The Same Is Fast Fashion UNIQLO Vs ZARA, We Are Not The Same.

UNIQLO is the largest clothing chain in Japan, and the Inditex group ZARA belongs to is the largest garment manufacturer in the world.

The two best selling brands have many similarities, such as multi brand, giant, low price strategy, etc.

The more famous similarity is "self production and self marketing". Both companies have adopted the SPA flexible supply chain mode to become the geese in the industry.

SPA (Specialty Retailer of Private Label Apparel) is an integrated business mode in which enterprises participate in commodity design, production, logistics and sales.

What's interesting is that, uncovering the appearance, UNIQLO and ZARA use SPA's kernel completely different.

This guide reads:

Question 1: the evolutionary path of ZARA and UNIQLO SPA?

UNIQLO started from retail stores, and ZARA started from manufacturing.

Question two: Why did SPA become the standard of the best selling clothing brand?

Clothing is a "fresh" commodity, SPA can help solve the problem of value chain, against seasonal.

Question three: why is UNIQLO and ZARA totally different in the landing mode of SPA?

The purpose of UNIQLO's SPA is to protect the best seller. The purpose of ZARA is to protect unsalable goods.

Question 1:ZARA and the evolution path of SPA in UNIQLO?

1. what is SPA?

First of all, let's recall the famous SPA, also called flexible supply chain.

The sales mode of SPA was extracted from the business mode of the fast moving consumer goods industry by GAP, a clothing giant of the United States. This model has been the fundamental business development of GAP since the 60s and 70s of last century. In 1986, the SPA model was formally defined in the annual report of the company.

By the end of the 80s and early 90s of the last century, with the new business model, GAP has successfully expanded in the US and the international market. This GAP SPA has also been widely recognized worldwide.

Self organizing network

2. evolution path of UNIQLO and ZARA

UNIQLO and ZARA are enterprises adopting SPA as the solution.

UNIQLO started SPA from a retail store, which is what it used to be.

After many years of customized Menswear, Ryui Masa was inspired by the European and American shopping methods: "can you open a clothing store like a record store, adopt the European and American customer self selection way, let customers choose and buy clothes as they please?"

UNIQLO opened its first store in 1984. After entering the 21 world, it started its own product design and merchandise management, and completed the switch from retail stores to SPA.

ZARA starts from the manufacturing industry to do SPA, that is, to do it from behind.

The predecessor of ZARA was GOA, a garment manufacturer.

At that time, the company's business involved buying cloth, sewing and wholesaling goods, but it did not involve retailing.

The clothes produced by the company will be sold to the retail industry, and the retail industry will be sold to customers again.

However, during the contact with retail buyers, GOA found that buyers did not understand consumers and always had some marginal needs.

So they decided to sell their own products.

In 1975, Zara's first store opened in La Coruna, Spain.

OK, before the story is described.

Question 2: Why did SPA become the standard of the best selling clothing brand?

There is a general view about SPA: SPA makes more profits by integrating upstream and downstream.

Can such a simple reason really support the largest two garment enterprises in the world?

Young and simple, profit is not the key.

SPA's biggest value for the garment industry is "flexibility", which allows the company to have more budgets and form a virtuous circle.

Why is flexibility so important to the clothing industry?

Now let's talk about this fatal "flexibility".

1. clothes are seasonal goods.

Seasonal commodities refer to products with significant seasonal characteristics in production, purchase and sale, such as agricultural and sideline products, cool goods in summer, and winter goods.

Seasonal products will reach 1 or 2 sales peaks in the sales cycle, and they can be divided into three categories:

The first is that when the product is selling at a peak, the price will rise and the price will drop during the low sales period, such as clothing.

The second is that when the product is selling at a peak, the price will drop, and the price will go up during the low sales period, such as vegetables and fruits.

The third is that the price of the product is unchanged during the peak selling period and the low sales period, such as ice cream and cold drinks.

Self organizing network

Clothing is seasonal products, spring, summer, autumn and winter, a season is 3 months, this is the effective period of fashion.

Consumers usually buy clothes that can be worn immediately or can be worn in a month, so the selling price of clothing is usually set at two months.

The price will be reduced in two months, so clothing is also called "fresh food".

2. pain in clothing industry

UNIQLO and ZARA both take a relatively low price strategy. After the cost is removed, the gross profit margin is lower than the industry average.

UNIQLO first noticed that most customers could buy 1900 yen products without hesitation, so they positioned their yen price by 1900 yen.

The pricing strategy of ZARA is also about 50 percent off of the price of traditional clothing.

The main threat to the gross profit margin of clothing is the fluctuation of commodity prices.

As a seasonal commodity, the price of clothing is different from that of general merchandise. Seasonal goods can not be completely priced according to marginal cost, or the average cost price is unified.

The reason is that seasonal demand for commodities fluctuates regularly, but seasonal commodities are not storable and cannot be regulated by supply and demand based on inventory.

Therefore, if unified pricing is based on marginal cost or average cost, goods may be in short supply at peak times.

On the contrary, supply may be too much at a low point.

