Retail in Asia

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While the rest of the industry struggles, this store has created the ‘best business model in apparel

It’s tough to be a retailer right now. But one company has managed to buck all of the ugly trends in the market.

That’s Zara – which is beloved by young, fashion-forward women.

It’s almost like it built itself to operate successfully among today’s millennial and teen shoppers that are frugal, value-minded, and demanding quick, speedy, on-trend fashion. The company does so well because it has a phenomenal operating supply chain and manages its inventory well, creating great value for customers and shareholders alike. It helps set it apart from other fast-fashion retailers like H&M, Forever 21, and the frighteningly cheap Primark.

“If I had to condense the foundations for Zara’s success, I would say it comes down to agility and flexibility,” Neil Saunders, CEO of retail consulting firm Conlumino, said in an e-mail to Business Insider in December. “From these things flow a number of advantages: quickly picking up on new fashion trends, accurate forecasting of stock requirements which reduces markdowns, quick turn of stock which keeps customers coming back for new product, good responsiveness to external factors like the weather, and margin maximization.”

A report Suzy Hansen in The New York Times Magazine revealed how Zara doesn’t stock a lot of clothes, and the company updates what’s in stores regularly. That benefits the company in two ways: one, it doesn’t have to resort to excess sales to rid itself of inventory, and two, it encourages consumers to shop with a sense of urgency – something that consumers don’t have when it comes to shopping at a Banana Republic or J. Crew, when they have been conditioned to buy everything on sale.

It’s incredibly swift at adapting, too, since it operates on a fast-fashion basis. This make Zara immune to sudden changes, like unseasonable weather or a sharp detour in fashion trends.