Zara: Vertical Retailer

Vertical integration is when one firm joins with another at a different stage of the same production process. Forward Vertical is when the other firm is at a later stage and Backward Vertical is when the other firm is at an earlier stage. Vertical integration as a whole allows for a firm to control key stages of the production process; guarantees access to a market; and gains control of supplies. Companies such as Zara and American Apparel are vertically integrated, especially at key stages of

These points of interest lead ZARA to be the business sector pioneer in dress industry. ZARA can cut its expense and time or having cost and time control as it doesn’t outsource its distribution, this additionally permits them to stay away from the contentions that for the most part emerges on account of receiving diverse appropriation channels. Vertical integration is likewise serving as a state of separation in the middle of ZARA and its rivals, as a rule retailing stores outsource its distribution and that can be the reason of deferred distribution. (Bootwala,

In comparison to competitors, Zara’s business strategy, in regards to strategic partnerships and cost of production, provide for a strategic competitive advantage. Zara, unlike its competitors such as Gap, Benetton, and H&M, does not use Asian outsourcing. Eighty percent of Zara’s materials are manufactured in Europe, with 50% made in Zara controlled facilities in the Galicia region of Spain near headquarters. Most of Zara’s competitors have 100% outsourcing to cheap Asian countries. Though the cost of production in Spain is 17-20% more expensive than Asia, Zara does have a competitive advantage over its competitors in regards to operations. The local strategic partnerships that Zara maintains with manufacturers in Europe allow for a product throughput time of 3-4 weeks from conception to distribution. To make this happen, the company designs and cuts its fabric in-house and it acquires fabrics in only four colours to keep costs low. The proximity of these suppliers gives Zara great flexibility in adapting their product lines based on up to date market trends and consumer behaviour. It also decreases costs of holding inventory. Zara’s competitors, through outsourcing to Asian countries such as China, sacrifice the benefits of proximity for low labour and production costs.

Quick response of Zara leads it to be successful in the fashion clothing industry. Zara adopts international strategy for its operation. With vertical integration, it benefits Zara in cost aspect, however, it involves some risks. Due to our anaylysis on Zara’s operations, some of the recommendations are made to facilitate its further improvements.

Zara is a clothing company that was founded in 1975 and came from Spain. Its under Inditex group which owns other brands such as Massimo Dutti, Pull & Bear, Oysho, Uterques and many more companies. Zara grew very fast and currently in 2012 has 1,617 stores worldwide. With a large name in the fashion industry, besides that, Zara faces tough competition internationally including H&M, Benetton, and GAP. In order to keep up with the speed chic, Zara need to keep up also with the information system to run their business.

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.

Collaboration of chief tasks, strategic use of organizational resources and core competencies contribute to Zara’s competitive advantage. Zara follows vertically integrated supply chain so it exercises control over suppliers. Demand is easily met and manufacturing is easily achieved. It uses Vertical Marketing System (VMS). It has Zara successfully integrate design, production, distribution, and retailing and which has turned it into the world’s fastest-growing fashion retailer. Its design team is having skilled and talented and experienced staff and the designers are regularly updated by stores and sales staff which keep record of moving stock. Its in-house team of production department is also hardworking and producing clothes quickly as it is manufacturing clothes in small batch. The market survey said that people visit Zara often when compared to Zara’s competitors. Its employees wait for one week for selling its stock and meanwhile if stock is not sold then they just take it out from store and then design team try to make better design for customer satisfaction and the design which is not sold their production will be stopped and in this manner it will face only little cost but will be able to attract customers. So its vertical integration system is helping it to gain advantage. Its customers are well aware that its stock will be changing after every week so they visit quite often to this store as they know if they don’t visit regularly then they can miss good stuff and good designer clothes. In the market survey it has been revealed that in Spain top branded fashion store is visited by customers 3 times a year and whereas Zara is visited by its customers 17 times a year so it is clear that Zara is taking advantage of vertical integration (Christopher,

Zara tries to synchronize the supplies to change designs based on customer feedback use Vertical integrating design strategy. Zara designs and manufactures clothes

First, “Retail companies have become involved in supply chain management in order to control product quality, inventory levels, timing, and expenses.” (About money). For this reason, Zara’s strategy ensured that its supply chain capabilities supported its ability to satisfy the targeted customers. In addition, Zara collects information on customer needs, integrates data with design, manufacturing and distribution functions. With this in mind, Zara concentrated its product to short lead time, lower quantities, more styles and use an effective distribution system. Similarly, Limited Brands, shifted to a high end product line that required a strategy to bring product to market and customer satisfaction. Furthermore, Limited Brands management approved the project of building a global

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 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.

With annual growth of around 20 percent in both sales and number of stores, Zara was finding that strategy increasingly difficult to execute. Part of the Inditex group of fashion distributors, it currently has more than 1,100 stores in 68 countries. With so much volume flowing through the supply chain, the

The boutique retail chain "Colours" is based in India. They are primarily located in South India in the localities of Bengaluru, Hyderabad, and Bangalore with a total of 18 stores nationwide. They sell ready-to-wear sarees for women. They also have large inventories of Indian outfits for men and children as well. The two new services "Colours" can offer are shipping options and outfit customizations. In the following marketing proposal, I will discuss two service options the company can provide to increase its revenue as well as acquire new clientele. Both options will take the target market from the national level to an international scale.

Zara prides itself on fast moving fashion with new designs restocked in limited quantity every two weeks. This encourages consumers to frequent the stores for new designs and to snap up interesting outfits on the spot in order to guarantee themselves a piece. This provides a sense of exclusivity to shoppers.