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ABSTRACT
The fast-fashion business model, polished by Spanish fashion label Zara, is the most social and most successful long term business model, according to Emiliano Duch, Lead Specialist in Global Trade and Competitiveness Global Practice at the World Bank Group. Zara's collections are based on the most recent fashion trends, which are designed and manufactured quickly and cheaply to allow the mainstream consumers to take advantage of current clothing styles at lower prices.
KEYWORD: Porter's Five Forces model
Introduction
* Zara's competitive advantage is the fact that they are "fresh".
* They have a fast production and distribution strategy that allows them to offer the latest fashions in less than two weeks.
* Also, with them being able to produce and distribute new fashions in a short amount of time, it allows Zara to change over 75% of the merchandise on display every 3 or 4 weeks. This increases the frequency of customer visits to approx 17 times a year.
* Zara's factories are based in Europe, so new designs can get into stores in as little as two weeks. Other retailers are faced with the disadvantage of having their products shipped from China and facing a lag time of more than two months.
* Considering the fact that Zara will not order new merchandise after a line is sold out, it forces customers to purchase the product right away and not wait for discounts.
THE MARKET:
Females, always wish to dress fashionably and what they are wearing is important to them.
They understand that if they don't purchase the product when they see it, they may never get the opportunity to again.
This also works to the advantage for many customers that want to wear only exclusive dresses made just for them. With the limited stock, there will not be as many people wearing the product if they only carry a small amount of inventory.
According to the report in Economic Times, Zara, with an annual turnover of Rs 405 crore, clocked a sales growth six times more than India's largest apparel brand Louis Philippe and a tad higher than the largest department chain Shoppers Stop.
* And in March 2013, Inditex Trent, the joint venture between Zara and Tata Group, reported high...