Zara Forecasting [PDF]

Zitiervorschau

Zara forecasting Since the beginning of Zara, they position themselves as a shop that sells medium quality clothing at affordable price. Although Zara is in the middle segment the thing that is prioritized in attracting customers is the design that is issued continuously. Until the end of 2001, Zara had made 11,000 different designs every year and has opened as many as 507 stores spread across almost all major cities in the world. To increase sales, Zara do various ways and consider the right time to launch their product, there are two categories that can be explored by season, first one is macro patterns which are year to year sales pattern that remain consistent such as rising sales in summer and second one is the specific events which refers to events that have an impact on demand but shift dates form one year to the next, such as Easter or Ramadhan. These two factors are use to forecast short and long term aggregated store demand. New products in Zara stores mostly sell in the first few weeks the product is marketed, for this reason when forecasting demand for replenishment purpose and increasing sales, it is very important to understand. Forecasting is an activity that aims to predict or predict all matters related to the production, supply, demand, and use of technology in an industry or business. This estimate will eventually be used by companies and operational management to make plans related to business activities in certain period. The forecasting function is seen when making decisions. A good decision is a decision based on what will happen when the decision is implemented. Types of forecasting based on the type of forecast data prepared, estimates are divided into two types, qualitative forecasting methods and quantitative forecasting methods. Zara uses several other methods to find out market demand. To achieve success, Zara listens and collects data not only from customer but also from employees. Employees play an important role too because store employees know what customer like and dislike and also know what customer is using. Zara do the trend forecasting to ensure that customers keep coming back, the creative team work simultaneously on the product for the current season by creating constant variations, expanding successful products and continuing in-season development, and the following season into the following years . Zara always produces new design that can cause fiscal losses caused by dead inventory. Understanding peaks and troughs in demand with four until six months of anticipation of each store allows Zara to learn how is global demand. This understanding would allow them to align supplier deliveries with customer demand. Zara relies mostly on prior year performance and historical demand pattern based mostly on Spain’s fashion demand cycle. For forecasting long term, Zara is more focused on historical performance with particular attention on prior year performance. Based on Zara historical, Zara prepared the purchases so that the bulk of their merchandise is displayed at the stores in line with Easter for summer collection and the end of September for winter collection. This pattern stems from the habits of customers in Spain where the company is founded. Introduce their new and best merchandize at certain time of the year leads to those times being the best performing times of the year.