Zara case study Essay

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.

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’s business model can be broken down into three basic components: concept, capabilities, and value

Zara has its own railway track on which the goods move to the distribution centre. Its distribution facility functions with minimal human intervention and optical reading devices sort out and distribute thousands of clothing an hour. (Ray, 2010) Zara business model differentiates it from the competitors. It is positioned on high quality and low

Fast fashion is merely more than a one hit wonder. The fast fashion industry has grown and has ultimately proven itself to be profitable industry in the clothing market. The retailer most distinguished for a fast fashion approach is Zara (Hayes & Jones, 2006). Zara is a child company of the parent company Inditex. Zara stores have established the stride for merchants around the globe in creating and shipping fashionable clothing (“Case 3-4. Continued Growth for Zara and Inditex”, 2013). Their marketing approach has helped them become extremely successful in terms of providing the customer with. International marketing strategies and its efficiency assists in the expansion of Zara. Cultural understanding is virtuously

Designs are conceived with the target market in mind - women and men between the ages of 16 and 35 who desire inexpensive, yet ahead-of-the-trend fashions. Zara’s design conceptualizations can go from design to production to delivery in fifteen days. Their sourcing strategy entails a mix of 60% external fabrics sourcing, 40% internal fabrics sourcing, 50% in-house manufacturing, and 50% external manufacturing.

Such distinct features of the Zara business model which adds value to almost every aspect of the value chain, makes Zara stand apart from the competition and improve

Zara clearly established a differentiation strategy by designing according to the trend and customers’ tastes. The target customers are more the public who cannot afford very expensive stylish goods. Moreover, not only the design, it also changes its fashion very fast and up-to-date. Combining the two factors, it is clearly that Zara positioned itself as Focus Differentiation, which provides uniqueness with a narrow market segment. At the same time, with the just-in-time and manufacturing-to-sales cycle, the cost of Zara’s clothes is relatively low, thanks to the technological advance and Zara’s unique supply chain management. Even so, the uniqueness is more the core competence than cost for Zara.

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 's designers and customers are inextricably linked. Specialist teams receive constant feedback on the decisions its customers are making at every. Zara develops just two weeks for a new product and approach their products to stores in each year, launch around 10,000 new designs. Zara has 3,000 in-house designers for men, women and children’s wear are located in different halls in a building attached to the Inditex headquarters. Each head office is equipped with its own unique design facilities and logistics centers from which merchandise is shipped to the stores worldwide twice a week weekly. Zara produces clothing as per the latest trends in a limited quantity. Zara produces more than 12,000 new designs to the market every year in the stores globally twice a week. The creative teams worked on products for the current season by creating constant variation, expanding on successful product items and continuing

In the Design Phase, 300 professional designers create the design after they gather information from Zara’s stores that are spread everywhere, where the store managers track the trends and report their findings daily. This fast process allows a smooth communication between the markets and the people designing the products to be sold in it. Daily, Managers with the help of personal digital assistants, follow-up with designers on what designs are available on daily basis, after which they place their orders according to what they might think is going to be bought by their customers. This way, managers make sure that the designers issued designs that appeal to the customers’ taste of fashion. In the Material Sourcing Phase, Zara balances in-house and outsourcing activities (Dutta, 2002). It makes out 40 percent of its own fabrics and produces more than 50% of its own items which makes the supply process fast. In the Cutting Phase, Zara 's strategy lies on maximizing time efficiency by keeping all production in a remote

Stores are located in prime retail districts and layouts are changed frequently. Zara introduces approximately 11 000 new items in a typical year while competitors average 2000-4000. Zara vertically integrated manufacturing with CAD which gives room for flexibility and quick turnaround. Designs and cutting of fabrics are done in-house. Garments are delivered to the stores with prices ready for the rack.

This report aims to study the supply chain management and logistics of fashion retailer, Zara, to boost customer value. The concept of sustainability and competitive advantage is considered with other business models and compared with successful and unsuccessful company. The study is compared with the supply chain management and business strategies of Zara with Dell and Zara with Myers.

Zara’s strategy is to offer cutting edge fashion at affordable prices by following fashion and identifying which styles are “hot”, and quickly getting the latest styles into stores. They can move from identifying a trend to having clothes ready for sale within 30 days (whereas most retailers take 4-12 months). This is made possible by controlling almost the whole garment supply chain from design to retail.

The business that I would like to examine is called Zara. Zara is in a retailing industry that was founded in 1975 by Amancio Ortega and Rosalia Mera in Spain. It is a flagship retail store of the Inditex group, which owns other retailing brands like Massimo Dutti, Pull and Bear, Bershka, Stradivarius, and Uterque. In 1988, the company started its international expansion in Portugal and other parts of Europe and then to north and south America and Asian countries. There are over 2100 located in 88 countries. The company usually selects the best and the most expensive real estate location to open its flagship store like Fifth Avenue in new york, Myeongdong in Seoul, South Korea and much more. In 2010, the company started its online