To: Zara Management
From:
Subject: Zara 's US Expansion
Date: 2001
Background
Following is an analysis of Zara 's current expansion strategy into the US retail market and recommendations on future tactics to ensure a successful expansion. Zara 's expansion strategy thus far has been quite successful; however, with every new store opened, its ability to maintain an efficient centralized production system and a strong, unique culture will be diminished.
Analysis
Let us first consider Zara 's main competitive advantage before analyzing how current and potential future strategies will affect this competitive advantage. Zara currently employs a "design-on-demand" retail model allowing the company to bring the latest fashion trends from
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(See Appendix and above)
It is recommended that Zara maintain full ownership of new stores rather than choosing to franchise. This will ensure the continuation of the strong Zara culture.
Zara 's combination of cutting-edge fashions and culture lends itself well to a European-style, fashion-conscious consumer. While this type of consumer can be found in New York, this is not representative of the entire US market. Retailers in small towns and urban sprawls rely more on a shopping mall atmosphere. Adapting that strategy would undermine Zara 's image. It is therefore recommended that Zara target only major metropolitan areas which would likely have higher concentrations of fashion-minded individuals.
Zara currently employs no advertising at all. As word of mouth is very important in retail, this low key approach is in line with Zara 's culture. A well structured marketing campaign could, however, spread the word of Zara 's expansion across the US, while maintaining their mysterious boutique-type image. Billboards or print ads with a "teaser" approach could accomplish this goal. Advertising will become important to increase Zara 's profile during expansion. Due to its comfortable profit margins, a modest advertising budget could be afforded.
Zara 's US expansion will rely heavily upon continued emphasis on strong IT procedures both
Amancio Ortega and his company Zara have developed a fast fashion model that has revolutionized the fashion industry. From their origins in Spain, these companies have become a growing international presence that tailors fashion not to preset seasons and the whims of star designers, but to the changing demands of customers. However the growth in Zara sales will slow down eventually, this slowdown will likely be due to the increasing adoption of its business model by
The business idea of Zara is to link customer demand to manufacturing, and to link manufacturing to distribution. And based on this general idea, Zara has several essential elements for its business model. First, speed and decision making, which means that in the external level, Zara need to respond very quickly to demands of target customers, and always keep in style. While for the inside, Zara treasure intelligence and judgment of common employees who enjoy a great deal of autonomy. Second, its marketing, merchandising and advertising strategy. Zara does not spend on virtually advertising, while it spends heavily on stores, and no selling online because of
The world 's largest clothing retailer has been able to cope with the financial crisis better than most of its rivals, helped in part by the expansion of shops in fast, growing commercial centres and also by offering affordable fashion at a fraction of the cost of designer fashions. This case provides information on Zara and its major rivals in the industry to highlight the challenges and opportunities facing companies who are competing on a global basis. Zara is the biggest player in the clothing retail sector and leads the way in sales and consumer growth whilst being recognised
What is the best way to grow the ZARA chain? How, specifically, do you see prospects in the Italian market? And more broadly, what do you think about the strategy of focusing on Europe versus making a major commitment to a second region?
The basic strategy for fighting competition is to attract buyers at lower prices, more unique designs, high-quality design, efficient customer service and solid image brand. Thus bargaining power of buyer for apparel industry is high as the products falls under the basic needs in human lives. There is no much difference in terms of products offered by the apparel company, so if buyer is unhappy with the product or service they can easily switch to another brand. Thus, Zara are trying to strengthen its position in the market by using their unique strategy by giving priority to buyer to meet their special needs.
Zara’s business model can be broken down into three basic components: concept, capabilities, and value
Other companies have tried pushing their products and setting trends through advertising, but this often resulted in “fashion misses”, while Zara, through its responsive supply chain strategy, is able to produce and deliver styles that capitalize on what the customers are looking for. Thus, Zara is able to accurately match supply to demand.
Zara is one of the Inditex’s largest international fashion brands. The company first opened in La Coruna in 1975, still lives by the simple idea of Amancio Ortega to link customer demand to manufacturing, and link manufacturing to distribution. Castellano and Ortega shared the same beliefs that quick response to customers, use of computers, and disintegrated decision-making were important to build the business. It has built distribution and information system which allows to keep latest design in stores in just one or two weeks. Its supply chain has made it so successful and popular among its customers (Zhang, 2008).
In recent year, Zara is well-known as the world’s largest retailer and the most favorite fashion brands in the world to the people in their 20s-30s and children. Its success doesn’t come from just only what it sells but how it sells them.
Zara is known for one of the smartest company to sustain a breakthrough marketing strategies and efforts. They have been successful in the fashion industry for over many years and now a day, still continue to earn more accomplishment to become the “Spanish successful story”.
Zara is a Spanish clothing and accessories retailer based in Arteixo, Galicia. Founded by Amancio Ortega and Rosalia Mera in 1975, it is the main brand of the Inditex group and also the world’s largest apparel retailer (Inditex). It is one of the first store’s to showcase low-priced look alike products of high-end clothing brands. Later on, it was viewed as an ‘instant fashion’ company as it revised its logo, manufacturing, and distribution process along with improvements that included information technology and the use of designer groups instead of individuals. Beauty, clarity, functionality and sustainability; over the years it has remained loyal to its core values expressed in these 4 simple words. With its current portfolio of 2,169 stores worldwide, Zara generated revenue of about US$15.9 billion in 2016. Its target market is young, price-sensitive, and highly responsive to the latest trends (Harbott). They hold a strong competitive advantage over other retailers because they don’t define their target market on the basis of age or lifestyle segmentation, providing them a relatively broader market to target.
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
Zara has created a very creative business model and supply chain technique that is often studied but very rarely copied. Zara has a very centralized headquarters in Arteixo, Spain. This allows Zara to have a good grasp on the business processes. They focus on speed and responsiveness by delivering quick and small batches of clothing to stores at precise times. About half of the manufacturing is either done in Spain or a neighboring country, Europe and if it is not manufactured there then it will be shipped to the distribution center before going to a retailer. This allows Zara to have a competitive edge when it comes to their supply chain. Zara does this by being a vertically integrated retailer. unlike similar retailers Zara controls most of its own supply chain, from designing, manufacturing and distributing to its products. Zara offers
Zara is characterized by its unique and rapid-fire supply chain that is governed by the vertically integrated system that links their shops, designers, and distribution system. The key players in this system are the wholesalers and retailers, so controlling the activities of those mark the success of the business. Zara’s system is so integrated that makes it hard for other competitors to nail the starting point of a similar product.
Differences in positioning also affected the stores which products were sold and ZARA’s overall image. For example in South America, ZARA’s products had to present a high-end rather than a mid-market image and it was emphasized that they were “made in Europe”. However, the image