Fashion Brand Cases (Zara and UNIQLO)

Executive Summary

For a customer to purchase an item of clothing, that item needed to be invented, developed, marketed, raw materials sourced, produced, stored and transported to that retailer for that customer to buy. This series of processes or stages is known as the supply chain. The definition of a supply chain according to Chopra 2016, is a supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. The supply chain includes not only the manufacturer and suppliers, but also transporters, warehouses, retailers, and even customers themselves (Chopra 2016, p13).

Careful planning, creation and management of the supply chain must be done to achieve a supply chain surplus, which maximizes that supply chain’s overall value. This must also align with the company’s main goals and vision. Companies in the fashion industry rely heavily on the success of their supply chains. Today’s fashion industry is huge, with countless brands, styles, materials and different items. Two major players in the fashion industry that are achieving global success are Zara and UNIQLO.

Both companies have different visions and goals to maximize their value and compete in today’s global market. Their supply chains also differ greatly, but both companies still remain successful. This comparative analysis will look at both Zara and UNIQLO’s supply chain from the three decision phases, management of its implied demand uncertainty, understanding of its supply chain capabilities, success in achieving strategic fit, ability to expand its scope of strategic fit; and their use of the six supply chain drivers (i.

e., facilities, inventory, transportation, information, sourcing, and pricing) to achieve its supply chain objectives (i.e., efficiency and responsiveness).

Summary of the Cases

Fashion has been around for as long as humans have been wearing clothes. Not only does clothing keep us protected from the elements and cover our shame, it has also been used as a wealth and status symbol for centuries. Today’s fashion industry is huge, with countless brands, styles and people behind the scenes all around the world trying to achieve the right look, the fashion industry is constantly evolving. Two major players in the fashion industry that are achieving global success are Zara and UNIQLO. Both companies have different visions and goals to maximize their value and compete in today’s global market, their supply chains also differ greatly.

Zara

Zara opened its first store in A Coruna, Spain back in 1975 by Amancio Ortega who was the founder of Inditex, which started in 1963 as a family run business that made women’s clothing and quilt covers from a small workshop in A Coruna. By 1973, their workforce had increased to 500 staff and Zara’s first store was opened 2 years later. Zara is the oldest brand of the Inditex Group which is one of the world’s largest fashion retailers, who also own other brands (Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterque) ( Zara’s products are the cheapest of the Inditex Group’s brands. Zara’s “fast fashion” model produces clothing for men, women and children and they produce 450 million items a year thanks to its fully integrated and efficient supply chain. By 2018, Zara had 2238 stores around the world and had a revenue of $18.9 billion US (2018).

UNIQLO

Unique Clothing Warehouse (UNIQLO) opened in Hiroshima, Japan back in 1984 by the clothing company Ogori Shoji, which was founded in 1949 as a men’s clothing shop. According to ( the UNIQLO name comes from the words: Unique Clothing, which was the name of its first store. The name was to be changed to Uni-Clo in 1988, but the “C” was confused with a “Q”  and the name hasn’t changed since. UNIQLO belongs to the Fast Retailing Group, which own five other brands. Unique Clothing Warehouse UNIQLO now operates 2068 stores all over the world, with 827 of them located in Japan. UNIQLO revenue for 2018 was $13.5 billion US. The UNIQLO business model that has brought them global success is to stick to the basics and to produce and sell their own items. UNIQLO only stocks around a thousand items at a time (mostly the same item with multiple colours), keeping them in stock for longer. By sticking with the basics, UNIQLO has extremely good buying power with its suppliers, buying raw materials in high volumes to reduce costs and save on complex inventory issues. According to Li, A. (2015), Selling only the basics allows the company to appeal to a wider audience than its competitors.

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