Zara Case Study

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Kotler P. et al, (2008), Principles of Marketing, 5th European edition, Harlow, Pearson Education Ltd. Company Case 19 Zara – the fast and furious giant of fashion One global retailer is expanding at a dizzying pace. It is on track for what appears to be world domination of its industry. Having built its own state-of-the-art distribution network, the company is leaving the competition in the dust in terms of sales and profits, not to mention speed of inventory management and turnover. Wal-Mart, you might think? No! Tesco, possibly? No! The company is Zara, the flagship specialty chain of Spain based clothing conglomerate, Inditex. Forget football stars, the Costa del Sol and Real Madrid, they are nothing compared with Zara as Spain’s…show more content…
Thus, Zara reaps the benefit of prices that average much closer to the list price. The vertical secret to Zara’s success Just how does Zara achieve such mind-blowing responsiveness? The answer lies in its distribution system. In 1975, Amanco Ortega opened the first Zara store in Spain’s remote north-western town of La Coruňa, home to Zara’s headquarters. Having already worked in the textile industry for two decades, his experience led him to design a system in which he could control every aspect of the supply chain, from design and production to distribution and retailing. He knew, for example, that in the textile business the biggest mark-ups were made by the wholesalers and retailers. He was determined to maintain control over these activities. Ortega’s unique philosophy forms the heart of Zara’s unique, rapid-fire supply chain today. But it is Zara’s hi-tech information system that has taken vertical integration in the company to an unprecedented level. According to CEO Pablo Isla, ‘Our information system is absolutely avant-garde. It’s what links our shop to our designers and our distribution system.’ Zara’s vertically integrated distribution system makes the starting point of a product concept hard to nail down. At Zara’s headquarters creative teams of over 300 professionals carry out the design process. But they act on information fed to them from the stores. This goes far beyond typical pointof-sales data. Store managers act as trend

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