Zara

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Zara: IT for Fast Fashion
Zara is one of the oldest and biggest fashion brands of Inditex, one of the world’s largest distribution groups. It is a Spanish clothing and accessories retailer that was started in 1975 by Amanico Ortega. Jose Maria Castellano Rios joined Zara in 1985 as an IT manager and went on to become the CEO of Inditex in 1997. Ortega and Castellano shared many business beliefs about the company which has led Zara to become one of the world’s largest apparel retailers today. Zara still lives on a simple idea originated by Ortega, according to which, customer demand is the crux of the business. The idea is to link customer demand to manufacturing, and link manufacturing to distribution. Castellano along with Ortega brought computerization to Zara. Along with the need for Information Technology, Ortega and Castellano also shared other beliefs that Zara needs to be quick in responding to fashion demands of its customers and that the judgment of employees in speedy decision making will be of an advantage to Zara’s business.
Out of the 1,558 stores that Inditex operated in 45 countries in 2003, Zara chain had 550 stores with an average of opening one store per day worldwide. Today Zara has a huge international presence, with France being its largest international market. Its target market is young, fashion conscious city-dwellers. It offers a wide range of selection of clothes and accessories to three different segments of its target market– the largest being Women’s accounting for 60% of sales and the other two being Men’s and the fast-growing Children’s segment. Multinational clothing retailers such as H&M, Gap, and Benetton are its competitive rivals. Keeping this in mind, the consistent success of Zara in the ever-...

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...cause its Distribution Centers are not configured for handling and shipping small orders. Moreover, Zara understands that 5% store returns are a very small number as compared to 50% - 60% returns in the retail mail-order industry. It does have a website – www.zara.com- but it is only a digital display window.
Zara is extremely focused on its core fashion credo and therefore it is constantly seeking innovation in its products by introducing something completely new or by making changes to the existing products in a very short lead time throughout the year. Due to this solid commitment towards its goals, Zara does not have to predict its sales; be it six months down the line or a month. This helps it save a huge amount of production cost. The IT architecture is in alignment with their operating processes. All these factors give Zara an advantage over its competitors.

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