Zara is currently considered to be one of the most innovative in the field of supply chain for a clothing firm. One of its main distinctions from other firms in the same field is its high turnover rate and the artificial scarcity which results from the high turnover rate.
Zara consistently introduces new products as part of its strategy. It can better adapt to the new fashion trends by responding rapidly to it instead of trying to predict the trend. It is innovative not because it differentiates itself from other firms by establishing its position first into the market.
This strategy was made possible from Zara’s new form of organization which emphasize on the supply chain and its high turnover rate. Zara resupplies its stores across North America on an average of seven days, and keeps its inventory at a constituent low. This strategy, although costly, has several benefits. Firstly, it creates an artificial scarcity in the store where the demand exceeds the inventory in stock. The inventory also changes on a weekly basis, which induces a high customer return rate.
This new form of supply chain strategy is the reasoning as to why Zara is one of the most innovative firms in the clothing market who emphasizes on the supply chain.
