case study zara analysis

How Zara became the undisputed king of fast fashion?

Zara is one of the biggest international apparel brands. Zara invites customers from around 93 markets to its organization of 2000+ stores in upscale markets on the planet’s biggest urban communities. With these stores, Zara generates 18 billion Euros annually.

The brand has been fruitful in keeping up its central goal to give quick and reasonable designs in the world of fashion. Zara’s way to deal with configuration is firmly connected to its clients. This story is about how Zara became the undisputed king of Fast fashion.

Fashion is the imitation of a given example and satisfies the demand for social adaptation. . . . The more an article becomes subject to rapid changes of fashion, the greater the demand for cheap products of its kind. — Georg Simmel, “Fashion” (1904)

History of Zara: The Long Story Cut Short

Amancio Ortega launched the first Zara store in 1975 in Central Street in downtown A Coruna, Galicia, Spain. The main Store included low-value look-a-like designs of famous and better-quality dress styles. The store ended up being a triumph and Ortega Began opening more Zara stores throughout Spain.

During the 1980s, Ortega began changing the plan, assembling and dissemination cycle to diminish lead times and respond to new patterns in a snappier manner in what they called “Moment Fashions”.

In 1980 the company started its international expansion through Porto, Portugal in the 1990s, with Mexico in 1992. Since then Ortega has continued to grow and create brands such as Pull & Bear, Bershka , and Oysho . It has acquired groups like Massimo Dutti and Stradivarius . Even though these brands have been contributors to their parent group Inditex’s success, Zara is still the principal growth driver.

Zara’s Customer-driven Value Chain

Product line-up:.

Unlike other Inditex chains, Zara has focused on manufacturing fashion-sensitive products internally. The latest designs were continuously in production as per changing customer’s preferences. Many competitors were producing just a few thousand SKUs whereas Zara was producing several hundred of thousands of SKUs in a year. These SKUs varied as per color, size, and fabric.

Zara’s designs are not dependent on design maestros. Instead, its designers carefully observe the catwalk trends and try to implement them for the mass market. The design team continuously creates variations in a particular season. Thereafter expanding on successful designs.

Fast Supply Chain:

Zara’s flexible supply chain allows it to dispatch new ranges to shops two times per week from its central distribution center that is an approximately 400,000-square-meter facility located in Arteixo, Spain. This kind of business system called vertical integration eliminated the need for local warehouses. The strategy here was to reduce the “bullwhip effect”. Let’s see what the bullwhip effect is:

The bullwhip effect is a distribution channel phenomenon in which demand forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in consumer demand as one moves further up the supply chain. Wikipedia

It was a matter of a few weeks and a new design was on the shelf for the customers. Isn’t cool? These designs of clothes and accessories were quickly moved to fancy stores in prime locations but at a cheap price. This strategy has attracted a lot of fashion yet money conscious customers.

We want our customers to understand that if they like something, they must buy it now because it won’t be in the shops the following week. It is all about creating a climate of scarcity and opportunity. Luis Blanc, one of the former Inditex’s international directors

Zara’s Retailing Strategy

Zara instead of focusing on improving its manufacturing efficiency focused on improving its retail strategy. This retailing strategy was about following fashion trends quickly even it means there is an unmet demand. As was previously discussed, this also helped Zara in creating a FOMO for its products. The two components of its retailing strategy were dependent on its upstream operations: Merchandizing and Stores.

Read: The Torchbearers of Sustainable Fashion

Merchandising.

Merchandising is the promotion of goods and/or services that are available for retail sale. It includes the determination of quantities, setting prices for goods and services, creating display designs, developing marketing strategies, and establishing discounts or coupons. Investopedia

• Zara placed emphasis on the freshness of its designs. It wanted to create a sense of exclusivity. It never focused on creating bulk items of one design. Zara had confidence in its fast supply chain of twice a week shipment to the store with the latest designs. Thre quarter of its merchandise gets replaced in just a month. How about that?

The success of your business is based in principle on the idea of offering the latest fashions at low prices, in turn creating a formula for cutting costs: an integrated business in which it is manufactured, distributed, and sold. Amancio Ortega

Fun Fact : An average customer visits a Zara store 17 times in a year where the number is 3-4 times for its competitors.

• Zara understood the importance of store locations very well. Zara prices are not expensive but its store location and design made its products look expensive. The brand wanted its customers to have a premium feel at a reasonable price.

We invest in prime locations. We place great care in the presentation of our storefronts. That is how we project our image. We want our clients to enter a beautiful store, where they are offered the latest fashions. Luis Blanc, one of the former Inditex’s international directors

Store Operations

Zara has stores in most upscale markets and shopping centers in the world. You name it and they have a store there. Champs Elysées in Paris, Regent Street in London, and Fifth Avenue in New York to name a few. As per its latest annual report the value of these properties is valued at almost 8 billion Euros. But the way these stores are managed is a strategy to learn for all retailers.

• We all love grand stores with a lot of variety. Zara has emphasized on creating a grand image of its stores. Imagine a big store at a posh location. How much impressed you would be. The average size of Zara stores has continuously increased over the years. In 2001 the average store size was 910 sq.m whereas in 2018 the size has more than doubled.

