Constant demand feedback from random, irrational and finicky customers who want cheap liquidity (the latest fashion) now is used to front run the competition with supply side flexibility and incredible production speed, allowing them to capitalize upon short term market dynamics (fashion fads) and grab easy alpha (cash money).
> “Prada wants to be next to Gucci, Gucci wants to be next to Prada. The retail strategy for luxury brands is to try to keep as far away from the likes of Zara. Zara’s strategy is to get as close to them as possible.”
-- http://en.m.wikipedia.org/wiki/Hotellings_law
Game theory FTW! Zara is using other people's clout, clothing designs, advertising and foot traffic to free ride and not pay the advertising or branding taxes most brands need to pay to stay competitive. They are commoditizing high fashion with volume, speed and ruthless efficiency.
> Echevarría said that is because the customer is always determining production — not the other way around. Every piece of clothing the company makes has, in a way, been requested. A business model that is so closely attuned to the customer does not share the cycle of a financial crisis
...
The managers field calls from China or Chile to learn what’s selling, then they meet with the designers and decide whether there’s a trend. In this way, Inditex takes the fashion pulse of the world. “The manager will say, ‘My customers are asking for red trousers,’ and if it’s the same demand in Istanbul, New York and Tokyo, that means it’s a global trend, so they know to produce more red pants,” the P.R. person said.
Just like traders at a desk. Or computers watching lines move. Supply is now meeting demand when it exists, thus reducing inventory, waste and maximising both consumer happiness and Zara's profits. This is an example of big data + lean manufacturing running at scale to meet random and short term thundering herds that really, really want the latest in whatever is hot. It's a little like Akamai and popular videos - find the probabilistic trends of content demand (aka Cat videos :), cache the files at edge nodes - reduce backbone bandwidth waste via local file streaming - profit.
> “To the luxury brands, they are copycats, they are like mushrooms feeding off the main body of fashion,” Golsorkhi says. “I was of the same mind myself, but I have grown out of that because I realize that the fashion companies also copy each other. In the end, no one’s original.”
Why isn't this obvious :D. Everything is a remix - and anyone who denies it doesn't pay enough attention to how things are made. Zara, like Samsung, is bringing things that people want, at the prices they can afford, when the people want them. Supply is matching demand and that's a good thing. It's good for the consumer - and funnily enough - it's good for the brands they copy.
If people want Gucci they'll get Gucci - not Zara. For everybody else - they just want to social signal to others that they are fashionable, good looking and wealthy - let them for pete's sake! Each knock-off Gucci just adds to Gucci's brand recognition as THE brand other brands copy.
> “The reality is: a T-shirt is a T-shirt is a T-shirt,” Golsorkhi says. “It costs the planet the same thing whether you have paid £200 for it or £1 for it. It does the same amount of damage. A T-shirt is equivalent to 700 gallons of water, gallons of chemical waste, so much human labor. But it used to be that we could do with three T-shirts a year. Now we need 30. Sometimes it’s actually cheaper to throw away clothes than to wash them. That has got to be wrong.”
Perhaps. But that assumes that everything that went into the T-shirt just flat out disappeared from the Earth. That water went back into the rivers. Those chemicals were recycled (they're expensive). That human labor needs something to do - or they'd starve to death on subsistence farming. The T-shirt ends up being used for years, donated to charity, or recycled.
Globalisation, crass consumerism and funny T-shirts have saved the world and brought billions out of poverty. It's the pointless things that keep things running. Cat videos have done more for the internet than Wikipedia (I'm not messing around). Indeed Wikipedia's dominance is directly helped by Cat videos (reducing cost of bandwidth, getting more eyes online, reducing cost of information access).
Non-cyclic thinking is really - well - short-sighted.
We need MORE consumption not less - our entire world economy is based on 75% personal consumption - that means CONSUME.
Without it we're all fucked.
Discouraging consumption is ridiculous - how will people in poor countries get out of poverty-subsistence cycle if Americans won't buy their shit. As much as people hate to admit it - consumerist, debt laden Americans make the world better off than thin, hard working, non-consuming Germans.
The Germans only live because the Americans consume. People only buy expensive German cars to move their lazy asses around.
This is a good thing because, without lazy consuming people doing pointlessly complex commuting and travelling - people wouldn't buy cars - period. And if people don't need what you produce (starving artists anybody) - you don't exist - no Germans. See what happened to Japan's economy - they killed consumptions - and once you kill consumption, supply never comes back easily - because no one is going to work for free or invest in an economy, unless they know that in the end - they'll get paid by consumers.
Next time you watch Jersey Shore, really, really shallow consumerist people, reality television, QVC or any of the other crass consumerism crap you see everyday - don't denounce them, don't say the world has "jumped the shark".
Instead you must thank them for keeping your ass employed, and the world economy running with their wasteful, arbitrary and pointless consumer habits.