Constant demand feedback from random, irrational and finicky customers who want cheap liquidity (the latest fashion) now is used to front run the competition with supply side flexibility and incredible production speed, allowing them to capitalize upon short term market dynamics (fashion fads) and grab easy alpha (cash money).
> “Prada wants to be next to Gucci, Gucci wants to be next to Prada. The retail strategy for luxury brands is to try to keep as far away from the likes of Zara. Zara’s strategy is to get as close to them as possible.”
Game theory FTW! Zara is using other people's clout, clothing designs, advertising and foot traffic to free ride and not pay the advertising or branding taxes most brands need to pay to stay competitive. They are commoditizing high fashion with volume, speed and ruthless efficiency.
> Echevarría said that is because the customer is always determining production — not the other way around. Every piece of clothing the company makes has, in a way, been requested. A business model that is so closely attuned to the customer does not share the cycle of a financial crisis
...
The managers field calls from China or Chile to learn what’s selling, then they meet with the designers and decide whether there’s a trend. In this way, Inditex takes the fashion pulse of the world. “The manager will say, ‘My customers are asking for red trousers,’ and if it’s the same demand in Istanbul, New York and Tokyo, that means it’s a global trend, so they know to produce more red pants,” the P.R. person said.
Just like traders at a desk. Or computers watching lines move. Supply is now meeting demand when it exists, thus reducing inventory, waste and maximising both consumer happiness and Zara's profits. This is an example of big data + lean manufacturing running at scale to meet random and short term thundering herds that really, really want the latest in whatever is hot. It's a little like Akamai and popular videos - find the probabilistic trends of content demand (aka Cat videos :), cache the files at edge nodes - reduce backbone bandwidth waste via local file streaming - profit.
> “To the luxury brands, they are copycats, they are like mushrooms feeding off the main body of fashion,” Golsorkhi says. “I was of the same mind myself, but I have grown out of that because I realize that the fashion companies also copy each other. In the end, no one’s original.”
Why isn't this obvious :D. Everything is a remix - and anyone who denies it doesn't pay enough attention to how things are made. Zara, like Samsung, is bringing things that people want, at the prices they can afford, when the people want them. Supply is matching demand and that's a good thing. It's good for the consumer - and funnily enough - it's good for the brands they copy.
If people want Gucci they'll get Gucci - not Zara. For everybody else - they just want to social signal to others that they are fashionable, good looking and wealthy - let them for pete's sake! Each knock-off Gucci just adds to Gucci's brand recognition as THE brand other brands copy.
> “The reality is: a T-shirt is a T-shirt is a T-shirt,” Golsorkhi says. “It costs the planet the same thing whether you have paid £200 for it or £1 for it. It does the same amount of damage. A T-shirt is equivalent to 700 gallons of water, gallons of chemical waste, so much human labor. But it used to be that we could do with three T-shirts a year. Now we need 30. Sometimes it’s actually cheaper to throw away clothes than to wash them. That has got to be wrong.”
Perhaps. But that assumes that everything that went into the T-shirt just flat out disappeared from the Earth. That water went back into the rivers. Those chemicals were recycled (they're expensive). That human labor needs something to do - or they'd starve to death on subsistence farming. The T-shirt ends up being used for years, donated to charity, or recycled.
Globalisation, crass consumerism and funny T-shirts have saved the world and brought billions out of poverty. It's the pointless things that keep things running. Cat videos have done more for the internet than Wikipedia (I'm not messing around). Indeed Wikipedia's dominance is directly helped by Cat videos (reducing cost of bandwidth, getting more eyes online, reducing cost of information access).
Non-cyclic thinking is really - well - short-sighted.
We need MORE consumption not less - our entire world economy is based on 75% personal consumption - that means CONSUME.
Without it we're all fucked.
Discouraging consumption is ridiculous - how will people in poor countries get out of poverty-subsistence cycle if Americans won't buy their shit. As much as people hate to admit it - consumerist, debt laden Americans make the world better off than thin, hard working, non-consuming Germans.
The Germans only live because the Americans consume. People only buy expensive German cars to move their lazy asses around.
This is a good thing because, without lazy consuming people doing pointlessly complex commuting and travelling - people wouldn't buy cars - period. And if people don't need what you produce (starving artists anybody) - you don't exist - no Germans. See what happened to Japan's economy - they killed consumptions - and once you kill consumption, supply never comes back easily - because no one is going to work for free or invest in an economy, unless they know that in the end - they'll get paid by consumers.
Next time you watch Jersey Shore, really, really shallow consumerist people, reality television, QVC or any of the other crass consumerism crap you see everyday - don't denounce them, don't say the world has "jumped the shark".
