Zara secret sauce. How to respond to customer demand successfully

To be able to react to customer demand, do you really believe clothes can be produced in 3 weeks?

Cooking requires time, no matter the chef. The same goes for clothing production.

 

After 4 years at Inditex, I can tell you Zara’s secret sauce is the planning – not the actual cooking time.

They buy the ingredients and then prepare the kitchen counter; this planning is what gives them the ability to react fast.

The key is to be able to change recipe with the same ingredients. Then if part is already cooked just serve it to the right guests (don’t serve the meat to the vegetarians.)

The most important is to get the data of your consumers preferences as soon as possible and then be prepared and able to react.

 

Back then, a new basic shirt meant buying at least for 200 000 units of fabric on the first order.

So how did we decide on THE style that at the tip of our fingers would mean producing 7,5M budget?

The usual stuff: fashion trends, historical data, experience & flair….

So, your question is: yes, but how could we never get it wrong?

We did. Sometimes.

We flew in by plane a small first quantity to stores and “tested” the basic shirt. To our disillusion THE basic shirt wasn’t selling well AT ALL.

 

At this point we had all the fabric but only part of it was in the dyeing process and another part in the cutting & garmenting process.

We worked very closely with our suppliers, it was a partnership more than anything. At all points the supplier was aware of our preparation process and he was key to the last-minute changes of recipe.

We stopped cutting, we stopped dyeing and we asked creatives to design a new long dress in the viscose fabric we had left – a smart way to consume the fabric – and we knew from historical data that our Southern market would enjoy it.

With this first test, we managed to get the early data that the red color was selling better than anticipated. So, we balanced the fabric dyeing with the production we had engaged ourselves to.

We sent what we had left of the shirt to the stores performing better and used the rest of the fabric to send some long dresses to Southern markets who enjoyed it.

Being able to react is Zara’s secret sauce, testing products in-store before and re-allocating stocks is no secret.

However, the cost associated to in-store testing and stock re-allocation is high depending on your logistics.

Nowadays, technological advancement makes the process of getting data on your customers preferences easy: at Sustalytics, we apply algorithms, AI and chatbots to detect the potential of each products using sample pictures or sketches.

By predicting which products are worth producing we enable brands to save both economically and environmentally – and you know that 9 in10 consumers will be more loyal to a company that supports social or environmental issues. (Forbes, November 2018)

So, whether you want to develop a sustainable collection like Zara’s “Join Life” or you simply choose to produce more efficiently with Sustalytics, being able to respond adequately to customer demand is the secret to sustainable success.

Sustalytics part of the first Google launchpad program outside of Silicon Valley

Identified as an emerging tech startup, Sustalytics was selected to take part in Google Launchpad program hosted for the first time outside of Silicon Valley.

Honored to have the opportunity to further scale our technology with the help and mentorship of the best of Google – its people, network, and advanced technologies.

 

Did you invest on the right print trend?

Test your own styles, colors, prints before buying

‘Major players are also leveraging advanced analytics to revolutionise the planning and production process.’

“The power of social media means trends are now more often established by consumers, as opposed to retailers and editors.

In an era of fast-changing preferences, being able to respond to shifting demand, and tailor production accordingly, makes a lot of sense.

Fashion is seeing the start of a seismic shift where products are “pulled” into the market based on actual demand rather than “pushed” based on best-guesses and forecasts.

The change is significant. Previously, procurement, production and distribution were predicated on designer and buyer predictions of future consumer demand. Products were produced and marketed in traditional “seasons.”

Under the “pull” dynamic, procurement, production and distribution are based on customer demand. 

 

The Business of Fashion, “The Year Ahead: Mass-Market Goes On-Demand”, 14 Jan 2019

https://www.businessoffashion.com/articles/intelligence/the-year-ahead-mass-market-goes-on-demand

Patagonia, profitable & sustainable

Patagonia is a leading retail fashion brand to follow.

They are setting the example when it comes to profitable & sustainable.

They have recently decided to invest the money they saved from tax-cuts into the environment.

As mentioned by the CEORose Marcario at UB Berkeley in April 2017, “Any time that we do something good for the environment, we make more money,”

Source: https://www.forbes.com/sites/angelauyeung/2018/11/29/patagonias-billionaire-founder-to-give-away-the-millions-his-company-saved-thanks-to-tax-cuts/#5aa3a0ad1d6f

 

“The customer profile is your brand’s secret weapon” Harvard Business Review

The reality today is many fashion companies focus on building the product and then serving it to the right customer however the reality is they shouldn’t that, they should do the opposite focus on the customer to build the right product

They keep on flying blind without knowing for whom they are designing, for whom they are buying and to whom they are distributing.

