Why Zara's Results Are Impressive & How They Could Be Better

Zara gets credit for boosting Inditex earnings by creating inventory flexibility with its short lead times. http://nyti.ms/1rpxGIP

That's enviable operational risk mitigation, but what about creating more sales upside? My weekend visit to Zara's large Financial District (Manhattan) during a promotional period last month suggested room for improvement:

  1. Take damaged merchandise off the racks  
  2. Be less conspicuous about the product that was bad enough to create so much excess inventory by leaving some of it in the stockroom 
  3. Use people and technology better because the store is too big and disorganized to find what one wants

The third point is most material and I'll illustrate it with my own experience. I tried on a dress that was too big. I asked the fitting room attendant whether he knew whether it was available in a smaller size. He was bothered by my interruption of his folding, mumbled a request for me to repeat myself, turned to a colleague to ask if she had an iPad (she didn't), and told me to go ask at the register.

While the store was fairly empty, there was a line at the register. (Nice conversion.) I walked around in circles (and circles) until I found another employee. I asked her whether I needed to wait in line to find out about the availability of the dress. She agreed to check for me... by paging the stock room, slowly reading them the SKU number, and waiting minutes for an answer. She said it wasn't there. I asked whether it might be on the floor somewhere (since, despite the photo below, not all like items were hanging together). She said "probably not" but that there was no way to check.  I'm guessing the elusive iPad-wielding associate might have been able to check whether it was in stock, but couldn't have located it in the store without RFID.

Zara's technology often enables it to prevent inventory excess before it happens. But sometimes it happens even to the best merchants and planners. So once it's on the floor and marked down, don't they want the best shot possible at selling it?

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