Zara’s average store size has increased by 50%: from 1,452m2 in 2012 to 2,184m2 in 2018. That growth has been driven by new store openings – larger flagship stores – as well as the fact that many of the new openings have entailed the absorption of one or more older, smaller units in the same catchment area. Inditex Annual Report

• Zara has tried to standardize the in-store experience with its store window displays and interior presentations. As the season progresses, Zara consistently evolves its interior themes, color schemes, and product placements. All these ideas come from the central team in Spain and regional teams implement with necessary region-based adaptations. So much so that the uniforms of the staff were selected twice in a season by a store manager from the latest collection.

Anti-Marketing Approach of Zara

Zara has able to maintain profitability ~13% whereas its major competitor like H&M is at 6% . This has been possible not only because of its efficient supply chain we discussed above but also because of its no advertising or limited advertising policy.

This is what makes Zara really one of a kind. The organization just spends about 0.3% of deals on promoting and does not have a lot of advertising to discuss. The usual trend in the industry is to spend 3.5% on advertising. Zara never shows its clothes at expensive fashion shows also. It first shows its designs at stores directly. But why does not Zara believe in advertising? There are primarily two reasons:

• First, as we discussed it saves Zara a lot of money. So much so that it has now one of the highest profitability.
• Second, it brings exclusivity and prevents overexposure of a design. Customers feel like if they purchase a shirt at Zara, five others won’t have that equivalent shirt at work or school.

Read: Viral Marketing over the Long-Haul ft. Burger King

Zara is a perfect case study to learn the perfect operations strategy, perfect marketing strategy, perfect pricing strategy, and whatnot. It’s all strategies are so perfect. It is also a perfect example to understand how a traditional brand is evolving itself with time to stay relevant.

As per its annual report , In 2018, Zara launched its global online store, marking a milestone in its commitment to having all of its brands available online worldwide by 2020. Zara continued to earn global accolades for its collections and initiatives, its integrated shopping experience, and its commitment to sustainability, with over 90 million garments put on sale under the Join Life label.

Zara is just not a brand of fast fashion. Its much more than that now. And that’s why it’s actually the true king of fast fashion.

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How Zara’s strategy made her the queen of fast fashion

Table of contents, here’s what you’ll learn from zara's strategy study:.

• How to come up with disruptive ideas for your industry.
• How finding the right people is more important than developing the best strategy.
• How best to address the sustainability question.

Zara is a privately held multinational clothing retail chain with a focus on fast fashion. It was founded by Amancio Ortega in 1975 and it’s the largest company of the Inditex group.

Amancio Ortega was Inditex’s Chairman until 2011 and Zara’s CEO until 2005. The current CEO of Zara is Óscar García Maceiras and Marta Ortega Pérez, daughter of the founder, is the current Chairwoman of Inditex.

Zara's market share and key statistics:

• Brand value of $25,4 billion in 2022
• Net sales of $19,6 billion in 2021
• 1,939 stores worldwide in 2021
• Over 4 billion annual visits to its website
• Inditex employee count of 165,042 in 2021

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Humble beginnings: How did Zara start?

Most people date Zara’s birth to 1975, when Amancio Ortega and Rosalia Mera, his then-wife, opened the first shop. But, it’s impossible to study the company’s first steps, its initial competitive advantage, and strategic approach by starting at that point in time.

When the first Zara shop opened, Amancio Ortega already had 22 years of industry experience, ten years as a clever and hard-working employee, and 12 years as a business owner. Rosalia Mera also had 20 years of industry experience.

As an employee , Ortega worked in the clothing industry, first as a gofer and then as a delivery boy. He quickly demonstrated great talent for recognizing fabrics, understanding and serving customers, and making sound business suggestions. Soon, he decided to use his insights to develop his own business instead of his boss’s.

As a business owner , he started  GOA Confecciones  in 1963, along with his siblings, his wife, and a close friend. They started with a humble workshop making women’s quilted dressing gowns, following a trend at the time Amancio had noticed. Within ten years, that workshop had grown to support a workforce of 500 people.

And then, the couple opened the first Zara shop.

Zara’s competitive positioning strategy in its first year

The opening of the first Zara shop in 1975 wasn’t just a new store to sell clothes. It was the final big move of a carefully planned vertical integration strategy.

To understand how the  strategy was formulated , we need to understand Amancio’s first steps. His first business, GOA Confecciones, was a manufacturing business. He was supplying small stores and businesses with his products, and he wasn’t in contact with the end customer.

That brought two challenges:

• A lack of insight into market trends and no direct consumer feedback about preferences.
• Very low-profit margins compared to the 70-80% profit margin of retailers.

Amancio developed several ideas to improve distribution and get a direct relationship with the final purchaser. And he was always updating his factories with the latest technological advancements to offer the highest quality of products at the lowest possible price. But he was missing one essential part to reap the benefits of his distribution practices:  a store .

So, in 1972 he opened one under the brand name  Sprint . An experiment that quickly proved unsuccessful and, seven years later, was shut down. Although it’s unknown the extent to which Amancio put his ideas to the test, Sprint was a private masterclass in the retail world that gave Amancio insights that would later turn Zara into a global success.

Despite Sprint’s failure, Amancio didn’t abandon the idea of opening his own store mainly because he believed that his advanced production model was vulnerable and the rise of a competitor who could replicate and improve his system was imminent.

