This report compares the retail activities of both retailers compared to other well-known fashion brands and retailers.
The business concept at H&M is straight-forward: “give the customer unbeatable value by offering fashion and quality at the best price” (hm.com 2010, p.1). This is accomplished by outsourcing all of their supply needs and reducing middlemen in the process of product procurement. The company also makes its purchases in higher volumes than other retailers, therefore receiving volume discounts that are passed onto the consumers in their pricing model. This is not common with other retailers in the UK, especially those that have built their brand based on diversity of offerings rather than volume inventories.
Zara is a leader in areas of procurement and acts as a benchmark for many other fashion retailers. The company also offers low cost fashions, however their inventory replenishment strategy is significantly different from H&M as well as other well-known retailers such as Marks & Spencer. Zara works on a six week lead time under its fast fashion replenishment model, therefore it is able to sell virtually all of its merchandise at regular price without pricing reductions (Hardman, Harper & Notaney 2009). Other fashion retailers are only able to sell 50 percent of their merchandise at regular price due to diversity of inventory offerings and the speed of replenishment chosen to maintain exclusivity in fashion offerings. Zara is considered by its youth consumer markets to be a place where there is always a new and “fashionably exclusive” product offering as it maintains a lean inventory policy for this reason (Ferdows, Lewis & Machuca 2003, p.63). Larger retailers that have a more diverse collection of fashions or other home-related merchandise do not have this luxury of lean inventory and must regularly consider clearance merchandise to make room for newly arrived inventories.
Zara also devotes a considerable amount of time into