Zara produces in small batches even though it costs more per unit.
On a factory report, that looks inefficient.
On the shop floor and the clearance rack, it is smart.
Small batches let them change direction when demand shifts. Less dead inventory sitting in the network. Fewer end-of-season markdowns to clear mistakes.
The result: Zara sells 85% of items at full price. The industry average is closer to 60%.
So yes, unit cost goes up. But total cost goes down.
Higher unit cost. Lower total cost.
Most companies still optimise what is easy to measure — unit cost.
Zara optimised what actually hurts — unsold stock.
The cheapest unit is not always the cheapest outcome.