Adding a store to his vertical integration strategy would have a twofold effect:

• The store would operate as a direct feedback source. The company would be able to test design ideas before going into mass production while simultaneously getting an accurate pulse of the needs, tastes, and fancies of the customers. The store would simultaneously reduce risk and increase opportunity spotting.
• The company would have reduced operating costs as a retailer. Since the group would control all aspects of the process (from manufacturing to distribution to selling), it would solve key retail challenges with stocking. The savings would then be passed on to the customer. The store would have an operational competitive advantage and become a potential cash cow for the company.

The idea was to claim his spot in prime commercial areas (a core and persistent strategic move for Zara) and target the rising middle class. The market conditions were tough, though, with many family-owned businesses losing their customer base, giant players owning a huge market share, and Benetton’s franchising shops stealing great shop locations and competent potential managers.

So the first Zara store had these defining characteristics that made it the successful final piece of Amancio’s strategy:

• It was located near the factory = delivery of products was optimized
• It was in the city’s commercial heart = more expensive, but with access to affluence
• It was located in the city where Ortegas had the most customer experience = knowing thy customer
• It was visibly attractive = expensive, but a great marketing trick

Amancio’s team lacked experience and expertise in one key factor:  display window designing . The display window was a massive differentiator and had to be bold and attractive. So, Amancio hired Jordi Bernadó, a designer with innovative ideas whose work transformed display windows and the sales process.

The Zara shop was a success, laying the foundations for the international expansion of the Inditex group.

Key Takeaway #1: Challenge your industry’s conventional wisdom to create a disruptive strategy

Disrupting an industry isn’t an easy task nor a frequent occurrence.

To do it successfully, you need to:

• Understand the prominent business mode of your industry and the forces that contributed to its development.
• Challenge the assumptions behind it and design a radically different business model.
• Develop ample space for experimentation and failures.

The odds of instantly conquering the industry might be low (otherwise, someone would have already done it), but you’ll end up with out-of-the-box ideas and a higher sensitivity to potential disruptors in your competitive arena.

Recommended reading:   How To Write A Strategic Plan + Example

How Zara’s supply chain strategy is at the core of its business strategy

According to many analysts, the Zara supply chain strategy is its most important innovative component.

Amancio Ortega and other senior members of the group disagree. Nevertheless, the Inditex  logistics strategy  is extraordinarily efficient and plays a crucial role in sustaining its competitive advantage. Most companies in the clothing retail industry take an average of 4-8 weeks between inception and putting the product on the shelf. The group achieves the same in an average of two weeks. That’s nothing short of extraordinary.

Let’s see how Zara developed its logistics and business strategy.

Innovative logistics: how Zara’s supply chain evolved

The logistics methods developed by companies are highly dependent on external factors.

Take, for example, infrastructure. In the early days of Zara, when it was expanding through Spain, the company considered using trains as a transportation system. However, the schedule couldn’t keep up with Zara’s needs, which had the goal of distributing products twice a week to its shops. So transportation by road was the only way.

However, when efficiency is a high priority, it shapes logistics processes more than anything else.

And for Zara, efficient logistics was – and still is – of the highest priority.

Initially, leadership tried outsourcing logistics, but the experiment failed and the company assigned a member of the house with a thorough knowledge of the company's operating philosophy to take charge of the project. The tactic of entrusting important big projects to employees imbued with the company’s philosophy became a defining characteristic.

So, one of Zara’s early strategic decisions was that each shop would make orders twice a week. Since the first store was opened, the company has had the shortest stock rotation times in the industry. That’s what drove the development of its logistics methods. The whole strategy behind Zara relied on quick production and distribution. And the proximity of manufacturing and distribution was essential for the model to work. So Zara had these two centers in the same place.

Even when the brand was expanding around the world, its logistics center remained in Arteixo, Spain, despite being a less-than-ideal location for international distribution. At some point, the growth of the brand, and Inditex as a whole, outpaced Arteixo’s capacity, and the decentralization question came up.

The debate was tough among leadership, but the arguments were strong. Decentralization was necessary because of:

• Safety and security.  If there was a fire or any other crippling disaster there (especially on a distribution day), then the company would face serious troubles on multiple fronts.
• Arteixo’s limitations.  The company’s center in Arteixo was reaching its capacity limits.

So the company decided to decentralize the manufacturing and distribution of its brands.

Initially, the group made the decision to place differentiated logistics centers where the management of its chain of stores was based, i.e. Bershka would have a different logistics center than Pull&Bear, although they were both part of the Inditex Group. That idea emerged after Massimo Dutti and Stradivarius became part of Inditex. Those brands already had that geographical structure, and since the group integrated them successfully into its strategy and logistics model, it made sense to follow the same pattern with its other brands.

Besides, the proximity of the distribution centers to the headquarters of each brand allowed them to consolidate them based on the growth strategy and purpose of each brand (more on this later).

But just a few years after that, the group decided to build another production center for Zara that forced specialization between the two Zara centers. The specialization was based on location, i.e. each center would manufacture products that would stock the shelves of stores in specific locations.

Zara’s  supply chain strategy  is so successful because it’s constantly evolving as the group adapts to external circumstances and its internal needs. And just like its iconic fashion, the company always stays ahead of the logistics curve.

Zara’s business strategy transcends its logistics innovations

Zara’s business strategy relies on four key pillars:

• Flexibility of supply
• Instant absorption of market demand
• Response speed
• Technological innovation

Zara is the only brand in the Inditex group that is concerned with manufacturing. It’s the first brand in the clothing sector with a complete vertical organization. And the production model requires the adoption or development of the latest technological innovations.

