ZARA

THE FAST FASHION

zara
Known for its fast, affordable fashion, retail chain Zara has built up a multi-billion dollar brand through listening and reacting quickly to its customers

Industry Founded Founder(s) Headquarters Area served Key people Products Revenue

Retail A Corua, Galicia, Spain (1975) Amancio Ortega Arteixo, Spain Worldwide Carlos Mato Lpez (Director General) Clothing 7.071 billion (2009)

INTRODUCTION
Zara is the flagship chain store of Inditex Group owned by Spanish tycoon Amancio Ortega, who also owns brands such as Massimo Dutti, Pull and Bear, Oysho, Uterqe, Stradivarius and Bershka. The group is headquartered in A Corua, Spain, where the first Zara store opened in 1975. Zara has resisted the industry-wide trend towards transferring fast fashion production to low-cost countries. Perhaps its most unusual strategy was its policy of zero advertising; the company preferred to invest a percentage of revenues in opening new stores

Creation of ZARA 1963-1974 Amancio Ortega Gaona founded Inditex 1975 The first zara store was opened in Spain 1976-1984 Spreading of zara store in Spain 1985 Zara started to enter the overseas market (in Portugal) 1989 Entering New York City, in USA 1990 Entering Paris, in France 1991-2004 Spreading to the whole world including Japan(1998) 2007 Entering Korea in 30, April at COEX Mall and Lottte Young Plaza In 2010 Zara s company opened his first online shop.

Creation of ZARA

Inditex

Chairman: Amancio Ortega Gaona Location of Headquarter: Corua in Spain Annual profit: 94billion
ZARA One brand of the Inditex group profit makes up 75% of the Inditex.

INTERNAL WEBSITE

Zara clothing offers quality trend to an audience: female male adolescent child.

From Zara derive other shops like: Zara shoes Zara accesories Zara home

This chain of Spanish fashion stores has more than 200 designers and a higher number of models.

Zaras collections are small and sell out quickly creating esxclusivity sensation.

Zara has no advertising, the only trade exhibition is based on trucks ,storefronts,catalog and in the zara bag.

Zara's five-point marketing approach to reach its customers

1. Store location: The company always tries to find the perfect location and ensure its brand is visible to as many people as possible 2. Store window: The first meeting point with the customer and the place where Zara advertises the next season's look 3. Interior design and store image: Has to be right every time. Zara renews this image every six to eight months in all of its stores 4. Goods display: A dedicated team of co-ordinators display the collections by showing off the best trends, fabrics and colours 5. Customer service: Something Zara believes it's excellent at. The aim is to have as much personal contact with the customer as possible.
Copyright 2010 - Roula Jannoun- BAU 13

ZARA S WORKING
Zara's single, centralized design and production center is attached to Inditex (Zara's parent company) headquarters in La Corua. It consists of three spacious halls one for women's clothing lines, one for men's, and one for children's. Unlike most companies, which try to excise redundant labor to cut costs, Zara makes a point of running three parallel, but operationally distinct, product families. Accordingly, separate design, sales, and procurement and production-planning staffs are dedicated to each clothing line. A store may receive three different calls from La Corua in one week from a market specialist in each channel; a factory making shirts may deal simultaneously with two Zara managers, one for men's shirts and another for children's shirts. Though it's more expensive to operate three channels, the information flow for each channel is fast, direct, and unencumbered by problems in other channels making the overall supply chain more responsive.

The relentless introduction of new products in small quantities, ironically, reduces the usual costs associated with running out of any particular item. Indeed, Zara makes a virtue of stock-outs. Empty racks don't drive customers to other stores because shoppers always have new things to choose from. Being out of stock in one item helps sell another, since people are often happy to snatch what they can. In fact, Zara has an informal policy of moving unsold items after two or three weeks. This can be an expensive practice for a typical store, but since Zara stores receive small shipments and carry little inventory, the risks are small; unsold items account for less than 10 percent of stock, compared with the industry average of 17 percent to 20 percent. Furthermore, new merchandise displayed in limited quantities and the short window of opportunity for purchasing items motivate people to visit Zara's shops more frequently than they might other stores. Consumers in central London, for example, visit the average store four times annually, but Zara's customers visit its shops an average of 17 times a year. The high traffic in the stores circumvents the need for advertising: Zara devotes just 0.3 percent of its sales on ads, far less than the 3 percent to 4 percent its rivals spend.

Zara manufactures and distributes products in small batches. Instead of relying on outside partners, the company manages all design, warehousing, distribution, and logistics functions itself

MARKETING STRATEGY
PRODUCT VARIETY SPEED TO MARKET STORE LOCATION Zara takes 10-14 days to take a new style from cocept to shelves in industry Where 9 months is a norm in the industry

 50% of the products Zara sells are manufactured in Spain, 26% in the rest of Europe, and 24% in Asian and African countries and the rest of the world. The company can design a new product and have finished goods in its stores in four to five weeks It can modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences. Zara maintains a design team of 200 people, all of which produce approximately 12,000 new styles per year for Zara.

COMPARISON
H&M stores : Countries : Employees : designers : Revenue :

The GAP

Benetton 5.500 120 8.000 300 2.085 billion

1.700 33 68.000 100

3.100 19 152.000 n.s.

9.6 billion $15.8 billion

Comparison: ZARA vs. H&M

ZARA
vertical integration Short lead times engages many designers Originate designs in a few weeks one distribution center Better survey over inventory low costs expand very fast(stores in 39 countries) stores as a face to the world

H&M
all production outsourced Long lead times 60 % fewer designers

a distribution center in each country High costs

expand very slow(stores in 8 countries) no focus on store makeups

Comparison: ZARA vs. Benetton

ZARA three different modes for expansion: 1.Franchise systems 2.Company owned stores 3.Joint Ventures United Colors of Benetton one main mode for expansion: 1. Licensees

Comparison: ZARA vs. GAP

ZARA vertical integration Short lead times fast expansion in 39 countries GAP outsourced all production Long lead times slow expansion in 5 countries

PRODUCT RANGE
WOMEN price: 3290- 11990 INR MEN price: 550- 1790 INR KIDS girl(2-14yr): 350-2690 INR boy(2-14yr): 350-2290 INR baby girl(3-36month): 550-2690 INR baby boy(3-36month): 350-3690 INR mini(0-9, 9-12month): 350-2290 INR

What s unique about ZARA?

freshness (fast production and distribution to offer the latest fashion) Change 75 % of the merchandise on display every 3 or 4 weeks The frequency of customer visits rises Scarcity few advertisement Customers need to visit stores to get the newest fashion Save costs for publicity

Pricing to market
At the Zara stores, price tags stated in many currencies and for multiple countries so customer feel equality .

Copyright 2010 - Roula Jannoun- BAU

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Zara Global expansion:

References
http://www.zara.com/ www.3isite.com/articles/ImagesFashion_Zara_Part_I.pdf www.3isite.com/articles/ImagesFashion_Zara_Part_II.pdf http://hbswk.hbs.edu/archive/4652.html Harvard Business Review, Vol. 82, No.11, November 2004 http://en.wikipedia.org/wiki/Fast_fashion http://www.torex.com/english/news/whitepapers/pdf/Fa stFashion-en-WP.pdf www.inditex.com

Thats all what I can say about Zara Thank you

Created by: 1 Roncesvalles Barainca 2 Ftima de Orbe 3 Mara Garro