Zara the Sucess Story

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

This relatively recent phenomenon has been extensively discussed in the fashion press. It has been suggested (Carruthers, 2003) that Zara’s entry to the UK acted as a catalyst for other retailers competing in the same market segment to attempt to improve their own response times. The aim of this research is to establish the effect that lead-time compression has on the success of fashion retailers. In order to achieve this aim, three objectives were identified as follows: (1) identify and describe techniques used to achieve lead-time compression and evaluate their benefits; (2) judge the contribution that following a fast fashion strategy makes to the success of fashion retailers; and (3) assess if and how lead-times will be reduced in future.

Zara is a Spanish clothing and accessory retail company founded in 1975 by Amancio Ortega and Rosalía Mera. It is the main brand of the Inditex group, the world's largest apparel retailer. Zara also owns brands such as Massimo Dutti, Pull & Bear, Bershka, Stradivarius, Oysho, Zara Home, and Uterqüe. 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. Zara, as of 2017, manages up to 20 clothing collections a year.

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.

Information Technology: Zara was able to balance convergence and divergence within the company that provided a great platform for its expansion into other countries. They followed standard procedures in selecting the market that closely resembled the Spanish market, had a minimum level of economic development and relatively easy to enter. The decision of an “oil-stain” approach in entering made it easier to scale operations by opening up a flag-ship store to fully understand the local environment and culture, then after additional stores would be added. This is similar to the approach Amazon.com is taking in expanding its operations abroad by targeting easy to enter countries and limiting the amount of categories before expanding. In addition because many of the markets they entered were similar to Spain they were able to use basic/standard designs to make up 85%-90% of the product mix. Zara’s expansion procedures also left room for customization for each market and store that wasrequired for different cultures and countries. Some of the areas that had to be tailored between countries were the type entry mode (franchised, owned, joint), product mix and offerings that fit their market (decided by the store owners), pricing (some countries are more price sensitive like Germany; however, France was more fashion sensitive) and brand positioning (based on purchasing power and taste). Zara’s open culture amongst headquarters and the

With this feeling of exclusivity and desirability in place, products tend to have a low retailer to customer sell time of approximately 17 days. This reduces the need for clearance sales, allowing Zara to completely benefit from its pricing scheme as customers are willing to spend. As a result, when the season ends, Zara offers an average discount of 18% to its clothing range in comparison to the industry average of 36% (Zara 2013). This heightens the value of Zara’s goods in the consumer’s eyes, creating intangible value for Zara’s items.

Because of its flexibility, Zara does not worry about “missing the boat” for a season. When new trends emerge, Zara can reach quickly. More interestingly, Zara runs its supply chain like clockwork, with a fast but predictable rhythm: every store place orders on Tuesday/Wednesday and Friday/Saturday. Trucks and cargo flights run on established schedules – like a bus service. From Spain, shipments reach most European stores in 24 hours, US stores in 48 hours, and Asian stores in 72 hours. Not only does store staff know exactly when shipments will arrive, regular customers know too, thus motivating them to check out the new merchandise more frequently on those days, which are known as “Z days” in some cities. Overall, supply chain management has become an integrated system that mutually reinforces each other and has propelled Zara’s formidable rise around the globe (Business week,

The limited market growth opportunity at home was the main influence on Zara’s decision to expand internationally. In addition to the maturity of market, there was a change in Spanish consumer behavior over this period, with increased spending

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

With estimated annual revenue in excess of 7 billion Euro, Zara has over 1700 stores worldwide, (Wikipedia, 2013). Zara has been described by Louis Vuitton fashion director as “possibly the most innovative and

In 1975, Amancio Ortega opened the first Zara store in Spain's remote northwest town of La Coruna, 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 wholesalers and retailers. He was determined to maintain control over these activities.

This competitive advantage for Zara is based on controlling business procedures in supply chain. This company is very different from most retailers who outsource their manufacturing to third party firms in other countries. Zara owns and closely controls their supply chain process which helps them to have more market demand (Lu, 2014).

Zara is a Spanish store that deals in clothing and accessories. The store is one of Inditex fashion distribution retail store based in Artexo, Galicia and founded in 1975 (Harbott) by Amanico Ortega (Shankar). It is a flagship chain store and the world’s largest apparel retailer. The first Zara store dealt in low priced attractive higher-end fashion clothing that looked alike. It was a success and the founder, Ortega, started opening more stores across Spain. In the 1980’s he began changing the process of design, manufacturing and distribution to reduce the times of lead and counter new trends in a faster manner. The evolution of Zara stores reflects the changing culture of modern man where speed, customer relations, quality, and feedback

Zara is an apparel retailing chain owned by the Spanish company Inditex. As of the time

However, it is also needed to point out that the company prefers to establish its own branches to take better control, but in certain markets, politically or culturally complicated or that present certain risks, establish deductibles or agreements with local partners (franchising). Today, brand nearly owns 90% of Zara chain stores all over the world.