How the Zara Effect is changing the Organizational Structure of Luxury Brands
Zara, a Spain-based fast fashion company, has dramatically disrupted the way luxury brands operate. Fast fashion brands like Zara and HM operate in a much more agile manner compared to traditional designer fashion brands, who typically have a very silo-ed structure. “Zara effect” is a concept used by those in the fashion industry describes the tendency of customers to check back in more regularly for new product, which has increased the pace of the current trend cycle. The agile structure of Zara means the company can more quickly produce fashion goods that meet customer needs and desires. Luxury brands are restructuring to better use customer data and become more adaptable, modeling after start-ups. High end brands are also investing in tools like AI software and other data-parsing technology. Luxury brands have prime opportunity to adjust their organizational structure due to their creative industry.