If you regularly follow NGC’s blog or our guest posts on The Sourcing Journal, you’ve heard us discuss what has been christened in the industry as the “Zara Gap.” The “Zara Gap” is the idea that retailers can increase profits and capitalize on market share by reducing lead times and delaying product completion to respond to changing consumer demands. Zara has achieved this while other fast-fashion retailers continue to lose profits and waste raw materials by ignoring consumer demand.
John Thorbeck, chairman of Chainge Capital LLC, and Warren H. Hausman, a professor at Stanford University, along with Citi Research, were the first to discuss the Zara Gap and are diving deeper and researching this phenomenon. According to Thorbeck and Hausman, “retailers can increase profits by as much as 28 percent and market capitalisation by as much as 43 percent if they reduce lead times and delay finished product commitments in order to respond quickly to changing consumer demand.”
In a recent article on Jan. 9, Business of Fashion further explored the “Zara Gap” based on Thorbeck and Hausman’s research. You can view the full article and learn more about the “Zara Gap,” here.
If you’re a retailer looking to close the gaps in your supply chain, contact NGC today.