The case study presentation this week about the Zara clothing store was incredibly interesting to me. The business model of that company blew me away. By increased production and constant reinvention of fashion trends, Zara managed to stay on top of the latest fashion trends without having to be on top of the latest technology. To the contrary, Zara managed to use their low tech inventory system to create increased demand for their products.
By constantly rotating their products, Zara created a sense of urgency among the individuals that shopped there. By keeping their inventory system low tech and minimizing inter-store communication, Zara managed to create sales as opposed to hurt them. If a shopper found something that she liked, there was no ability, nor time to check if another store had that product in her size. Despite this, the shopper would be influenced to buy whatever else in the store she found remotely appealing because she knew that it wouldn't be around if she came in later, and she couldn't try to find it somewhere else.
In creating the impression that failing to buy something instantaneously will forever prevent one from doing so, Zara more than makes up for the business that they lose from people that can't find exactly what they want with the business that is created through the constant pressure for impulse purchases. It is an ingenious idea that is counterintuitive, yet incredibly effective.
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