Fast Fashion Industry: Growth of Zara and Inditex Essay

Zara is a Spanish clothing and accessories retailer based in Arteixo, Galicia, and founded in 1975 by Amancio Orteg. It is the flagship chain store of the Inditex group, the world's largest apparel retailer. Zara describes its business as “The fast fashion” model which abandoned the traditional model of seasonal lines using instead adapting the creative ideas to customer demand on a going basis. Fashion clothes are like food, it turns bad quick. Zara’s business is about reducing response time. Zara needs about two week to develop a new product and gets it to stores. The company launches around 12,000 new designs each year. Zara’s success offers us some instructive lessons in how to create and sustain a break through strategy.

To cite this document: S.G. Hayes, Nicola Jones, (2006),"Fast fashion: a financial snapshot", Journal of Fashion Marketing and Management, Vol. 10 Iss: 3 pp. 282 - 300 Permanent link to this document: http://dx.doi.org/10.1108/13612020610679277 Downloaded on: 07-08-2012 References: This document contains references to 40 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 10511 times since 2006. *

Zara International is considered a high end clothing store that is affordable. Due to its quality in fashion, low prices and immediate availability, popular stores such as Gap and H&M fail to keep up with Zara’s success. Zara’s well known tactic of fast fashion has separated them from their competition. The ‘fast fashion’ objective is to distribute top trends of fashion within the runway to customers by selling them in local stores. Zara has been able to achieve the fast fashion perspective by hiring approximately 200 people that will assist in getting these trends out in stores within a matter of weeks.

During the 1980’s, Zara started its international expansion as a result of a change in its production of clothing, which allowed the company to react to trends much faster, creating “instant fashions”.

The current structure of Zara will prove to be advantageous as it continues to expand globally. With the current marketing setup, Zara has always promoted its products by way of their retail space. There is almost never a large marketing campaign for the new product line, which unlike their competitors allows Zara to decrease their costs. For every new store that is opened by Zara there is a centralized distribution center that is responsible for supplying the

Zara produces of-the-moment fashion and has developed a very successful vertically integrated company which can design, manufacture, and distribute garments to retail stores in as little as three weeks. Zara 's target market is comprised of urban, fashion-conscious consumers who shop frequently for the latest trends. Currently under debate is a proposed upgrade to the POS system throughout the Zara chain. With over 550 stores, this would be a huge undertaking for Inditex, Zara’s parent company. The current DOS-based system meets the needs of the company, and despite some of the benefits of upgrading, we feel it is best to continue with the current system in place.

The brand is well-known for its capability to distribute new clothes to the stores “fast and in a small batch, twice a week”, the store managers order clothes and other items, on a schedule that they follow in all Zara stores, so the new garments arrived just in time. To reach this Zara controls most of its supply chain than the majority retailers do. On opposed to H&M, Zara keeps a nearly all of its production in-house.For Zara, the supply chain is its competitive advantage. In house production allows it to be elastic in the quantity, occurrence, and multiplicity of new products that are gone to be launched. Zara commits only 15 to 25% of a season’s line. And it curls in only half of its line by the launch of the season, sense that up to 50% of its garments are designed and manufactured during the season. If items become highly popular all of the unexpected, Zara respond directly and create a new design in that popular style, so that gets new stuff into stores while the trend is still

Zara is one of the leading company that introduced the idea of fast fashion within the apparel industry. Within a short span of few decades their key selling points are the speed and responsiveness for which there unmatched design, manufacturing and distribution systems existed. Precision in terms of timely order generation from all its stores and then production to timely delivery back to all stores has become possible ensuring satisfied profitable customers. Thus we can safely say that its competitive edge is its supply chain.

Defining and inspection of the Zara's Fashion stores and on understanding the impact of purchasing of supply chain strategies. The manufacturing ZARA clothing company has superb development of supply chain, practical and innovative distributional processes.

Zara, a Spanish-based chain owned by Inditex, is a retailer who has taken a new approach in the industry. By owning its in-house production, Zara is able to be flexible in the variety, amount, and frequency of the new styles they produce. With their unique strategy, Zara has the competitive advantage to be sustainable. In order to maintain that advantage and growth they must confront certain challenges that face traditional retailers in the apparel industry such as Hennes and Mauritz (H&M) and The Gap, who differ from Zara because they outsource all of their production, spend more money on advertising, and is price-oriented.

Zara is a fashion company founded by Amancio Ortega in Spain in 1975. It is part of Inditex holding company, a large fashion retail chain that operates five other clothing brands. Since its inception, Zara has been financially very successful as it contributes the most to Inditex’s overall revenue. Also, Zara’s fast growth is represented by its massive global presence; it has stores all over the world from Americas to Middle East to Europe, its principal market. In my analysis, Zara’s competitive advantage lies in its ability to mass produce a large range of highly demanded latest designer clothes faster than its other competitors in the industry. By virtue of being first in the

The internet has been the easiest way to copy and reproduce all designs instantly just after a show trade ended. Retail organisations such as Zara are among companies which reproduce designer’s trend with low cost material and sell them cheaper. Zara stores provide new collection to their customers for shorter period and replaced them by another new collection; this means they manage fewer inventories. There is a rapid flow of information that circulates across the channel of their supply chain and logistics system from customers to all store managers to their market specialist passing through distributors to the warehouse responsible, (Carugati, Liao, & Smith, 2008). Rushton, Croucher & Baker (2010, p.23) highlighted that for a global company to perform efficiently Just-In-Time approach, there would be a desire to reduce lead times as well as eliminate unnecessary stock and waste within their operations.

Zara is a clothing and accessories retailer selling stylish apparel at affordable prices, and it is also the most profitable brand of the Spanish clothing retail group Inditex SA. Ortega planned for this new Zara outlet, located near his factory in La Coruna in northern Spain, to sell this overstock merchandise himself. Since then, Zara has expanded into 500 stores in 68 countries as of January 2007 and has become a leader in customized fashion retailing. This assignment presents core competencies to help Zara achieve competitive advantages in fashion industry. Besides, we also offer five competitive objectives about quality, speed, flexibility, dependability and cost to evaluate

The fashion apparel industry is considered to be one of the most globalised industries across the world with a turnover of multibillion dollars every year and hence plays an important role in the global growth of the industry (Jackson and Shaw, 2006). The fashion business typically comprises of various aspects like compressed product life cycle, highly erratic demand and changing buying trends of the consumer (Christopher et al., 2004). The growing demands of fashion conscious consumer and the need for fast reaction to the emerging trends has transformed the conventional fashion buying cycle wherein planning the range initiates one year prior to the selling period. Predominantly driven by fixed calendar schedules of trade shows, events and exhibitions planned for two seasons in a year: spring summer and autumn winter, the traditional fashion cycle has been changed now to fast fashion buying cycle (Barnes and Greenwood, 2006; Bruce and Daly, 2006). In recent years fast fashion has revolutionized the retail industry. Few years back it was considered as a niche segment offered by mainly two key players like Zara and H&M but the fast fashion concept has now flourished rapidly and is being adapted by many brands, private labels and e-retailers. Fast fashion retailers have outplaced the traditional designer driven push approach with pull model where retailers react to the trends within just few weeks against the traditional fashion industry norm of six months (Sull and Turconi,

Especially the textile industry is in constant flux, hardly driven by consumer demands. Therefore, the fundamental concept of the company is to maintain design, manufacturing and distribution processes which enable Zara to respond quickly to shifts in consumer demands. While other competitors outsource all production to Asia, Zara designs and produces in-house. By doing so, the company has tight control over the whole production process (the vertical integrated