Krugman posting with ‘Geography’ in the title

February 23, 2008

He is an academic economic geographer, BTW

He writes:

Anyway, there’s a nice WSJ article today about the interesting case of the fashion chain Zara.

What makes Zara interesting is that its strategy, which is based on using IT to make its stores extremely responsive to changes in consumer taste, has actually worked against globalization:

Stores are stocked with new designs twice a week. Collections are small and often sell out, creating an air of exclusivity and cutting down on the need for markdowns. The company ships clothes straight from the factory to stores. Unlike competitors who manufacture most of their wares in Asia, Inditex makes two-thirds of its goods in Spain and nearby countries such as Portugal, Morocco and Turkey. The retailer says the higher labor costs are offset by the flexibility of having production close to its warehouses and distribution centers, which are all in Spain.



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