Zara's profile
Zara is a fashion brand which was established in 1975 by the Spanish Inditex group which was owned by Amancio Ortega. The brand is supported by other sister companies like Bershka, Massimo Dutti, Pull and Bear, Stradivarius, Oysho, Zara Home, Zara kinds and Uterque. Zara has made huge profits during the last two decades and is now ranked the third biggest retailer world-wide (Zhang, 2008). Unlike its competitors, Zara produces more than half of its products in Europe and not in Asia or South America as most companies do nowadays(Bruce and Daly, 2006).
Average markdown ratio of Zara is set at approximately 50 per cent according to Sull and Turconi (2008) and as opposed to similar brands Zara sold out only 15 per cent of its products on sale basis. All these factors have enabled Zara to expand its sales and profits over 20 per cent per year. Zara is credited by its Agile Supply Chain and most market researchers attribute the success it has made thus far to its success with its efficient Agile Supply Chain (Dutta, 2002; Tiplady, 2006; Sull and Turconi, 2008; Zhang, 2008). Zara’s success can be summarized into four factors.
1- Owning a professional group of designer.
2- Operating 9 garment factories by itself, so that the new apparel can be completed from planning, designing to production within a week.
3- Thirdly, Zara has a fast delivery.
4- Zara adopts a strategy of “limited collection and new design”. This means every three week all of the clothing products should be updated and parceled. (Zara 2010.)
Zara’s designers have unique creativity with tendency and enthusiasm towards young people. They often visit New York, London, Paris, Milan and Tokyo, to have ideas about latest female fashion and trends in order ...
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- Expand assortment
Threats
- Lots of competitors
- No advertising campaign
- Potential oversaturation
- Manufacturing base in Spain may become expensive
- Competitive market despite lower prices
- Consumer distrust by lower prices
- Changing consumer preferences
- Lower cost competitors or imports
Comparison between H&M and ZARA
The differences between H&M and Zara have been shown in this chapter. They have something in common which is easy to compare with. Both of them are successful apparel company and have a huge popularity in the same industry. However, they have different business strategy to carry out their businesses. Benchmarking here is aimed at evaluating H&M’s strategic management and learning some experiences to better improve their strategy and performance.
The Michael Kors business is operated in three segments: retail, wholesale and licensing. The company has developed strong distribution channels in these three segments including company-operated retail stores, various department stores, specialty stores and select licensing partners. As illustrated in the graph, the company has real...
The line “Zara Women” mainly target the white collar working woman aged 25+. The style has amore haute couture appeal and consist of many business and workplace related pieces that complement each other and can be worn as formal suits. Zara’s “Basic” line is more self-explanatory. The pieces found here are very versatile and can be worn by any Zara female customer aged 18+. This consists of selling casual everyday t-shirts, evening party gowns, to business attire, at very affordable prices. It is the largest of the three sections found in Zara’s women’s clothing. The “Zara TRF” line focuses more on the urban appeal for the Zara customers aged 13-25.Trendy denim as well as graphic t-shirts can be found in this section
The strongest visual presentation that Zara creates are the mannequins in front of the stores and also standing through the glass windows. Since all of them are wearing the trendies clothing from this season and they all look put together, that draws many people to go in to the store and have a look. Not only they will have one style, there will be many different styles on the mannequins, so it will bring different types of people in.
2) How specifically do the distinctive features of Zara’s business model affect its operating economics? Specifically, compare Zara with an average retailer with similar posted prices. In convenient to assume that on average, retail selling prices are about twice as high as manufacturers’ selling prices.
Business strategy and model: Zappos.com had a differentiation strategy with which they had differentiated themselves from the rest of the market. They had use a unique corporate culture in their company which was one of the major competitive edges of the company. According to the CEO of the company, Tony Hsieh, that everything that they had done at Zappos such as their relationships with 1,200 to 1,500 brands, policies and website style could be copied, however, the only thing that no one could copy from them was their unique culture. Zappos had 10 unique core values as a basis of their company’s culture, employee performance and their overall operations. They were hiring and firing people on the basis of their abilities that whether they were living up to these core values or not.
