Zara- It for Fast Fashion: Case Solution

Zara- IT for Fast Fashion: Case Solution

Zara has developed a business model based on short deadlines, decrease quantities and a great choice of style and clothes. The success of ZARA is based on two principles. First, follow the trend to be able to sell garments at a moment where people want this kind of style, without using any advertisement. They don’t want to convince people to buy their clothes but give the public what they desire at the moment. Secondly, the trust that had given to employees allowed the company to delegate. They decide what clothes should be in stores based on their real-time interactions with the customers.

Information System (IS) plays a key role in the value chain of Zara to support its preferences for speed and decentralized decision making. But Zara is now confronted with a problem. Its Point Of Sale (POS) system runs on DOS and Microsoft does not support this system and also POS terminal won’t be compatible with the current POS software. The project proposed by Salgado would be a revolution for the IS of Zara. Updating the POS operating system is expensive and irreversible. If the project fails, it would black out the global sale system and would cost a lot. That’s why an IS upgrade has to be considered seriously.

Zara has been keeping its POS OS (DOS) because it is stable, easy to use and inexpensive. The main risk is its POS suppler drops to support DOS as Zara is the only customer of its supplier running on DOS. This would involve incapacity to open new stores – without POS it is impossible. We can quickly evaluate the benefits from very high level calculations: The average store sales are about €2 millions a year, with 80 new stores every year: €160 millions a year. Much more than the price needed to put into this investment as indicated in Exhibit 13. Therefore, the current IS system is a drawback to the future development.

Personal Digital Assistants (PDAs) and POS terminals which are used in Zara stores are neither...