provide the quality and fashion of its products for its customers.

        In addition to its stores location and fashionable designs with good quality, ZARA cares everything about its customers’ thoughts of fashions. For ZARA, its customers not only help it to give shape to the ideas and changing frequently demands in the fashion industry, but also point out ZARA’s strategies about instant fashions. Moreover, ZARA tries hard to maintain the good relationship between its customers, which is a major way of reflecting the shoppers’ reactions and demands. All these key factors are ZARA’s secret to success to attract lots of people from different cultures and ages.

Sources: 
http://zarafashion2013.wix.com/zara#!brand-identity/c1xbv
http://www.inditex.com/en/shareholders_and_investors/investor_relations/press_releases/extend/00000761