This requirement is counterintuitive in the clothing sector.

Most people believe that making big investments in a market as mature as clothing is a bad idea. But the Zara production model is very capital and labor intensive. The technological edge derived from that investment gave the company, in the early days, the capability to manufacture over 50% of its own products while maintaining an extremely high stock rotation frequency.

Zara might be one of the best logistics companies in the world, but that particular excellence is a supporting factor, or at least a highly contributing factor, to its successful business strategy.

Zara’s business strategy is so much more than its supply chain strategy.

The company created the “fast fashion” term and industry. When other companies were manufacturing their collections once per season, Zara was adapting its collection to suit what people asked for on a weekly basis. The idea was to offer fashionable items at a fair price and faster than everybody else.

Part of its cost-cutting strategic priority was its marketing strategy. Zara didn’t – and still doesn’t – advertise like the rest of the clothing industry. Its marketing strategy starts with choosing the location of the stores and ends with advertising that the sales period has started. In the early years of the brand’s expansion, Amancio would visit potential store locations himself and choose the site to build the Zara shop.

The price was never an issue. If the location was in a commercial center, Zara would build its store there no matter how high the cost was because the company expected to recoup it quickly with increased sales.

Zara’s marketing is its own stores.

The strategy of Zara and her Inditex sisters

Despite Zara’s success (or because of it), Amancio Ortega created – or bought – multiple other brands that he included in the Inditex group, each one with a specific purpose.

• Zara  was targeting middle-class women. ‍
• Pull&Bear  was targeting young people under twenty-five years old with casual clothing. ‍
• Bershka  was targeting rebel teens, especially girls, with hip-hop-style clothing. ‍
• Massimo Dutti  was targeting both sexes with more affluence. ‍
• Stradivarius  was competing with Bershka, giving Inditex two major brands in the teenage market. ‍
• Oysho  was concentrating on women's lingerie. ‍
• Zara Home manufactures home textiles and decor.

Pull&Bear  was initially targeting young males between the ages of 14 and 28. Later it extended to young females of the same age and focused on selling leisure and sports clothing. It has the slowest stock turnaround time in the group.

Bershka’s  target group was girls between 13 and 23 years of age with highly individualized tastes. Prices were low, but the quality average. Almost a fiasco in the beginning, it underwent a successful strategic turnaround becoming today one of the biggest growth opportunities for the group. And out of all the Inditex chains, Bershka has the most creative designs.

Massimo Dutti  was the first retail brand Amancio bought and didn’t create himself. Its strategy is very different from Zara, producing high-quality products and selling them at a high price. It’s an extension of the group’s offer to the higher end of the price spectrum in the fashion industry. It’s also the only Inditex chain brand that advertises regularly.

Stradivarius  was the second acquired brand, with the purchase being a defensive move. The chain shares the same target group with Bershka, making it, to this day, a direct competitor.

Oysho  started as an underwear and lingerie company. Its product lines evolved to include comfortable night and homewear along with swimwear and a very young children’s line. The brand’s strategy was aggressive from its conception, opening 286 stores in its first six years of existence.

Zara Home  is the youngest brand in the Group and the only one outside the clothing sector, though still in the fashion industry. It was launched with the least confidence and with immense prior research. An experiment to extend the Zara brand beyond clothing, it was based on the conservative view that Zara could extend its product categories only to textile items for the home. But it turned out that customers were more accepting of Zara Home selling a wide variety of domestic items. So the brand made a successful strategic pivot.

Key Takeaway #2: The right people are more important than the best strategy

It might not be obvious in the story, but a key reason for Zara's and Inditex’s success has been the people behind them.

For example, a vast number of people in various positions from inside the group claim that Inditex cannot be understood without Amancio Ortega. Additionally, major projects like the development of Zara’s logistics systems and the group's international expansion had such a success precisely because of the people in charge of them.

Zara’s radically different model was a breakthrough because:

• Its leadership had a clear vision and a real strategy to execute it.
• People with a deep understanding of the company’s philosophy led Its largest projects.

Sustainability: Zara’s strategy to make fast fashion sustainable

Building a sustainable business in the fast fashion industry is a tough nut to crack.

To achieve it, Inditex has made sustainability a cornerstone of its business model. Its strategy revolves around the values of  collaboration ,  transparency,  and  innovation . The group’s ambition is to make a positive impact with a vision of prosperity for the planet and its people by transforming its value chain and industry.

Inditex’s sustainability commitments and strategy to achieve them

Inditex has developed a sustainability roadmap that extends up to 2040 with ambitious goals. Specifically, it has committed to

• 100% consumption of renewable energy in all of its facilities by 2022 (report pending).
• 100% of its cotton to originate from more sustainable sources by 2023.
• 100% of its man-made cellulosic fibers to originate from more sustainable sources by 2023.
• Zero waste from its facilities by 2023.
• 100% elimination of single-use plastic for customers by 2023.
• 100% collection of packaging material for recycling or reuse by 2023.
• 100% of its polyester to originate from more sustainable sources by 2025.
• 100% of its linen to originate from sustainable sources by 2025.
• 25% reduction of water consumption in its supply chain by 2025.
• Net zero emissions by 2040.

The group’s commitments extend beyond environmental issues to how its  manufacturing and supplying partners conduct their business . To bring its strategy to fruition, it has set up a new governance and management structure.

