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Zara and fast-fashion are hurting JCPenney and Sears

Zara gets out new designs quickly and encourages customers to come back to the store often.

Zara store queue australiaEnlarge
Shoppers await as Zara opens the doors to its Westfield Pitt Street Mall store on April 20, 2011 in Sydney, Australia. (Cameron Spencer/Getty Images)

The fast-fashion model made popular by Zara is impossible for corporations including JCPenney and Sears to keep up with. 

Zara sources most of its apparel in Spain and can get out new designs quickly. Meanwhile, department stores are simply modifying other people's designs and sending them to low-cost Asian factories, writes Patrick Lamson-Hall at the Business Of Fashion

By the time the clothing makes the racks at JCPenney or Sears, the fashions are stale. 

"It's worked so far because they can offer the apparel at lower cost," Lamson-Hall writes. "But consumers are quickly losing interest." 

Chinese labor costs are also going up, making the model financially unsustainable. 

"These companies are getting squeezed on two sides: by rising costs and by consumers who have more options and are becoming more choosy," Lamson-Hall writes. "These trends will only accelerate as the sourcing mix shifts and e-commerce booms."

Zara's model has fundamentally changed the fashion industry, the New York Times reported last year. 

Zara's strategy involves stocking very little and updating collections often. Instead of other brands that only update once a season, Zara restocks with new designs twice a week, Suzy Hansen wrote. 

That strategy works two ways, according to Hansen. First, it encourages customers to come back to the store often. It also means that if the shopper wants to buy something, he or she feels that they have to purchase on the spot to guarantee it won't sell out. 

Unfortunately, JCPenney and Sears don't have the infrastructure to keep up right now. 

It's showing: both companies have been in a tailspin in recent years. 

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Original Source URL: 
http://www.businessinsider.com/zaras-genius-business-model-2013-3

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