Benetton’s, H&M’s, and Zara’s Design and Retail

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Table of Contents

Introduction
Design
Manufacturing and Suppliers
Distribution
Retail outlets
Recommendations
References

Introduction

It is quite clear that fashion trends change very often due to changed conditions in the universal market since tastes are so dynamic. As such, companies and partners in the supply chain must remain vigilant to avoid losing customers to competitors. Moving to different geographical areas in search of cheap labor does not matter anymore and might not be useful to fashion companies since fast fashion competes on both price and time. Product and technology life cycles have decreased with time which makes it hard to predict demand (Zhelyazkov, n.d.).

This complicates issues regarding raw materials as companies have to plan long in advance. Things become more complicated since customer behavior is very dynamic as customers get rid of their clothes in short durations to match with latest trends (Zhelyazkov, n.d.). In this situation, Supply Chain Management comes in handy to assist companies keep pace with fast fashion since supply chain management deals with different players in the supply chain. Such players include suppliers, those who supply such suppliers, and customers. This essay compares and contrasts three different companies in the fashion industry namely Benetton, H&M and Zara on aspects of design, manufacturing, distribution, and retail.

Luciano Benetton started Benetton company close to fifty years ago aided by his sister. The firm grew through controversial advertisements and has its presence in over 120 countries. Benetton produces over 110 million garments each year and has over 5,000 retail stores which produce close to two billion euros (Slack, Chambers, Johnston, & Betts, 2008). H&M came into being in 1947 and sells clothes and cosmetics through it retail stores estimated at over one thousand distributed across 21 countries (Slack, Chambers, Johnston, & Betts, 2008). Amancio Ortega Gaona started Zara in 1975 by accident as it was initially set up as an outlet for cancelled orders. Zara brand has over 1,300 stores spread in 39 countries and became the world’s fastest growing volume garment leader (Slack, Chambers, Johnston, & Betts, 2008).

Design

The three companies create own designs and are reluctant to outsource. Benetton and Zara engage in in-house designing while H&M engages popular designers occasionally with an aim of attracting more customers for associating with famous designers (Slack, Chambers, Johnston, & Betts, 2008). However, such guest designers at H&M create designs in H&M production stores. In-house designing arises from the fact that in fashion industry, designing defines a company and contributes to success or lack of it in a market. In addition, in such a dynamic market, design must take least time possible (Slack, Chambers, Johnston, & Betts, 2008).

In this regard, speed is of essence in the supply chain and especially in design stage. The three companies make sure that designs reach required points on time and in right quality. This leads to another important aspect which clearly manifests in the three companies: flexibility. Flexibility refers to being fast and responsive which is critical in fashion industry. Flexibility also applies to the cost of producing a design where each company works towards allocating enough resources to the design process. All in all, the companies must also take care not to overfund the design process (Zhelyazkov, n.d.).

Manufacturing and Suppliers

All suppliers associated with Benetton are distinct from the ownership of Benetton. Regarding manufacturing, Benetton does not make any cloth or spin yarn. Benetton is only involved in some steps in the garment-making process which allows it to interact with suppliers (Slack, Chambers, Johnston, & Betts, 2008). Benetton has production units in Italy and various other places in the world but outsources most of manufacturing work. H&M does not claim ownership to any of the supplying or manufacturing stages and this makes H&M stand out from the three companies. Zara came into being as an exclusive manufacturing company and have since owned most of the supply chain and manufacturing stages (Slack, Chambers, Johnston, & Betts, 2008).

Distribution

Each of the three companies has its own warehouse facilities. Zara has heavily invested in warehouses with an aim of increasing manufacturing velocity. Such warehouses do not serve as storage facilities but units for sorting and re arranging products into right quantity for delivery to retail outlets. As such, goods do not take long in the warehouses and if a company is not able to handle this part, outsourcing becomes necessary so that goods move around the world in time. The three companies have invested in this part through outsourcing (Slack, Chambers, Johnston, & Betts, 2008).

Retail outlets

Benetton owns few of the outlets while the rest are under franchise. H&M and Zara own most of the retail outlets and only partner in regions where such partnership is a legal prerequisite for doing business. Benetton is in a position to expand without investing much of its capital to retail outlets while H&M and Zara must necessarily invest in capital to acquire more retail outlets (Slack, Chambers, Johnston, & Betts, 2008).

Recommendations

Since design forms the foundation of the three companies, they should invest a lot in this stage of the supply chain management. To attract more customers, Benetton and Zara should also invite guest designers to increase the popularity of the two companies since H&M has already done it and has succeeded in attracting customers by exploiting the reputation of such designers. However, this does not imply outsourcing of the design stage as outsourcing a core capability is risky and if handled by unworthy players, can bring down an enterprise (Mandeep, 2008).

Regarding suppliers and manufacturing, it is prudent to own parts of the manufacturing process and get involved in supplying process. This gives a company a chance to influence manufacturing velocity and get in touch with suppliers (Zhenxiang & Lijie, 2011). As indicated, this should only be partial and complete involvement in manufacturing and supplying process should belong to other players so that the three companies minimize expenditure that would go towards setting up of expensive manufacturing units. In addition, lack of deep involvement in manufacturing and supplying process gives a company an advantage in focusing on core capability (Mandeep, 2008).

On the same line, the three companies should outsource distribution stage of supply chain management but where necessary and convenient, they should invest in warehouses which should serve as an extension of the factories but not as storage units. The companies should make sure that goods getting into warehouses do not overstay but are repackaged and distributed to retail stores in the shortest time possible (Mandeep, 2008).

As concerns retail, franchise is better than investing capital in retail outlets. This allows companies to invest capital in core business and at the same time expand easily. In this case, the three companies would invest more in design and partner in retail outlets. Lastly, none of the companies seem to have invested in Information technology yet this would contribute to competitive advantage (Bhagwat, 2011).

References

Bhagwat, S. (2011). Zara: IT for Fast Fashion Case Analysis. Web.

Mandeep, S. (2008). Analysis of clothing supply chain: Integration & Marriage of Lean & Agile. Web.

Slack, N., Chambers, S., Johnston, B., & Betts, A. (2008). Operations and Process Management: Principles and Practice for Strategic Impact (2nd ed.). New York: Prentice Hall.

Zhelyazkov, G. (n.d.). Agile Supply Chain: Zara’s Case Study Analysis. Web.

Zhenxiang, W., & Lijie, Z. (2011). Case Study of Online Retailing Fast Fashion Industry. International Journal of e-Education, e-Business, e-Management and e-Learning, I(3), 195-200.

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