The Board of Directors is responsible for approving Inditex’s sustainability strategy. The  Sustainability Committee  oversees and controls all the proposals around the social, environmental, health, and safety impact of the group’s products, while the  Ethics Committee  makes sure operations are compliant with the rules of conduct. There is also a  Social Advisory Board  that includes external independent experts that advises Inditex on sustainability issues.

Finally, Javier Losada, previously the group’s Chief Sustainability Officer and now promoted to Chief Operations Officer, will be leading the sustainability transformation of the group. Javier Losada first joined Inditex back in 1993 and ascended its rank to reach the C-suite.

Inditex is dedicated to its commitment to reducing its environmental impact and seems to be headed in the right direction. The only question is whether it’s fast enough.

Key Takeaway #3: Integrating sustainability with business strategy is a present-day necessity

Governments and international bodies around the world are implementing more stringent environmental regulations, forcing companies to commit to ambitious goals and developing a realistic strategy to achieve them.

The companies that are impacted the least are those that always had sustainability as a  high priority .

From the companies that require significant changes in their operations to comply with the new regulations, only those who  integrate  sustainability into their business strategy and model will succeed.

Why is Zara so successful?

Zara is the biggest Spanish clothing retailer in the world based on sales value. Its success is due to its fast fashion strategy that is based on a strong supply chain and quick market feedback loops.

Zara's customer-centric approach places a strong emphasis on understanding and responding to customer needs and preferences. This is reflected in the company's product design, marketing, and customer service strategies.

Zara made fashionable clothes accessible to the middle class.

Zara’s vision guides its future

Zara's vision, as part of the Inditex Group, is to create a sustainable fashion industry by promoting responsible consumption and production, respecting the environment and people, and contributing to the communities in which it operates.

The company aims to offer the latest fashion trends to its customers at accessible prices while continuously innovating and improving its operations and processes.

Growth by numbers (Inditex)

Zara Case Study: How Zara Lead The Fast Fashion Market?

Supti Nandi

Updated on: April 8, 2024

You asked, and we listened! Get ready to dive into the fascinating world of Zara with our highly requested Zara Case Study. 

Recently, Zara has been trending in Instagram reels and YouTube shorts for its funky model poses. You must have seen it too! Have you wondered what made this Spanish brand so famous?

You may say that Zara works on the concept of fast fashion, which makes it win in the competitive market. 

Well, that’s true but it is not the only reason. Let’s uncover the secrets behind Zara’s success through the Zara Case Study.

Let’s begin!

(A) Zara: A Brief Overview

Zara, a notable name in the fashion industry, is a Spanish retailer known for its distinctive approach to clothing and accessories. Operating on a fast fashion model, Zara excels in swiftly adapting to evolving fashion trends, setting it apart in the market. With a vertically integrated process, the brand manages everything from design to production in-house, allowing for efficient and responsive operations.

You’ll find Zara stores globally, each offering a diverse range of trendy and affordable clothing for men, women, and children. The brand’s commitment to delivering fashion-forward pieces at accessible prices caters to a broad audience, reflecting its significance in the industry.

Do you know what is fast fashion?

Fast fashion is a business model characterized by quickly producing affordable, trendy clothing items to meet rapidly changing consumer demands.

Zara works in the same way. We will look into its details in the upcoming section. Before that, let’s go through the profile of Zara-

What makes Zara stand out is its ability to balance responsiveness in manufacturing, a well-structured supply chain, and a keen understanding of consumer preferences. This combination has established Zara as a trendsetting and influential player in the fashion landscape. Its adaptability and dedication to making fashion trends accessible have solidified Zara’s place as a recognizable and influential name in the fashion industry.

(B) Zara Case Study: History & Evolution

Zara’s journey began with a dress-making factory called Inditex, established by Ortega in 1963. Over the years, Zara expanded its presence from Spain to Portugal and eventually to other European countries, the United States, and France.

Today, Zara boasts nearly 6,500 stores across 88 countries worldwide.

Let’s dive into the history of Zara in detail-

Zara is the flagship brand of the Inditex group, which is one of the world’s largest fashion retail conglomerates.

The head office of Zara is located in Arteixo, in the province of A Coruña, Galicia, Spain. Inditex also owns other popular brands like Massimo Dutti, Pull&Bear, Bershka, and Stradivarius.

(C) Brand Philosophy of Zara

Do you know why Zara stands out among its competitors? Due to its brand philosophy! Sara’s success hinges on several key principles-

Zara’s strategy is strikingly different from traditional fashion retailers. Reason? Fast fashion concept and in-house production of clothes! Go through the next section for detailed information.

(D) Zara Business Model: Effective Working Strategies

In this section, we will dive into the business model of Zara to determine its working strategies that played a huge role in its success-

Let’s dive into the details-

(D.1) Fast Fashion Model

Zara is known for its “ Fast Fashion ” approach. It releases new collections frequently, sometimes launching over 22 new product lines per year. This agility allows Zara to respond swiftly to changing trends and customer preferences.

