ZARA
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ZARA

 

ZARA   Zara is one of the most popular retail brands in the world — if not the most popular. With the dramatic introduction of the 'fast fashion' retail concept since its foundation in Spain in 1975, Zara has sought to create a responsible passion for fashion among a wide range of consumers, in different cultures and age groups. There are many factors that have contributed to Zara's success, but one of their main assets, which has played a significant role in making them a world fashion powerhouse today, is their ability to put customers first. Zara are obsessed with their customers and from the very beginning they defined the company and the brand culture according to their customers.

The Zara brand offers men's and womenswear, children's wear (Zara Kids), footwear and accessories. Zara TRF sub-brand offers fashionable and, at times, 'edgier' products for younger women and teenagers.

Zara brand history

Zara company was founded by Amancio Ortega and Rosalía Mera in 1975 as a family business in the centre of Galicia in the north of Spain. Amancio Ortega named the Zara brand because his favourite name Zorba had already been taken. Over the next 8 years, Zara's approach to fashion and its business model gradually focused on customers within Spain. This led to the opening of 9 new stores in Spain’s largest cities.

In 1985, Inditex was established as a holding company that laid the foundations for a distribution system capable of reacting very quickly to changing market trends. Ortega created a new design, production and distribution process that can reduce lead time and respond faster to new trends, which he called 'instant fashion'. This was due to the large investment in information technology and the use of groups instead of individual designers for the critical element of 'design'. Over the next decade, Zara began aggressive expansion into global markets, including Portugal, New York (USA), Paris (France), Mexico, Greece, Belgium, Sweden, Malta, Cyprus, Norway and Israel. Today there is hardly a developed country without a Zara store.

Zara now has 2,266 stores strategically located in leading cities in 96 countries. No wonder that Zara, which was originally a small store in Spain, is now the world's largest fast fashion retailer and the Inditex's flagship brand. According to Forbes magazine, its founder, Amancio Ortega, is the sixth richest man in the world.

Today, Inditex is the world's largest fashion group, with more than 170,000 employees and more than 7,400 stores in 202 markets worldwide, including 49 online markets. Inditex's revenue was $29.4 billion in 2018.

 

 

Zara brand strategy

In 2018, Zara was ranked 25th on consulting company Interbrand's list of top global brands. Its basic values can be found in four simple categories: beauty, transparency, functionality and sustainability.

The secret of Zara's success is largely due to their ability to keep up with the rapidly changing trends in fashion and present it in its collections in a very short time. It was supposed to keep up with the latest fashion trends, but to offer clothing collections that are a combination of high quality and yet affordable. The brand watches closely as fashion changes and evolves every day around the world. Based on the latest styles and trends, they create new designs and put them in stores within a week or two. In comparison, most other fashion brands would take almost six months to bring new designs and collections to market. Zara was able to beat other competitors. It quickly became a favourite brand of people who want to keep up with fashion trends. The founder, Amancio Ortega, is known for his views on clothes as perishable goods. According to him, people should love to use and wear clothes for a short time and then throw them away, like yoghurt, bread or fish, instead of storing them in cabinets. The media often quote that a brand produces 'freshly baked clothes' that will survive fashion trends for less than a month or two.  

Customer co-creation: Zara's main designer is the customer. Zara's constant focus on the customer is the basis of the brand's success and the peaks achieved today. There was a fascinating story about how Zara co-creates its products with the input of its customers.

In 2015, a lady named Miko entered Zara's store in Tokyo and asked the shop assistant for a pink scarf, but the store did not have any pink scarf. The same thing happened almost simultaneously to Michelle in Toronto, Elaine in San Francisco and Giselle in Frankfurt, who all went into Zara stores and asked for pink scarves. They all left the stores without scarves — an experience that many other Zara fans have met all over the world in various Zara stores over the next few days. 7 days later, more than 2,000 Zara stores around the world started selling pink scarves. Exactly 500,000 pink scarves had been shipped. They sold out in 3 days. How were the pink scarves available so fast?

Customer information is the holy grail of modern business, and the more companies know about their customers, the better they do.

 

 

Zara's highly efficient supply chain

Zara's highly responsive, vertically integrated supply chain enables Zara to export clothing 24 hours a day, 365 days a year, sending new products to stores twice a week. After designing the products, it takes about 10–15 days to reach the stores. All clothing items are processed by a distribution centre in Spain, where new items are checked, sorted, marked and loaded into trucks. In most cases, the clothes are delivered to the stores within 48 hours. This vertical integration allows Zara to retain control over areas such as dyeing and processing, and fabric processing capabilities are available on request to provide the right fabrics for new styles according to customer preferences. It also eliminates the need for warehouses and helps to reduce the impact of demand fluctuations. Zara produces more than 450 million products and introduces around 12,000 new projects each year, so supply chain efficiency is crucial. In addition to supply chain efficiency, Zara can also modify existing products in just two weeks. Shortening the product life cycle means more success in meeting consumer preferences.

If the project does not sell well within a week, it is withdrawn from the stores, subsequent orders are cancelled and a new project is implemented. Zara closely monitors changes in customer preferences towards fashion. They have a number of basic designs that are carried over from year to year, but some fashionable, trendy products, inspired by the latest trends, can stay on the shelves for less than four weeks, encouraging Zara fans to visit again and again. The average store in Spain expects customers to visit it three times a year, but in the case of Zara, customers are expected to visit it about 17 times a year.

 

Sustainability at the heart of Zara's business

 Sustainability has been a hot topic in business for the last decade and is now rapidly becoming an essential hygiene factor for companies that want to live up to and win the loyalty of their global customers. For Inditex, this means being committed to people and the environment.

Commitment to people: Inditex ensures that its employees share a common vision of values based on sustainability through professional development, equality and diversity and volunteering. It also ensures that its suppliers have fundamental rights at work and initiates continuous improvement programmes for them. Inditex also spends almost $52 million a year on social and community programmes and initiatives.

To sum up, the entire brand culture is extremely customer-oriented, which was and still is a significant contribution to Zara's success.

 

Zara brand communication strategy

Zara brand communication strategy applied an almost zero advertising and promotional policy throughout its existence, preferring instead to invest a percentage of its revenue in opening new stores. It spends a modest 0.3 percent of its sales on advertising compared to an average of 3.5 percent of its competitors. The brand's founder, Amancio Ortega, never talked to the media or advertised Zara in any way. It is indeed a sign of a truly successful brand, where customers appreciate and want a brand that outweighs the benefits at product level, but is strongly driven by the brand experience.

Instead of advertising, Zara uses store location and store displays as key elements of its marketing strategy. By choosing a location in the most famous locations in the city, Zara stores receive very high customer traffic.

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