Does Zara have the best business model in the industry?

High-street fashion retailer Zara is using an innovative business model to excellent effect and raking in profits. Its parent company, Inditex, had a fantastic 2015 and looks set to continue this trend; owner Amancia Ortega became the richest man in the world in October, according to Forbes, although he only held the record for a few minutes.

Zara’s success has been reported to result from its approach to stocking and turning over its products. The latest trends make it from the runway to Zara’s clothes rails much faster than any of its major rivals since they refresh their product lines twice weekly rather than the more typical once every few months. In fashion, success is often down to chance and a hit-or-miss situation, so Zara minimises its risk by ensuring its misses are quickly ousted, and the supply of hits stays steady. Keeping on top of trends and ensuring everything stays fresh means minimal markdowns; you’ll struggle to find a clearance rail in Zara, and this is where the profit margins kick in.

This approach requires some excellent infrastructure to be in place, but it ties in with digital strategies, too. Zara is hugely successful on social media, with nearly eight million users keeping up with their latest Instagram updates to catch runway trends early. Taking fast fashion as far as this relies on keeping up to speed on social channels and being completely in tune with customers almost immediately, something Zara has invested heavily in.

More traditional retailers in the fashion world are scrambling to keep up, looking at new strategies to bring trends from the initial ideas stage through buying, manufacturing, marketing and making sales. Of course, retail display products are a vital element here, and often, it’s easier to feature elements of the latest trends in your branding and visual merchandising, even if your product range doesn’t necessarily reflect these yet. Taking inspiration from the most current trends possible in any way will help create the fresh atmosphere you need in your retail environment, and even if your business isn’t quite catching up with Zara, you can be fully in tune with your customers and completely in control of your brand image.

Who do you think has a great business model from which other retailers could still learn something? We’d love to hear your comments! Let us know if you have any other questions for Valentino’s Displays team about how our products and bespoke services can help you.