First of all, Inditex tries to tackle cannibalization by differentiating the brands mainly through the product, target markets (customer groups and countries), store presentation and retail image. And in 2008, the percentage of the growth in sales compared to 2007 is 9%, it means that Zara has been successful by meeting the ‘risk of cannibalization’.
Compare with the other competitors, Inditex has some advantages. For example, the first one is the repeat visits. An average high-street store in Spain expects customers to visit 3 times a year, but that figure will be up to 17 times for Zara. And Zara can offer considerably more products than similar companies. It launches about 30,000 model items .annually compared with 10,000 items for its key competitors. Zara is also good at the speed. The company can design a new product and have finished goods in its stores in four to five weeks; it can modify existing items in as little as two weeks.
In my opinion, the key point of them is making more repeat visits. For achieve this purpose, ZARA uses two methods- Shortening the product life cycle, “More model and less quantity.” Shortening the product life cycle means greater success in meeting consumer preferences. If a design doesn’t sell well within a week it is withdrawn from shops, further orders are cancelled and a new design is pursued. No design stays on the shop floor for more than four weeks, which encourages Zara fans to make repeat visits. As you know, we can usually find that there are only two or three pieces of each model in Zara’s shops. And they won’t replenish when its sold out. Like the limited release of stamp increase its value. It has increased more fans of Zara by this way.
The most important is that Zara has the ability to recognize and assimilate the continuous changes in fashion, rapidly designing new models that respond to customer needs and wants. Zara uses its flexible business model to adapt to changes occurring during a season, reacting to them by bringing new products to the stores in a short time. For Zara the keys to global competitiveness are the time factor and the ability to adapt the offer precisely and quickly to the customer desires.
I think this is the reason why Zara can be successful by meeting the “risk of cannibalization”.
Courtney from Study Moose
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