The History of Zara

Zara is the most profitable brand from Spain which is doing its business in clothing and
accessories retailer. The headquarter of Zara is located in Arteixo, Galicia, and founded in 1975
by Amancio Ortega and Rosalia Mera at 1975. Zaras brand is owned by Inditex, the worlds
largest apparel retailer. Beside Zara, Inditex also owns some big brands such as Pull And Bear,
Stradivarius, Massimo Dutti, etc. Amancio Ortega, the founder, opened the first store in La
Coruna, Spain. At first, Ortega named his store Zorba after got inspiring by the film Zorba The
Greek. But at that time, there was a bar that called Zorba at just 2 blocks away from the Ortegas
store. The owner from each sides had met to discussed about their stores name. They had
already made some arrangements, one was to change the Ortega stores name with helping from
the Zorbas owner and then they found Zara as the name for Ortegas store. The first store sold
low-priced product which were lookalike the popular products from higher-end clothing
fashions. The store was success and Ortega opened more Zara stores throughout Spain. But in
1980s, Ortega started changing dhe design, manufacturing, and distribution process of Zara in
order to reduce lead times and react to new trends in a quicker way, Ortega called it instant
fashions.Zara began its expansion to Porto, Portugal in 1988 as the beginning. Few years later,
Zara entered the United States and Frances markets. The intensity of expansion was increased in
1990s with many European countries such as Greece, Belgium, Sweden, etc becoming their
target. Zara also did its expansion in Asia, America, and Africa. At this moment, they already has
many stores in more than 88 countries over the world.
Zaras vision is to be the number one in fashion retailer, and Zaras mission is that: The world is
getting smaller; we want the whole world to dress in style, class, and experience unique designs
weekly. Their added values is quick respond to any fashion style that the public demand, improve
quality, sell a modern design that the public needs with quality at an affordable price, a perfect
distribution
system,
just
in
time.
And
Zaras
business
values
is
professional,ethics,commitment,confidence,loyalty,creative. And this brands essence to make
high-street fashion brand.
The Difference Between Zara and The Other Retailers
But why Zara is more successful from the other fashion retailers? Whats the difference between
Zara and the other? The answer is the business process. As already weve discussed above, Zara
make the innovation in its business process. For comparison, here is the usual fashion retailers
business process (as-is). The business process are formed into few steps:

Figure 1 Business process of the usual fashion retailer (as-is)

From the business process above, we can see that the process from usual fashion retailer is so
simple. At first step they create designs based on their idea. They usually work hard to create a
new design that will be the trend in public. The second step is order materials that they need in

order to bring the designs become real. The quality and quantity of the materials are depended on
the retailers regulation. Some retailers focused on the quantity of their product so usually they
need a huge amount of material rather than the quality. The other focused on their product quality
so they need a good materials in order to make the nice products. The next step is building the
clothes. The material that has already ordered is used for making the clothes based on the design.
And the last step is shipping and promoting their clothes into the markets. They promote their
clothes via advertisement,etc in order to make their clothes becoming easier to sell and becoming
the trend in public.
Based on the explanation above, designers is the most vital position in that business process.
They should make their design become hits in the market or otherwise, the retailers will suffer a
huge of losses. Of course, their task is so complicated other than the other party. They will spend
a long time to make their design. They also take control in clothes making process in order to
bring the designs become real. All of the tasks were the reason why the usual retailers are too
depending on the designers, because the designers job will affect approximately 60-70% from
the whole process.
Zara makes the revolution with its business process with adding more technology in the process.
The business process of Zara are formed into these steps:

Figure 2 Business Process of Zara (to-be)

This is the business process of Zara that makes Zara so successful in this business. The process is
divided into designing, production, logistic, and promotion strategy. All of these process is
connected each other. In order to make its products becoming easier to sold, Zara brings different
positioning for each country. Thats happened because Zara knows every country may have
different taste of style based on the citizens body shape, lifestyle, the economic condition,etc.
How Zara runs its business is so different from the other retailers. Zara has many designer and
fashion scout around the world. The job of Zaras designers are for learn the fashion trends and
style around the world so they can applied the concept to Zaras product in such a short time.
Also, one of three pillars from the business model of zara is short lead time-

