by Denis Noharet
Are you currently enjoying the 14C° in Paris in the middle of the afternoon in mid June? You are not eager to buy a new pair of sandals at full price, since your closet is full of them or since you don’t like to wear them with wool socks. All the stores are full of plain summer stuff (bikinis, Ts, tanktops, mini shorts) in shimmering colors, but empty of customers… All the retailers are complaining about weather in Europe. Well, almost all indeed. Zara, the world champion of fast-fashion and lead time reduction is not only able to get in stores what you see during the catwalks within 5 or 6 weeks, but is also able to adapt their supply to adapt to the weather conditions. To make a long story short, to deliver a world class retailer performance. And the figures speak for themselves:
“…The first-quarter results sent shares in Inditex, one of the most expensive retail stocks globally, up 3.2 percent, outperforming Swedish Rival H&M which reported a pickup in sales growth in May after a fall in its first-quarter profit.”
Inditex, well known for whisking the latest trends from runway to stores in a matter of days, is bucking a broader industry trend with other major fashion retailers complaining of weak demand.
Sales of lingerie-inspired, lace-trimmed dresses, oversized shirts and other items from flagship chain Zara helped push sales across the group’s brands up 15 percent at constant exchange rates in the first weeks of the second quarter from May 1 to June 13, it said.
“In a market environment where most retailers are bemoaning the weather, Inditex’s results demonstrate the strength of the business model and its ability to deliver superior results,” said Bernstein analyst Jamie Merriman…” (extract from Fashion Mag US, June 15).
Believe you me Zara, or Massimo Dutti and even Inditex as a whole did not discovered the way to predict the weather 6 months in advance, or how to “influence” the weather. On the other hand, they have implemented a fast fashion system, highly sophisticated and well kept-up by a world class supply chain. There is a size effect for sure, and the scale savings Inditex is able to enjoy, thanks to its worldwide network is an amazing asset. They are able to book in advance huge amounts of greige fabrics, or yarns, or mesh… the size effect helps also the designers to create with immediately available stuff, without compromising the final product…but many other retailers are also giants. If we talk about Mulliez Group in France, or Mango (another Spanish company), Target, The Gap or Ralph Lauren in the US…they’re giants aren’t they? But why the hell do all these “traditional” retailers continue to withstand out-of-fashion supply chain management (I am sure you’re enjoying the play-on-the-words). When will you guys decide seriously, professionally and with a decent accountability level to implement the solutions already at hand? Anybody remember the juniors market in the 1980’s with 6-7X’s turn over a year and goods to market in 6 weeks? It’s possible…just imagine a better way! It exits; it’s called Manufacturing Excellence.
The choice is yours: continue to waste money investing to predict the weather, or seriously turnaround your supply chain. I will buy a bathing suit this afternoon at 50% off. There might be some sun this summer…