Zara is a famous Spanish apparel retailer based in Arteixo Galicia that provides product lines for women, men, and children. They are a high fashion retail that has a fast changing product lines. Zara is now represented in over 30 markets worldwide and operates over 500 stores. Zara has been operating under Inditex that was founded by Amancio Ortega in 1975. Inditex has been a global specialty retailer and has six apparel retailing chains including Zara. The six different chains include Zara, Massimo, Dutti, Pull & Bear, Bershka, Stradivarius, and Oysho. In 2001, Inditex has generated a net income of 340 million Euros. Currently, Zara is the largest and most international retailer in Inditex’s chains. Zara mission was to always to provide fast and affordable fashion apparel for customers. Since the fashion industry is rapidly changing over the seasons, Zara wanted to provide customers with attracting design.
1a: Zara’s ability to manage some of the manufacturing in-house and distribute only what is absolutely necessary to outside manufacturers gives them a unique amount of flexibility and control over cost and quality. Their competitors are primarily outsourcing the production, so that control over price is lost.
The fundamental business strategy of Zara is very simple which is linking customer demand to manufacturing, and liking manufacturing to distribution. Zara has been running their business in fashion industry which is susceptible to seasons and quick changing customer tastes. Zara has been approached to and considered their business as a perishable commodity business just like a fresh baked cake or bread to be consumed quickly.
The Inditex Company is a company based in Spain known as one of the most successful fashion companies in the world. Inditex’s brands include Bershka, Massimo Dutti, Oysho, Stradivarius, Pull & Bear, Uterque, Zara Home, and most commonly known, Zara. Zara is the oldest and biggest brand that Inditex owns. The company started as a small shop in La Coruna first named Zorba. The name was later changed to Zara because there was already a bar nearby with the name Zorba. “It wasn’t long before the brand became a huge success known for its fast fashion. Inditex is a pioneer amoung “fast fashion” company, which essentially imitate the latest fashions and speed their cheaper versions into stores” (Hansen, 2012).
Zara is a fashion clothing store owned by Spanish fashion group Inditex. The first Zara store opened in La Coruna by Amancio Ortega in 1975. Major consumers included young, fashion forward people who resided in the city whose trends and demands were hard to forecast. Being in the apparel industry, he believed that retailing and manufacturing needs to be closely linked to meet consumer demands. What differentiates zara from competitors is the rapid turnover time and using the physical store as a source of information. The company was a huge success and the Zara chain opened an average of one store per day across the world since 2003 and currently having about 550 stores.
2.4 Segmentation: Some of the important bases for segmenting consumer markets are Demographic, Geographic, benefits, Psychographic and Usage rate segmentation. Geographic segmentation is the priority of Zara. It is a global brand and its supply chain management is very much perfect. It helps Zara in getting the latest trends into stores in three weeks’ time, based on consumer preferences. It’s a Spanish brand, so it would be a better option for Zara to open more stores in European countries.
Therefore their consumer promise is also the force behind the combination of their environmental and preservation guidelines used through the group 's supply chain. Zara, has been a groundbreaker in conveying new fashions, new designs, and new ideas rapidly to its stores. Zara’s tenacious thrust of on-trend products into the supply chain channel keeps its stores in stock on the latest fashions at lucrative prices. Lots of their new concepts have come from some of the fashion shows that just ended in New York, Paris and Milan will soon be on Zara’s racks.
Zara is the run by Inditex, which is the largest Spanish corporation and the world’s largest fashion group. Zara was first opened by Amancio Ortego Gaona in 1975 on an upmarket shopping street in La Coruna, and has continued to expand at a very positive growth rate. By the 1970’s, there were half a dozen Zara stores in Galician cities, and by the year of 1990, Zara had opened in various countries internationally such as USA, Paris, and Portugal.
ZALORA’s brands range from International favorites, High-end local designers and also an eclectic mix of home grown high street fashion labels. Besides that, there are hundreds of new product lines every week thus able to ingratiate to the needs and preferences of every consumer. ZALORA is the best and most stylish lookout for new trends and new styles.
The business model that sets Zara apart from other clothing retailers is how rapidly the company changes stocks and releases new product lineups. The company averages 12-16 collections annually which equates to more than one lineup a month. Due to stock being limited and the rapid production Zara brings forth, their items are viewed as exclusive promoting further business. Their customers are happy knowing that their specific article of clothing is more “rare” due to only having an average of a two-week window to purchase the clothing. The company specifically targets current trends and has them in the store within 30 days. This maintains the brand’s uniqueness and relativity in fashion.