A woman filed suit against fashion retailer Zara after she found a rat sewn into a dress she bought at their store.
The woman and her lawyer tried to settle out of court but Zara refused and is fighting it in court, here in New York City.
Why would a retailer fight such a negative-publicity-generating lawsuit?
I dug a little and what I found was interesting.
Zara is amazingly profitable and extremely customer focused.
It has grown by 240% since 2004, in an industry filled with struggling retailers like Gap, American Apparel, Express, etc.
Zara spends very little on advertising – a mere 0.3% compared to 3% to 4% for others in its industry.
Nearly 85% of its inventory sells at full price, compared to 40% average for other retailers.
Customers stop in at a Zara store an average of 17 times a year, that’s more than once a month.
Zara has enviable customer loyalty and engagement. It has made Zara’s owner, Amancio Ortega the 2nd richest man in the world.
Zara’s success is driven by their ability to bring new fashion to customers in as little as three weeks – from design to production to stores.
These new designs are driven in part by sales data from the previous weeks. Designers analyze what’s popular and develop new designs that are in sync with customer taste and trends.
So customers keep returning to Zara to see what’s new and to grab the latest fashion before it sells out.
Giving customers what they want has always been a winning formula.
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