• Rapid Trend Replication: Harnessing cutting-edge information technology, Zara excels at swiftly replicating prevailing fashion trends. This enables the brand to stay ahead of the curve, delivering the latest styles to customers promptly.
• Group Design Approach: Departing from the conventional individual designer model, Zara adopts a collaborative approach. Teams of designers work in synergy, fostering enhanced creativity and efficiency in product development. This collective effort ensures a diverse range of products aligned with dynamic market demands.
• Cost-Effective Materials: Zara strategically utilizes affordable materials without compromising on quality. This approach allows the brand to maintain competitive pricing while delivering products that meet or exceed industry standards. The focus on cost-effective yet quality materials contributes to Zara’s accessibility and broad customer appeal.
• Competitive Pricing: Zara optimizes its production costs by outsourcing to countries with cost-effective labor. This global approach not only supports competitive pricing but also facilitates the brand’s ability to swiftly adapt to market demands. The combination of efficient production and competitive pricing reinforces Zara’s position as a leader in the fast fashion landscape.

(D.2) Product Range

Let’s briefly look at its product range too-

• Clothing: From chic dresses and tailored suits to casual wear and activewear.
• Accessories: Including bags, shoes, belts, and jewelry.
• Beauty Products: Fragrances and cosmetics.
• Perfumes: Zara has its line of fragrances.

(D.3) Vertical Integration: In-House Operations & Logistics

Zara’s way of doing business centers on something called vertical integration. Here is how it works-

• Design: Zara takes charge of creating its designs, meaning it controls how its clothes look and stay on-trend. This ensures that what you find in Zara stores reflects the latest fashion trends.
• Manufacturing: Zara doesn’t just design; it also makes its clothes in-house. This is a big deal because it lets Zara make changes to its products fast. If there’s a new trend or customer feedback, Zara can respond quickly, which is pretty cool.
• Shipping and Distribution: Zara doesn’t stop at making the clothes; it handles everything from getting them to the store to making sure they’re sent to the right places. This full control of the supply chain ensures that the clothes you see in Zara are not only stylish but also reach the stores efficiently.

In short, the fast fashion concept, vertical integration, and supply chain efficiency helped Zara to achieve impressive milestones.

(E) Revenue Model of Zara: How does Zara make money?

Do you know Zara earned Rs.2,562.50 crore in India? That’s not all. It earned over 23 billion euros from its stores worldwide.

That’s quite amazing! Isn’t it?

But how does Zara earn such a whopping amount of money? Due to its impressive revenue model.

Let’s go through them one by one-

Let’s briefly dive into Zara’s finances for the years 2022 & 2021-

That’s how Zara is going through its purple patch in terms of revenues!

(F) Zara Marketing Strategies

Zara, the renowned Spanish fashion retailer, has crafted a distinctive marketing strategy that contributes to its global success. In this section, we will delve into the key elements of Zara’s marketing approach-

(F.1) Fast Fashion Strategy

The fast fashion model functions as a highly effective marketing strategy for Zara in several ways. First and foremost, the rapid turnover of collections, with over twenty product lines per year, creates a sense of urgency and novelty for customers. This continual introduction of fresh styles not only keeps Zara top-of-mind but also fosters a dynamic shopping experience, encouraging frequent visits to discover the latest trends.

Moreover, the quick response to changing trends and customer preferences positions Zara as a trendsetter, appealing to fashion-conscious consumers. The ability to swiftly translate runway trends into accessible and affordable pieces reinforces Zara’s image as a go-to destination for staying in vogue.

Additionally, the limited production batches contribute to an atmosphere of exclusivity, prompting customers to make timely purchases to secure unique and in-demand items. This scarcity-driven approach enhances the perceived value of Zara’s offerings.

In essence, the fast fashion model serves as a powerful marketing tool for Zara by creating a sense of immediacy, exclusivity, and trend relevance, fostering customer loyalty and consistently attracting a diverse audience seeking the latest in fashion.

(F.2) In-Store Experience

Zara places a strong emphasis on crafting an exceptional in-store experience, carefully curating showrooms to exude an atmosphere that is both exclusive and professional. The meticulous design choices contribute to an ambiance that goes beyond a mere shopping space, creating an environment where customers feel engaged and inspired. 

The meticulous attention to detail is aimed at ensuring that every aspect of the in-store setting is carefully considered, from layout to lighting.

This focus on the in-store ambiance goes beyond aesthetics—it becomes a vital part of Zara’s marketing strategy. The thoughtfully designed physical stores act as powerful marketing tools in themselves, drawing in customers by providing a memorable and immersive shopping environment. 

By enticing shoppers to explore the latest trends in this carefully curated setting, Zara not only enhances the overall customer experience but also reinforces its brand image as a trendsetting and sophisticated fashion destination!

(F.3) Affordability & Differentiation

Zara strategically positions itself by prioritizing affordable pricing while maintaining a commitment to quality. This dual emphasis allows the brand to resonate with a wide range of customers. By providing stylish clothing at reasonable prices, Zara ensures accessibility, making fashion-forward designs attainable for a diverse audience.

The effectiveness of this marketing strategy lies in Zara’s ability to differentiate itself in the market. The brand stands out not only for its trendsetting designs but also for its adept balance of fashion-forward aesthetics and accessible costs. 

This unique blend positions Zara as a go-to destination for those seeking both style and value, enhancing the brand’s appeal and solidifying its market presence. The affordability and differentiation strategy contribute to Zara’s ability to capture a broad customer base and maintain its status as a leading player in the competitive fashion landscape.

(F.4) Word of Mouth and Limited Advertising

Zara strategically leverages the power of word of mouth and customer recommendations as primary drivers of its marketing efforts. In a departure from traditional advertising-heavy approaches, Zara relies on the subtlety of customer satisfaction and positive experiences to promote its brand.

