Zara

History
Zara is one of the most well-known international fast-fashion companies, owned
by the Spanish fashion group Inditex . The first Zara store was opened in La
Corua by Amancio Ortega Gaona in 1975. From that moment forward, Zaras
expansion has been unstoppable. By the year 1990, Zara had opened stores in
Oporto, Portugal, New York, USA, and Paris, France . Utilizing Zaras strong brand
image, Zara Home was introduced in 2003, providing housewares. Later, in 2007,
the first online store was launched to sell Zara Home products . After 38 years of
operation, Zara now has 1,830 stores in 82 countries across Europe, America,
Africa, and Asia. The number of stores that Zara has only accounts for
approximately one-third of stores that Inditex has; however, they generate more
than 64% of Inditexs sales . Zara classifies itself through its commitment as a
fast fashion brand rather than high fashion, and quickly adopts high fashion
styles from the catwalk to reach the public at an affordable price. Unlike other
fashion brands, which outsource their production, Zara has successfully
developed a vertical integration model including design, just-in-time production,
marketing, and sales . With vertical integration, Zara is able to meet consumer
demands within a relatively short timeframe and respond to market trends
quickly. Because the fast fashion industry is constantly changing and hard to
predict, the flexibility and efficiency provided by this model is becoming the key
factor in Zaras success.

BRAND OWNERSHIP
This is a rare glimpse into the world of Inditex, the owner of Zara a company that does not
advertise, still manufactures products in Europe and relies heavily on its store managers.
Inditex is notoriously guarded and private, a legacy of its founder, Amancio Ortega, who was
born in 1936 in northern Spain into humble origins and is today the third richest man in the
world.
Ortega and his business partner Rosalia Mera opened their first store in the city of A Coruna,
close to Arteixo, in 1975. They wanted to call the shop Zorba, after their favourite film, Zorba
the Greek. However, a bar further down the street had adopted the same name, so Ortega and
Mera were forced to adapt. Given that the Zorba name was already on the store, they tried to
think of a name that would still use most of the letters. They settled on Zara, a brand now
present in every corner of the globe.
BRAND PORTFOLIO
Zara opened its first store in the coastal town of A Corua in the northwest of Spain in
1975. Zara has over 2,000 stores strategically located in leading cities across 88
countries. Zara's designers and customers are inextricably linked. Specialist teams
receive constant feedback on the decisions its customers are making at every Zara

store. This feedback inspires Zara's creative team which is made up of over 200
professionals.
Zara is always striving to meet the needs of its customers at the same time as helping
to inform their ideas, trends and tastes. The idea is to share responsible passion for
fashion across a broad spectrum of people, cultures and ages.
PRODUCT ATTRIBUTES
WOMEN : Zara produced a range with better fabrics and more womanly cuts.
Zara basic essential fashion fix pieces and fashion for younger women (lightness,
looser silhouettes, and silky tops)
Mens : zara has produced the range of light weight cotton tops and printed
shirts paired with cotton twill shorts(hints of ethnic touches like robes and beads
which provides hippie bohemian detailing)
Zara kids : it produces unique and sophisticated range . it feels secure in finding
unique great quality cloth with reasonable price point.
Zara footwears : zara footwears is leading manufactures which offers wide array
of ladies footwears which are beautifully crafted ( ladies sport sandal ,
fashionable sandals , formal sandals , bellies ,designer sandals , shoes , high heel
sandals , flat sandals, and flat bellies )
Communication
Zaras information and communication protocols are significantly different from
its competitors. Zara spends less than 0.5% of total revenue on IT and IT
employees account for only 0.5% of Zaras total workforce. This differs from their
competitors who spend on average 2% of total revenue on IT expenditures and
have 2.5% of their total workforce devoted to IT. Zara utilizes human intelligence
(from store managers and market research) and information technology (such as
their PDA devices) in order to have a hybrid model for information flow from
stores to headquarters. For example, managers at Zara stores use handheld
devices to send standardized information regarding customer feedback and
ordering needs directly to in-house designers. This not only keeps Zara's
designers informed of fast-changing customer trends and demand, but also
provides the company with insight on less-desirable merchandise. Unlike Zaras
hybrid model (which incorporates human intelligence and IT applications),
competitors rely almost completely on information technology. Zaras unique
approach of human intelligence assisted IT solutions results in well-managed
inventories, linkages between demand and supply, and reduced costs from
obsolete merchandise; however, there is still room for improvement in their IT
processes to realize more effective management of inventory levels. Hence, the
hybrid information and communication system that Zara uses provides cost
advantages to Zaras operations and helps to abide by their fundamental
principle to have the ability to rapidly respond to changes in consumer demand.