more fashionable clothes. When the other retailers designers need more than 3 months to do all
the job such as analyze the market, create the new design, etc, Zara can do it in less than 2 or 3
weeks. Zara applies the high-speed information system in their whole business process from
searching the design until the products are ready to distribute. Zara also using the strategy to
make their product become easier to be outdated using fashion show to create another trends.
Zara also make its store becoming comfortable for public. Zara does all in order to make their
brand become stronger in fashion market. These are so different with the other retailers which
only focus in making a really new design and dont really care about the information system.
Many designers dont like Zaras business process because they think, basically, Zara is only
copying the others design, including the famous designers design. But, Zara doesnt really care
about that statement and only focusing about expanding the business. And the last is more stylesmore choices and more chances of hitting it right means the production process are limited for
each model and size.
How Zara Use Technology
Information from stores to headquarters relies from combined human intelligence input and from
information technology, such as their PDA devices (Zaras business model, 2011). Store
managers will input the requested order of what the store needs and in return another
commercials group will decide whether to allocate the inventory on that particular store or
send it to retails where a greater movement of goods are there. Such decisions are based on
calculations from an application that tracks theoretical inventory of each available SKUs.
Inside the factories, IT is used for the production of goods such as large computer-controlled
cutting equipment that cuts fabric in pattern using the most of all the fabric available.
Its a common occurrence while you do shopping, then you find something that you like only to
know that your size is out of stock an sold out in another stores. The Radio Frequency
Identification Technology allows Zara to track every process and the stocks, from factory to final
sale. It means for the store, they will get the popular products or sold-out products immediately
because the headquarter is so responsive. So if you find yourself hankering after Zaras
sleeveless tailored white waistcoat but you cant get it, the new RFID technology will make sure
it soon reappears. In manufacturing processes, they use industrial robots working system with
sensors to provide identity on its products. The usage of RFID technology to read the identity has
been pinned on the process when in the manufacturing industry. RFID (Radio Frequency
Identification) is a method of identification by using a means called RFID labels or transponders
to store and retrieve data immediately. The RFID system give codes for each garment in the
logistics centres, that means when shipments reach the stores twice weekly, the system
immediately pinpoints which sizes and models that need replenishing. By the same token, the
system drives enhanced customer service by enabling, with the help of cutting-edge technology,
immediate identification of size availability either in-store, in nearby stores or online. The blend
of technology Strategy enabled Zara to break all the rules in the fashion industry. Zaras store
managers leads the intelligence gathering efforts that ultimately determines what ends up on each
stores rack.. ZARA uses PDAs (personal digital assistant) to gather customer input. PDAs are
also linked to stores POS system, showing how garments ranked by Sales. Zaras Staff regularly
take feedback from customers on what they they would like to see more of.e.g colour design etc.
Zara is currently trialling new virtual mirrors and self service tills which they believe will
become the future of retail. The advanced technological mirrors will allow customers to try the
clothes virtually. The self-service tills lets Zara customers remove the RFID security tags and pay

for the items themselves. The retail giant is also rumoured to be considering mobile payments
and 3D window projection devices.
Zaras Strengths and Weaknesses
The strengths of Zaras business process includes some part. The only warehousing done in this
system is locally and brief for the component parts and the finished items. This will add some
value by cutting down the costs associated with warehousing and by decreasing the time-to-shelf.
In inventory management, its IT system and the VMS in general both contribute to Zaras ability
to offer a just-in-time system. The results are lower inventories, cut costs, and faster throughput.
In transportation, Zaras shipping system is certainly quick. Vendors and suppliers can report that
people are accessible for the information and answers from their questions can be obtained
quickly. Internal communication is maximized by housing on one floor, the designers, pattern
makers and merchandisers, as well as everyone else involved in getting the product completed.
That is the big advantage. Shipping by air freight to individual stores is not the cheapest way to
go. But again, Zaras competitive advantage is their speed. 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. Zara has a very flexible design and easy to match with other clothing combined. Zara
doesnt have the characteristic style of the designs, but all ZARA products made for large
market. Zaras products is mass-producted but theyre still high class and their prestige are not
reduce of the product. Zara store design is made with a light and roomy to provide comfort.
Zara's brand is memorable and mysterious and this make the customers feeling interested. And
the other strengths are the brand awareness, brand loyalty, size and high-grow fashion for modest
prices.
The weakness of Zara business process includes some part. There is little information given in
the case regarding channel conflict. But one could easily speculate as to the outcomes. Because
Zara owns much of its own supply chain and exhibits an extreme amount of control over the
elements that it does not own, conflict is likely minimal. One disadvantage that Zara incurs is
possibly a higher cost on materials and labor by not sourcing globally to the cheapest source.
This, however, is offset by the cost savings of not having items shipped all over the world. It is
also offset by dramatically faster response time between each stage. Because Zaras competitive
advantage is the fast part of the fashion, this is much more important than the minimal amount
that Zara could save by sourcing globally. And other weakness at the new in this segments, more
experienced competitors and lack of e-commerce.
Our recomendation as the students to increase its strengths and lower its weakness in order to
maximize opportunity in aturated Industry are that. They need to increase their brand value,
responding to current industry trends, identifying the need for the product in the market and
overcome threat includes maintenance technology, market entry barriers, design challenges,
exisiting customer reactions, erasing perception "Fat is not fashionable" . Zara should encourage
people to always thrive on technological innovation. One of our suggestions is by adding some
programs for smart phone application in order to make online access easier and promptly
resolve the problem of the gap of technology in the store.