Instead you must thank them for keeping your ass employed, and the world economy running with their wasteful, arbitrary and pointless consumer habits.
There's two big problems I can see with your argument that we need more consumption.
But first, I agree that consumption is one of the factors that has helped raised the standard of living worldwide.
The first problem is the broken windows fallacy. Just because buying cheap t-shirts to throw out generates a lot of beneficial economic traffic doesn't mean that its not very wasteful. The 27 extra t-shirts being thrown out each year require a substantial amount of resources to produce: if redirected elsewhere that might be another space shuttle, or something else slightly grander than a bin full of discarded linen. (Of course some of it gets trickled down to other countries to provide more clothes).
But the bigger problem is the idea that the rest of the world only lives because America consumes. This is like a fable of an island with 50 people. A dozen fished each day, a bunch grew crops, etc, etc.. and from the hard work of all of these 20% was gathered and the final person consumed it. Without that final person, the demand for all those goods would go and the entire economy would suffer. Everyone else would have much less work to do.
Why would any group of people happily put up with one of them 'doing their share' by consuming, consuming, consuming while all the others work to provide? In the short term its due to stability emerging from the historical processes that led us to this point. And also the hard and soft power of the US. But its not an endearing quality.
T-shirts aren't broken windows - people want them, they are supplied, the economy rolls on. Just because you think they are a waste - doesn't mean the market does - and all that matters is what people demand. That's the great thing about the market - it's not what you want - it's what everyone else demands - and people really like clothes and they really like t-shirts, and they don't mind paying for it.
Secondly, your making a false comparison between islands and countries. That's a closed system. America exports IP and brings back it's surplus through the investment of everyone else lowering their cost of borrowing (0% T-bills).
It's irrelevant how many people in America actually produce - what is relevant, is that enough production is carried out. Nowadays that means robots and automation - not people. America will do fine so long as it stays innovative and keeps itself at the centre of the IP world - even if the vast majority of Americans don't do jack (but then again so do the vast majority of Chinese - most could be replaced with a machine).
There are other ways to drive the economy beyond essentials rather than through just consuming. Infrastructure is one, wars are another. But really, we could focus our resources on getting to the moon, getting to mars, and just lots of crazy R&D that would pay off greatly in the future. We could also spend more time in cultural endeavors, supporting more artists, writers, musicians, movies, and so on.
Buying a cheap shirt from Zara hardly does much more than buy someone's lunch in a Chinese factory.
Buying that cheap T-shirt pays for your R&D through taxes and value produced. The item at hand is irrelevant. So long as it is consumable, in demand, and people are willing to pay for it - it will be supplied. The best you can do is tax negative externalities, and invest any market surplus via taxation into long term R&D.
All the crap that was produced post WWII paid for your cutting edge shuttle program. That shuttle program subsequently helped the research of all the crap that was subsequently produced.
It's a crap cycle. Embrace it. The cookie monster should be the cheerleader of capitalism - he eats, and eats and eats, but none of it ever goes down because he lacks the stomach to actually ingest any food - it all goes to waste - but he enjoys it anyway.
Actually, it was the cold war that led to all the cutting edge research. Call it consumption by governments to protect themselves from the bad soviets; crap redirected. Having a bogeyman to focus our attention from consumerism to nationalism was very useful in this regard (and is all to easily abused, of course). China should be today's bogeyman to get us to invest more in education.
The cookie monster as a capitalistic symbol of consumption, I love it! I'm pretty sure this is not what the late Jim Henson had in mind, though.
You can never have enough cookies - the only upper limit is that of the second law of thermodynamics or the catastrophic end of civilisation.
If people want cookies - it's cookies we'll make - because the markets one and sole purpose is to provide goods that people want, at prices they can afford, at the times they want it.
The sole purpose of governments is to tax the negative externalities of said cookies (obesity/health etc.) and invest those market surpluses into the future safety and prosperity of said obese consumers through negative ROI R&D and scientific research that will allow us to make cookies taste like whatever we want on Mars.
Both governments and markets exist to serve consumer demand.
Everyone in the world is somebody's bitch.
Ignore consumer demand at your own peril. The world runs on french fries - tax it for the health concerns, invest it into rockets that'll let people eat those self-same fries on Mars.
The ulterior goal of infrastructure is consumption. The goal of everything you suggest is consumption. Infrastructure supports businesses and employees. All these crazy R&D projects are only a success when consumption has been increased. There's not much difference between consuming reality series or some high pretentious art, a lot of people will prefer the former.
All these cheap lunches together, one for the plantage worker, the transporter, the designer, the real estate holder, the taxman, etc. etc. is the clockwork of the (global) economy.
Constant demand feedback from random, irrational and finicky customers who want cheap liquidity (the latest fashion) now is used to front run the competition with supply side flexibility and incredible production speed, allowing them to capitalize upon short term market dynamics (fashion fads) and grab easy alpha (cash money).