Zaras concept, capabilities, and value drivers, as demonstrated through their

business model, have proven to be extremely successful. Their resistance to
outsourcing, concentration on core operations and production capabilities, and
focus on the pulse of fashion have made them one of the most successful
clothing retails. In the event of future global expansion, their future success and
sustainability will be drawn into quention. They will need to adapt their business
capabilities of product development, strategic partnerships and cost of
production, marketing and advertising, and information and communication
technologies in order to adjust to increasing global operations.
Pricing

Customer knowledge

The ideal Zara customer is a fashion-conscious, cosmopolitan, sophisticated woman. The

price point is a bit higher than budget but lower than luxury so the company attempts to gain
consumers from both ends of the spectrum; the budget consumer sees the items as a splurge
while the luxury consumer sees them as a steal. The mix between trendy and classic pieces,
which include instant fashions copied from the runway shows as well as a line of basic
pieces for all seasons, allows for the age range in customer to vary.
The ideal consumer for the brand must know the trends and be willing to hunt for them.
To consume is to participate in an arena of competing claims for what society produces and
the ways to use it, states Nstor Garca Canclini. This principle is at the foundation of Zaras
consumer acquisition technique. Instead of accepting that luxury items are only produced by
luxury brands and that purchasing them is the only way to achieve a high status from
clothing, Zara customers question this logic and are willing to accept that in spending less,
they remain able to be relevant to the wealthy, well-dressed set. In doing purchasing this way,
Canclini asserts that such consumption serves to appropriate meaning onto the items
consumed which, again, the Zara consumer model supports. With such a fast-fashion brand,
the shopper feels as if they must buy the product then and there in order to make sure it
doesnt fly off the shelves; Zara consumers capitalize on sales and new merchandise by
taking advantage of the fleeting quality of the clothes and accessories. Also key for
fashionistas is knowing that not everyone will be wearing the same thing as they are, a real
fear when wearing clothing from a fast-fashion retailer. Zara avoids this by upping the price
point more than an H & M, for example, thus limiting just slightly the consumer base for
more popular items. In facilitating this sort of consumer awareness, Zara assuredly promotes
its sales with this in mind; by retaining sales to only twice a year, the sense of immediacy in
purchasing becomes evident.

Recommendations:
(1) Zara has the potential for sustainable growth due to their unique business model and
operation strategies which enables them to face the challenges of the apparel industry. By
using special entry strategies they can exploit untapped markets such as Germany and Eastern
Europe (Goransson.S et al,2007). As their centralized distribution system located in Spain, it
will be easy for the company to support its existing system and new proximities or stores in
regions closely based to its main centres (Gallaugher, 2008). For instance, they have already
entered the Italian market through joint ventures and successfully operating the largest Zara
store in Milan without any major advertisement. So the company should continue to own
flagship and critical stores while franchising or joint-venturing other where there are barriers
to direct entry or financial risks (Ghemawat and Nueno, 2003 ).
(2) Zara should put more emphasis on expansion in the US market. Introducing a main
distribution centre in the US will facilitate the company to decrease logistic costs and time
consumption which will help to maintain its system of fast fashion and the economies of
scale (Anonymous, 2008). They should strategically build a distribution centre, where the
manufacturing can be done on a low cost basis and with less value added production for
standard clothes (e.g. Mexico or Caribbean), which will help them to minimize their
productions costs. They should consider a combination of two supply chains by keeping the
purchase of raw materials centrally in Europe but instead of going through Spain, the
materials can be shipped directly to America for manufacturing and distribution. The rest of
their model can stay centralized and just provide the necessary support for the American
based manufacturing and distribution (Christopher. M, 2009). By utilizing this concept, the
company will operate more efficient in the US market while reducing its total costs at the
same time. Another market opportunity for them is to invest in Internet retailing. This form of
direct marketing will reach more consumers faster and easier. Though it may be difficult to
display all of their ever-changing fashions online, it may prove profitable for shoppers to
purchase a moderate selection of trendy Zara pieces along with some of their staple basics
(Caesar, 2010).
(3) Zara can offer specialized product for different geographical locations but that to in
same city (Sull and Turconi, 2008). This will help them to increase their shopper traffic and
could differentiate its product location wise. This would work because shoppers would hear
about new/different products (word of mouth) that another Zara store is carrying across the
city and they would be intrigue to pay a visit (Simona et al, 2007). That way sales wouldnt
be catered from their own respective stores, decreasing cannibalization for the chain.

(4) They should also measure the customer satisfaction and customer loyalty in accordance
with productivity or performance management. Special customer retention schemes should be
introduced by the company (Craig, et al 2004). So the company should try and maintain a
customer database that pays frequent visit to the outlets.
(5) The company should implement the new balance scorecard system in its organization to
overcome the internal and external pressure affecting the company. This will help in getting
the employee feedback as the management will be aware of the employees needs and wants.
Performance appraisal method can also be introduced which will help the company to
measure its financial and non financial approaches (Dick et all, 2006). Through this company
will motivate its employees, to work more efficiently and to achieve the targets of the
company.