Saturday, May 27, 2017

Your Strategy Needs a Strategy - Zara Retail

The Harvard Business Review article “Your Strategy Needs a Strategy” defined the adaptive strategy style. It is one that is flexible with goals and tactics shifting and Zara retail was identified as an example. Zara’s competitive advantage is a core capability enabling a new design to move from concept to production with product in a distribution center in as little as 3 weeks.

Articles such as “Zara's strategy: bigger stores, online push” and “WhyZara Is The Most Exciting Retailer Today” are recent headlines about the retailer. The articles note that Zara is expanding while Macy’s is closing stores and laying off employees. Additionally, Gap, Inc. is working to reduce product lead time to 8 or 10 weeks.

The fact that Zara’s competitors are downsizing or emulating them to the extent possible confirms that Zara has the right strategy for their competitive environment. This raises the question of why did it take the competition so long to adapt? Has the competition tried to change their strategies, or are there other dynamics preventing a more flexible approach?

Zara’s process involves sales staff and store Product Managers monitoring customer reactions on the basis of what they buy and don’t buy and transmitting details to in-house designers. The designers quickly develop new designs and send them to factories to produce new clothing items. Data analytics can provide useful information such as purchasing history, comments on a product site, time spent browsing a company’s Web site. Sales staff can provide in store feedback and the information could be merged to provide input into new designs. Most competitors could emulate the Zara approach. However, it appears not to be part of their strategy. Given Zara’s success, it is reasonable to wonder why.

As Zara continues to expand both online and in brick and mortar stores, it will be interesting to see if their adaptive strategy can be maintained. Given how Zara is transforming the industry, is moving to a shaping strategy the next step?

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