A macro trend that we observe when benchmarking the market of retail in general is that companies are focusing more and more on the customer. Amazon, now the n # 1 world’s online retailer, had “customer obsession” as one of its core principle since the start.

What is customer personalization?

“Think about a moment when you’ve had to purchase a gift for someone. Naturally, you put some thought into this. During that thought process, you gather up relevant information about this person. Who is this person? What do they like? What do they enjoy doing? What are their interests?  With that 360 degree view, you’re able to come up with a few gift ideas suitable for that one person.  The same concept applies to marketing personalization and how Amazon uses that to target customers. »

KNOW YOUR CUSTOMER

“Knowing your customer is an advantage, the same advantage you have when you know who you’re playing against in poker. Knowing his style, habits, tendencies can make a huge difference. With insight on his next move you can capitalize by altering your plays. »

http://bigpicture.net/content/the-benefits-customer-profiling?page=0%2C0

https://nectarom.com/2013/10/07/amazon-targets-customers/

 

Chat marketing and chatbots

Companies that are heavily investing in their digital accessibility and innovation will be the
winners going forward. Harvard Business Review conducted research on First Mover Advantage and found that companies that are forefront in adopting new technologies are more likely to lead in growth and marketing position than competitors that lag in embracing new technologies.

Companies that are already incorporating artificial intelligence into their marketing approaches are positioning themselves for success in the future.
Companies that invest in AI marketing software that integrates native consumer behaviors will have the highest ROIs. The incorporation of the marketing event into the natural experiences of the consumer authenticates the marketing experience and produces higher consumer conversion and retention rates.

Here are some AI technologies companies should be investing in now:

Chat Marketing
Digital marketing as a discipline is undergoing a revolution in terms of effectiveness and
intelligence. This revolution is characterized by the rise of chat marketing, meaning direct
marketing to customers on a one-to-one basis through their chat apps, namely SMS and
Facebook Messenger.

The potency of this marketing channel is immediately apparent in the data on conversion
and click through rates as compared to other marketing channels. In contrast to the
industry averages for email marketing, which typically has open rates of 20 percent and
click-through rates of 3 percent, chat marketing campaigns are achieving opening rates as
high as 88 percent and click-through rates of 56 percent.

 

Chatbots
Chatbots are AI-powered programs that can respond to user plain-text queries with
human-like responses. Consumers can interact with chatbots via SMS, text or messaging
apps, and companies are increasingly implementing them as part of their marketing and
customer service operations.

 

Dana Gibber is an expert in chatbot UX and UI, natural language processing and consumer
conversions and co-founder and COO of Headliner Labs, a chat marketing platform.

By Dana Gibber • 02/19/18 6:15am

The 3 Technologies Your Company Needs to Survive

The New York Times: H&M $4.3 Billion in Unsold Clothes

In the digital era, the challenges around offering trendy apparel before it goes out of style have mounted, particularly as growing numbers of shoppers choose to buy from their smartphones and become more quality conscious.

 

In the world of fashion retailing, where shopping is fast moving online and stores try to keep inventories closely matched to sales, even a small stack of unsold clothes can be a bad sign.

What about a $4.3 billion pile of shirts, dresses and accessories? That is the problem facing H&M, the Swedish fashion retailer, which is struggling with a mounting stack of unsold inventory.

On Tuesday, the company said the pile of unsold stock had grown 7 percent in the past year and was now worth nearly 35 billion Swedish kronor.

The scale of the problem illustrates H&M’s vast size — as one of the world’s largest clothing manufacturers, it produces hundreds of millions of items each year.

Analysts have been pressing Karl-Johan Persson, the company’s chief executive, over the issue. Inventory levels were up, Mr. Persson said, because H&M was opening 220 new stores and expanding its e-commerce operations, and so needed to fill the racks.

Critics, however, blamed poor inventory management and underwhelming product offerings, prompting once-loyal shoppers to take their wallets elsewhere.

The company said operating profit fell 62 percent in the three months through February, sending its shares to their lowest closing price since 2005 on the Stockholm stock exchange.