Secret to ZARAs success- How did it become worlds largest

fashion retailer.
- By Shifa Rastogi
Galicia, Spain was home to Generalissimo Francisco Franco, but it was quite famous
as a place people try to leave. In 20th century, thousands of citizen of Galicia called
gallegos, migrated to various far off countries to escape Galician poverty. Now,
however, even as Spain is on the edge of economic breakdown, the Galician city La
Corua has become popular as the hometown of Amancio Ortega Gaona, the worlds
ninth-richest man stated by Forbes, who created thousands of jobs in spain, also the
founder of one of the most successful fashion brand ZARA.
Zara a company founded on just 30 Euros is now worth an estimated 32 billion. It
is the flagship retail unit of Spanish parent company, Inditex also found by Ortega.
Zara was found in 1975, now having over 1800 stores in 81 countries.
The question arises HOW? What did Zara do right to have achieved all this? Well
ZARA didnt really have to invent a brand new product to have become the worlds
most sort after fashion brand, it just invented a new process. A process innovation that
is dominant in the market.
Also in order to become a successful fashion brand there comes in 3 mantras: Produce
clothes that people want to wear. Sell enough clothes for more than you made them.
Lastly, get into the loop and keep repeating the first two.
Its easy to list these mantras but difficult to imply. Style is whimsical and fleeting, for
example Abercrombie and Fitch which was known to be one of the best selling
fashion brand is now known to be selling last decade fashion. Secondly,
differentiating yourself is quite expensive, crafty designers and advertising the brand
costs a lot.
Zara has found innovation solution to both style problem and advertising problem.
Firstly, instead of hiring expensive classy designers it just politely copies them. Then
it produces small quantity and sends it across the stores and waits for the shoppersfeedback. A system is in place for retail staff to transmit feedback straight to the
massive design team located at Arteixo, a tiny town on the north-west tip of Spain.
The corporate HQ absorbs thousands of comments, which are then conveyed to the
manufacturing units. The clothes are then again shipped back with a changed design
in small quantity. Now, here lies the first clue to its supremacy; it creates scarcity of
supply leaving the customer no choice but to buy it now or never. Although Zara may
run up to 30,000 copies of an item, but they are thinly distributed among its 1800
stores in 81 countries.
Masoud Golsorkhi, the editor of Tank, a London magazine about culture and fashion,
quoted Inditex has completely changed consumer behavior. When you went to
Gucci or Chanel in October, you knew the chances were good that clothes would still
be there in February, he says. With Zara, you know that if you dont buy it, right
then and there, within 11 days the entire stock will change. You buy it now or never.
And because the prices are so low, you buy it now.

Along with the less supply formula it also practices short production and distribution
method. Supply chain plays a crucial role in ones success and Zara established it just
perfectly. Unlike other companies it does not outsource bulk of its production.
Instead, it has most of its manufacturing units in Spain or very near by places like
other parts of Europe and North Africa. A hemline suggestion goes from a customer's
lips to a sales rack at record speed. It claims to develop a new product and get it into
the stores in just 2-3 weeks, compared to the six-months industry average time,
launching approximately 12,000 designs every year. Zara is known to be a fastfashion brand.
Quiet surprisingly, Zara owes nothing to advertising for its success. Why? Have we
ever seen a Zara campaign running on TV or print media or anywhere else? The
answer to this would be no, because it does not advertise. In fact, it hardly has a
marketing department; it doesnt indulge in any flashy campaign or association with
top-notch designers like its competitors do. It saves heavily on its marketing cost and
rather uses it in real estate, that is buying its retail points. The company believes in
investing in the beauty, historical appeal and location of its shops.
The company spends horrendous amounts on buying stores right next to luxury brands
to own the label of affordable luxury.
The high street is really divided according to brand value, says Golsorkhi, who is
also a consultant for fashion brands. Prada wants to be next to Gucci, Gucci wants to
be next to Prada. The retail strategy for luxury brands is to try to keep as far away
from the likes of Zara. Zaras strategy is to get as close to them as possible.
Zara stores cozy up on luxury brands to share the look and feel and provide customers
with a similar fashion at much lower prices.
Zara is playing its cards to bring Paris to your wardrobe fast and affordably.