Therefore, the pricing of seasonal commodities must be formulated according to the regular fluctuations of market demand.

Because the demand for clothing fluctuates, it often results in shortages of salable goods and backlog, and the price of clothing fluctuates.

In order to keep fresh, the clothing industry will clear up the seasonal products, turn the seasonal inventory into cash, and then invest in the next season's new products.

The price cut of clothing will shrink the gross profit margin.

Through comparison, we can see that UNIQLO and ZARA both control the reduction rate of commodities, thereby reducing the shrinkage of gross profit.

How does SPA control the price reduction of commodities?

To achieve the "flexibility" of supply chain ends, effectively counter the shortage of best sellers and the backlog of unsalable goods, so as to digest the fluctuation from demand side.

The smaller the fluctuation, the smaller the price reduction rate.

"Flexibility" is an excellent risk control.

Summary: clothing is a "fresh" commodity, SPA can help solve the problem of value chain, against seasonal.

Question 3: how to "flexible"?

Can the best seller be out of stock and the backlog of unsalable goods be solved at the same time?

From UNIQLO and ZARA solutions, no way.

The two companies did not find a way to balance them. Instead, they adopted "big or small" schemes.

To explain this problem, we need to compare the business philosophy and user buying scenarios of ZARA and UNIQLO.

1. ZARA and UNIQLO business philosophy

(1) UNIQLO is the main clothing that does not distinguish users from age and sex.

Clothing is originally without individuality, and only by ingenious wearing of someone can it display its unique personality charm.

Basic clothing is part.

(2) ZARA's business philosophy is the main fashion.

When making a style proposal for customers, customers find their favorite products and decide to buy them in the process of enjoying the style proposal.

Fashion can be displayed through matching of coats, jackets, and bottoms.

The core of fashion is design.

The different business philosophy of the two companies leads to different users' purchase scenarios from UNIQLO and ZARA.

2. purchase scenario of ZARA and UNIQLO

(1) UNIQLO mode of finding goods

UNIQLO's basic costumes are few in style, and the styles are relatively fixed every year.

The user group is fixed, and the demand per year is relatively fixed.

In such a "fixed" UNIQLO, there are many users with concrete and clear buying purposes.

For example, buy "one ordinary fleece", "a straight jeans", "a pure white T-shirt".

Take a chestnut: to go to McDonald's, some people are fuzzy needs, such as "I am hungry", some people are concrete needs "I want to eat double chef hamburger".

For this part of the user's worst experience, this very concrete demand failed.

There are not many user selectable styles in every category of UNIQLO. Once the needs of users fail, it is very likely that no other alternatives can be found to complete the purchase.

In order to maintain the best experience of users, avoid the worst experience.

The biggest difficulty of UNIQLO's risk control is to ensure that the best seller is not out of stock.

(2) ZARA's cargo search scene.

In ZARA, the trend of fashion is changing every day.

Users will come to ZARA with a very vague purpose, such as buying "bottoms".

The core value of ZARA is to provide N different fashion proposals for vague needs.

The worst experience for users is that all the proposal users are not satisfied, and users feel ugly.

In order to maintain the best experience of users, avoid the worst experience.

The biggest difficulty of ZARA is how to produce clothing that users really like.

3. SPA solutions for ZARA and UNIQLO

(1) the fundamentals of UNIQLO -- ensure that the best seller is not out of stock.

In order to ensure that the best seller is not out of stock, the mode of UNIQLO is "procurement 10 to sell 8" to ensure that the basic products are adequately stocked and the number of codes is sufficient.

For unsalable goods, and then reduce prices through time limit.

The core competency of UNIQLO is "sales forecasting capability".

How does the SPA model help uniqo?

Using SPA, the uniqo controls the design of style, the quantity of style and the sales link of the shop. By controlling the sale of what is sold, the "sales forecast ability" is obtained.

So in this mode, UNIQLO does not need to have production links like ZARA.

He doesn't need to be very quick in manufacturing.

Through the large purchase of a single basic fund, the control of production links can be completed.

(2) the fundamentals of ZARA -- keeping unsalable goods without backlog.

In order to protect the unsalable goods from backlog, the ZARA mode is to "sell 8 to sell 10" to ensure that the unsalable goods are not backlog.

The core competency of ZARA is "minimum turnaround time".

How does SPA mode help ZARA achieve this goal?

ZARA all from production to sales.

Specifically, every new fashion of Zara comes from the designer's creativity, design, to plate making, making clothes and store shelves. It can be completed in 2 weeks at the fastest time, and each additional 3 weeks.

Therefore, with the support of SPA, ZARA only produces 3 weeks of merchandise, constantly changing the design through shop feedback, increasing sales volume, and ensuring that there is no backlog of unsalable goods.

The idea of ZARA is:

If you do not put the goods on the shelf, you will not be able to make clear what kind of products the customers want, make sure the products they want, and then add them to the customers' needs.

Summary: UNIQLO's SPA solution is to protect the best seller. The core competency that SPA needs is the ability to predict sales volume. The solution of ZARA is to protect unsalable goods, and the core capability of SPA is the minimum turnover speed.