Zara, a fast-fashion retailer, had a $254 million profit in the second quarter of 2020, but the firm still faces three major challenges: e-commerce, competitiveness, and sustainability.
Trend forecasting backed by artificial intelligence would offer Zara an advantage over its online native rivals like Boohoo and Fashion Nova, who are trailing behind with just 14 percent of net sales from e-commerce.
Zara produces 85 percent of its products during the current season, and by anticipating demand, Zara can prevent overproduction and misidentification of trends, allowing it to be more sustainable.
While the corporation continues to invest in warehousing and monitoring technologies such as RFID, environmental groups such as Fridays for Future say that this is insufficient and call for more drastic measures.
One thing is certain: if clothing is to be recycled in vast numbers, the material from which it is created must be of good quality. However, excellent quality and quick fashion seldom go hand in hand. Inditex intends to alter that. Its Massimo Dutti brand provides high-quality apparel at a reasonable price.
Inditex is a Spanish fashion and technology juggernaut, with others turning to them for warehouse management and online platform advertising. However, the company’s inventive drive remains restricted, since commerce continues to be brisk despite no big changes. Revenue climbed by 7.5 percent to €19.8 billion ($21.8 billion) in the first nine months of 2019, while profit grew by a whooping 12 percent to €2.7 billion.
Instructions:
Use an Incremental analysis decision, which is Retain and Replace
Discuss the quantitative factors that need to be considered. Values can be assigned to illustrate the quantitative process.
Discuss externalities or qualitative factors to consider before making a final decision.
