We are in the Fashion Business - Not Clothing. Our customers buy our products because they like it - Not because it is ZARA.
Mr. Diaz
Built around a sophisticated sense, Zara is a Brand whose characteristics can be defined as being Simple, subtle, minimalistic. They have minimal adverstiments costs. Zara don’t merchandise on the Internet.Their showroom is the only source of revence and yet ...
Zara is the most profitable brand of The Inditex Group. It opened the first store in 1975 in La Coruna in Spain. Today, its become the central headquarters for Zara.
The Zara Concept
The Zara concept is to bring luxury clothing down to the masses. It transforms the must-haves of the big fashion houses into affordable pieces for all budgets.
“ Zara was a fashion imitator. Focused its attention on understanding the fashion items that its customers wanted and then delivering them, rather than on promoting predicted season’s trends via fashion shows and similar channels of influence, which the fashion industry traditionally used.�
The Infrastructure
Zara only works with stores. They don’t make merchandising in internet. The stores are based in the strategic place of towns. The design and the organization of the stores are changed every four years.
What Zara sells ?
Exclusivity Affordibility Differentiation Experience
“Our stores and word-of-mouth,do the advertising for us.” Further emphasizing the importance of the stores, Mr. Diaz argued that the Internet would not have a radical impact on their retail operations.
“ Customer’s have to try the dress to see how they look in it. In fact, that is why we don‘t anticipate a lot of sales through our web page.”
Strategy Small Qty batch production
Maximizing product scarcity
Push customers to buy their product immediately
Inc the frequency of visiting customers
Customer purchase
Zara is reactive and creative. Zara adapts to its environment. Zara delievers fashion when its hot and at a fraction of price charged by the designers brand. Strategy of producing low volumnes per style and changing products in its stores enables it to cut down on its dicounts as well.
“ Zara walks at the pace of society, dressing ideas, trends and tastes that society itself has matured. �
Success of Zara
Short Lead Times Reducing Risks Ownership and control of production React rather than Predict Use of IT technology Keeping cost down
Short Lead Times
Focussing on shorter response times, the company ensures that its stores are able to carry clothes that the consumers want at that time. Zara can move from identifying a trend to having clothes in its stores within 30 days. Zara can quickly identify and catch a winning fashion trend, while its competitors are struggling to catch up.
Reducing Risks
By reducing the quantity manufactured in each style, Zara not only reduces its exposure to any single product but also creates an artifical scarcity. As with all things fasionable, the less its availability, the more desirable the product becomes.
Ownership & Control of production
Zara introduces approximately 11 000 new items each year much more than its competitors. Zara manufacturing is vertically integrated. There is a network with specialized facilities that quickly produces and delivers the required goods. Zara owns a group of factories in and around La Coruna to do the capital intensive initial production steps dyeing and cutting cloth.
React rather than Predict
For the finished garments, rather than forecasting, Zara quickly produces the least amount possible of what is hot with consumers and moves to the next hot style fast. With its range of clothes constantly being updated, one or two slow-selling items are unlikely to hurt profits. Customers are also more likely to visit its shops regularly to see new stock.
IT technology
Zara utilizes human intelligence and information technology in order to have a hybrid model for information flow from stores to headquarters. 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.
Keeping cost down
Zara does not use Asian outsourcing. the company designs and cuts its fabric in-house and it acquires fabrics in only four colors to keep costs low. Zara postpones dyeing and printing designs until close to manufacture, thereby reducing waste and minimizing the need to clear unsold inventories. It also decreases costs of holding inventory.
Marketing
Zara does almost no advertising. However, this is not hindering that Zara in becoming a very well-respected brand worldwide. Zara’s strategy is to pay more attention to the feedback from consumers, and such feedback is reflected in its values, images and added values. Therefore, good control of customers’ feedback helps Zara to be stronger.
“The reason for not spending money on publicity is that it doesn’t bring any added value to our customers. We would rather concentrate on our offering more in terms of design, prices, rapid turn-around of stock and the store experience.”
Summary
Fashionable design with medium price is one of the most valuable distinguishing features of Zara. Another one is unique product strategy. In comparison with other competitors, Zara can produce 11,000 different products per year. The speed of creating a new design and delivering it to Zara stores is fast. There is a special situation in that Zara does almost no advertising. However, this is not hindering Zara in becoming a very well respected brand worldwide. Zara’s strategy is to pay more attention to the feedback from consumers, and such feedback is reflected in its values, images and added values. Therefore, good control of customers’ feedback helps Zara to be stronger.
Dollcee Khattar dollcee.khattar@yahoo.com