This unique strategy involves cultivating a strong and positive buzz around Zara’s collections, encouraging customers to share their experiences and recommendations. The reliance on word of mouth creates an authentic and organic promotion of the brand, fostering a sense of trust and credibility among potential customers.

The limited advertising approach doesn’t diminish Zara’s impact; rather, it aligns with the brand’s commitment to providing an outstanding in-store experience and quality products. The positive buzz generated by satisfied customers becomes a powerful force, driving foot traffic to Zara’s stores and contributing to the brand’s sustained success in the competitive fashion market.

(F.5) Social Media Marketing

Zara actively embraces social media platforms as a crucial component of its marketing strategy. The brand leverages platforms like Instagram, Facebook, and Twitter to engage directly with its audience, creating a dynamic online presence.

The strategy involves regular updates across these platforms, keeping followers informed about the latest arrivals, ongoing trends, and behind-the-scenes glimpses into Zara’s fashion world. By maintaining an active and visually appealing presence, Zara not only stays connected with its audience but also cultivates a sense of anticipation and excitement around its offerings.

In addition to direct engagement, Zara strategically collaborates with influencers. These collaborations amplify Zara’s reach, tapping into the influencers’ follower base and creating a ripple effect of brand awareness. 

Through this multi-faceted approach, Zara effectively utilizes social media not just as a promotional tool but as a means to foster a dynamic and interactive relationship with its audience, contributing to the brand’s overall success in the digital landscape.

(F.6) Personalization & Community Engagement

Zara adopts a customer-centric strategy by customizing its offerings to cater to local tastes and preferences. This personalization ensures that Zara’s collections resonate with diverse communities, creating a more inclusive and relatable shopping experience.

Community engagement takes center stage in Zara’s approach. Events like fashion shows or store openings play a pivotal role in fostering a sense of belonging among customers. By actively involving the community in these events, Zara goes beyond being a retailer and becomes an integral part of the local fabric.

Crucially, Zara prioritizes customer feedback. Actively listening to what customers have to say, the brand adapts and evolves its offerings based on this valuable input. This responsiveness not only enhances the overall customer experience but also reinforces a sense of collaboration between Zara and its community. 

In essence, Zara’s commitment to personalization and community engagement contributes to a brand image rooted in customer satisfaction and a genuine connection with the diverse communities it serves.

(G) Sustainability Efforts: Crucial Part of Zara Case Study

Do you know what Zara is famous for apart from fashion? Its sustainability efforts to preserve mother nature! Let’s look at the sustainability efforts of Zara-

Thus, Zara is increasingly conscious of sustainability. The brand aims to reduce its environmental impact by using eco-friendly materials and promoting recycling. Such initiatives resonate with socially aware consumers.

(H) Challenges Faced by Zara

The journey of Zara was not free of challenges. Let’s look at some of the major challenges of Zara- 

Zara brilliantly addressed those challenges to produce effective results that ultimately helped them grow their business.

(I) Summing Up: Zara Case Study

Zara’s remarkable success in leading the fashion market can be attributed to its unique blend of rapid fashion cycles, vertical integration, and a customer-centric approach. By staying ahead of trends with its fast fashion model, ensuring control over the entire production process, and tailoring offerings to local tastes, Zara captures a diverse and loyal customer base. 

The brand’s commitment to affordability, engaging in-store experiences, and strategic use of social media further solidify its market leadership. Zara’s story showcases the power of adaptability, responsiveness, and a strong connection with customers in navigating the dynamic landscape of the fashion industry!

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Apart from selling clothes and accessories at higher prices, still it is among the favourite ones for many!

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Digital Innovation and Transformation

Mba student perspectives.

• Assignments
• Assignment: Data and Analytics as…

ZARA: Achieving the “Fast” in Fast Fashion through Analytics

How does fast fashion make any business sense? Zara uses intensive data and analytics to manage a tight supply chain and give customers exactly what they want.

Introduction

Zara’s parent company Inditex has managed to thrive in the last decade while several other fashion retailers have faced declining sales or stagnant growth. Inditex has grown over 220% in annual revenue since 2004, more than its key competitors like H&M, Gap, or Banana Republic (1).

The value of a fast fashion brand is to bring the latest designs and “trendiest trends” into the market as quickly as possible, preferably as soon as they became hot on the catwalk, and to provide these at a reasonable price. The traditional fashion industry is not well equipped to provide such value as it operates on a bi-annual or seasonal basis, with long production lead times due to outsourced manufacturing to low cost-centers. Zara has turned the industry on its head by using data and analytics to track demand on a real-time, localized basis and push new inventory in response to customer pull. This enables them to manage one of the most efficient supply chains in the fashion industry, and to create the fast fashion category as a market leader.

Pathways to a Just Digital Future

How Zara Uses Data

Inditex is a mammoth retailer, producing over 840 million garments in a year, the majority of which are sold by Zara (2). Every item of clothing is tagged with an RFID microchip before it leaves a centralized warehouse, which enables them to track that piece of inventory until it is sold to a customer (3). The data about the sale of each SKU, inventory levels in each store, and the speed at which a particular SKU moves from the shelf to the POS is sent on a real time basis to Inditex’s central data processing center (see picture below). This center is open 24 hours a day and collects information from all 6000+ Inditex stores across 80+ countries and is used by teams for inventory management, distribution, design and customer service improvements (4).