> “Prada wants to be next to Gucci, Gucci wants to be next to Prada. The retail strategy for luxury brands is to try to keep as far away from the likes of Zara. Zara’s strategy is to get as close to them as possible.”
-- http://en.m.wikipedia.org/wiki/Hotellings_law
Game theory FTW! Zara is using other people's clout, clothing designs, advertising and foot traffic to free ride and not pay the advertising or branding taxes most brands need to pay to stay competitive. They are commoditizing high fashion with volume, speed and ruthless efficiency.
> Echevarría said that is because the customer is always determining production — not the other way around. Every piece of clothing the company makes has, in a way, been requested. A business model that is so closely attuned to the customer does not share the cycle of a financial crisis
...
The managers field calls from China or Chile to learn what’s selling, then they meet with the designers and decide whether there’s a trend. In this way, Inditex takes the fashion pulse of the world. “The manager will say, ‘My customers are asking for red trousers,’ and if it’s the same demand in Istanbul, New York and Tokyo, that means it’s a global trend, so they know to produce more red pants,” the P.R. person said.
Just like traders at a desk. Or computers watching lines move. Supply is now meeting demand when it exists, thus reducing inventory, waste and maximising both consumer happiness and Zara's profits. This is an example of big data + lean manufacturing running at scale to meet random and short term thundering herds that really, really want the latest in whatever is hot. It's a little like Akamai and popular videos - find the probabilistic trends of content demand (aka Cat videos :), cache the files at edge nodes - reduce backbone bandwidth waste via local file streaming - profit.
> “To the luxury brands, they are copycats, they are like mushrooms feeding off the main body of fashion,” Golsorkhi says. “I was of the same mind myself, but I have grown out of that because I realize that the fashion companies also copy each other. In the end, no one’s original.”
Why isn't this obvious :D. Everything is a remix - and anyone who denies it doesn't pay enough attention to how things are made. Zara, like Samsung, is bringing things that people want, at the prices they can afford, when the people want them. Supply is matching demand and that's a good thing. It's good for the consumer - and funnily enough - it's good for the brands they copy.
If people want Gucci they'll get Gucci - not Zara. For everybody else - they just want to social signal to others that they are fashionable, good looking and wealthy - let them for pete's sake! Each knock-off Gucci just adds to Gucci's brand recognition as THE brand other brands copy.
> “The reality is: a T-shirt is a T-shirt is a T-shirt,” Golsorkhi says. “It costs the planet the same thing whether you have paid £200 for it or £1 for it. It does the same amount of damage. A T-shirt is equivalent to 700 gallons of water, gallons of chemical waste, so much human labor. But it used to be that we could do with three T-shirts a year. Now we need 30. Sometimes it’s actually cheaper to throw away clothes than to wash them. That has got to be wrong.”
Perhaps. But that assumes that everything that went into the T-shirt just flat out disappeared from the Earth. That water went back into the rivers. Those chemicals were recycled (they're expensive). That human labor needs something to do - or they'd starve to death on subsistence farming. The T-shirt ends up being used for years, donated to charity, or recycled.
Globalisation, crass consumerism and funny T-shirts have saved the world and brought billions out of poverty. It's the pointless things that keep things running. Cat videos have done more for the internet than Wikipedia (I'm not messing around). Indeed Wikipedia's dominance is directly helped by Cat videos (reducing cost of bandwidth, getting more eyes online, reducing cost of information access).
Non-cyclic thinking is really - well - short-sighted.
We need MORE consumption not less - our entire world economy is based on 75% personal consumption - that means CONSUME.
Without it we're all fucked.
Discouraging consumption is ridiculous - how will people in poor countries get out of poverty-subsistence cycle if Americans won't buy their shit. As much as people hate to admit it - consumerist, debt laden Americans make the world better off than thin, hard working, non-consuming Germans.
The Germans only live because the Americans consume. People only buy expensive German cars to move their lazy asses around.
This is a good thing because, without lazy consuming people doing pointlessly complex commuting and travelling - people wouldn't buy cars - period. And if people don't need what you produce (starving artists anybody) - you don't exist - no Germans. See what happened to Japan's economy - they killed consumptions - and once you kill consumption, supply never comes back easily - because no one is going to work for free or invest in an economy, unless they know that in the end - they'll get paid by consumers.
Next time you watch Jersey Shore, really, really shallow consumerist people, reality television, QVC or any of the other crass consumerism crap you see everyday - don't denounce them, don't say the world has "jumped the shark".
Instead you must thank them for keeping your ass employed, and the world economy running with their wasteful, arbitrary and pointless consumer habits.