Spanish clothing retailer Zara pioneered a model in which functions have become quicker and more centralized, while decision-making happens on the front lines.
Historically, clothing retailers interpreted trends, ordered clothes for a season and six months later put them on sale. If pieces sold out, it was too late to reorder. If they didn’t sell, they went into clearance. Bad guesses produced huge losses.
Amancio Ortega thought he could reduce risk through “instant fashion.”
To do it, he integrated vertically so he wouldn’t have to wait for retailers to tell him what was selling. The former errand boy developed systems for on-the-spot data gathering, fast manufacturing and faster shipping.
Now Ortega has more than 1,700 stores and a market capitalization of $75 billion.
— Adapted from Resource Revolution, Stefan Heck and Matt Rogers with Paul Carroll, Houghton Mifflin Harcourt.