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Assess the extent to which Zara’s use of just in time (JIT) may have contributed to its success. - Edexcel - A-Level Business - Question 2 - 2019 - Paper 2
Question 2
Assess the extent to which Zara’s use of just in time (JIT) may have contributed to its success.
Worked Solution & Example Answer:Assess the extent to which Zara’s use of just in time (JIT) may have contributed to its success. - Edexcel - A-Level Business - Question 2 - 2019 - Paper 2
Step 1
Just in time (JIT) encourages customer purchases
Answer
Zara's use of JIT ensures that stock is always fresh and reflects current fashion trends. This strategy encourages customers to visit stores more frequently, as they know that new products will be available each time they shop. Zara customers visit stores 17 times per year on average, which significantly boosts sales.
Step 2
Limited stock reduces unsold merchandise
Answer
By limiting the amount of stock available, Zara minimizes the risk of having unsold items, which is common in the fast-fashion industry. This approach not only enhances inventory turnover but also reduces the costs associated with excess stock.
Step 3
Counterbalance: potential risks of JIT
Answer
However, there are risks associated with JIT. The limited availability of products could frustrate customers if they cannot find what they want, potentially harming Zara's brand reputation. Additionally, selling in small quantities could increase distribution costs and make scaling operations more difficult.
Step 4
Conclusion and overall impact of JIT
Answer
Overall, while JIT has greatly contributed to Zara's success by encouraging customer visits and minimizing unsold stock, there are inherent risks involved. Zara's ability to effectively manage these risks while maintaining customer satisfaction is crucial to its continued success in the fast-paced fashion market.