Zara’s Data Processing Center receives real-time data from around the world (4).

When the apparel arrives in store, RFID enables the stockist to determine which items need replenishing and where they are located, which has made their inventory and stock takes 80% faster than before (3). If a customer needs a particular SKU, salespeople are able to serve them better by locating it immediately in store or at a nearby location. Moreover, every Zara location receives inventory replenishments twice a week, which is tailored to that stores real-time updates on SKU-level inventory data.

The sales tracking data is critical in enabling Zara to serve its customers with trends that they actually want, and eliminate designs that don’t have customer pull. Zara’s design team is an egalitarian team of over 350 designers that use inspiration from the catwalk to design apparel on daily basis. Every morning, they dive through the sales data from stores across the world to determine what items are selling and accordingly tailor their designs that day. They also receive qualitative feedback from empowered sales employees that send in feedback and customer sentiment on a daily basis to the central HQ e.g., “customers don’t like the zipper” or “she wishes it was longer” (1).

At the start of the planning process, Zara orders very small batches of any given design from their manufacturers (even just 4-6 of a shirt per store). The majority of Zara’s factories are located proximally in Europe and North Africa, enabling them to manufacture new designs close to home and ship them to their stores within 2-3 weeks. They then test these designs in store, and if the data suggests the designs take off, Zara can quickly order more inventory in the right sizes, in the locations that demanded it. Such store-level data allows Zara to be hyper-local in serving their customer’s needs – as tastes can vary on a neighborhood level. As Inditex’s communication director told the New York Times,

“ Neighborhoods share trends more than countries do. For example, the store on Fifth Avenue in Midtown New York is more similar to the store in Ginza, Tokyo, which is an elegant area that’s also touristic. And SoHo is closer to Shibuya, which is very trendy and young.” (5)

Unlike other retailers that may order inventory based on their hypotheses about tastes at a regional level, Zara is tailors its collections based on the exact zip code and demographic that a given location serves (5).

Zara’s Results vs. Competitors

Zara sells over 11,000 distinct items per year versus its competitors that carry 2,000 to 4,000. However Zara also boasts the lowest year-end inventory levels in the fashion industry. This lean working capital management offsets their higher production costs and enables them to boast rapid sales turnover rates.

At Zara, only 15% to 25% of a line is designed ahead of the season, and over 50% of items are designed and manufactured in the middle of a season based on what becomes popular (2). This is in direct contrast to a close competitor like H&M where 80% of designs are made ahead of the season, and 20% is done in real-time during the season (6). Most other retailers commit 100% of their designs ahead of a season, and are often left with excess inventory that they then have to discount heavily at season-end. Instead, Zara’s quick replenishment cycles create a sense of scarcity which might actually generate more demand:

“With Zara, you know that if you don’t buy it, right then and there, within 11 days the entire stock will change. You buy it now or never.” (5)

• https://www.bloomberg.com/news/articles/2016-11-23/zara-s-recipe-for-success-more-data-fewer-bosses
• http://www.digitalistmag.com/digital-supply-networks/2016/03/30/zaras-agile-supply-chain-is-source-of-competitive-advantage-04083335
• http://static.inditex.com/annual_report_2015/en/our-priorities/innovation-in-customer-services.php
• http://www.refinery29.com/2016/02/102423/zara-facts?utm_campaign=160322-zara-secrets&utm_content=everywhere&utm_medium=editorial&utm_source=email#slide-11
• http://www.nytimes.com/2012/11/11/magazine/how-zara-grew-into-the-worlds-largest-fashion-retailer.html?pagewanted=all
• https://erply.com/in-the-success-stories-of-hm-zara-ikea-and-walmart-luck-is-not-a-key-factor/

Student comments on ZARA: Achieving the “Fast” in Fast Fashion through Analytics

Great post Ravneet – I had never read about Zara’s extremely quick supply chain or hyper-local testing. I have a question for you about fast fashion in general, but especially for Zara since it produces and sells more distinct items than its competitors: it seems that many designers are not fond of the “runway-inspired” fashions sold at these stores and some have even sued stores for copying their designs. Do you think Zara and other brands like it are doing anything wrong, and if not, what recourse do designers have for “imitations” of their work?

Thanks for the post Ravneet. Zara and H&M are beacons of hope for a mostly distressed industry. Do you think Zara’s advantage could be sustained in the event of a full-on assault by the Amazons of the world?

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Detailed SWOT Analysis of ZARA – World’s Largest Fast Fashion Brand

By Aditya Shastri

Previously we looked into the SWOT Analysis of the world’s most famous sports apparel brand, Nike . This time, we will tackle the SWOT Analysis of ZARA in-depth.

ZARA is one of the largest fashion apparel companies in the world. They opened their gates during the late 1900s, in Spain, followed by a speedy global expansion. Their market focuses is on minimal and party fashion for women and men. They have created their name in the market for their non-toxic clothing. 

Another aspect supporting ZARA’s successful stance is its marketing efforts . Marketing changes over the years, catering to the needs and trends of the current times, and now, the majority of successful campaigns have moved on to various digital platforms. If you are interested in learning how to create successful digital marketing strategies today, check out our Free MasterClass on Digital Marketing 101 by the CEO and Founder of IIDE, Karan Shah, to learn more about today’s successful marketing. 

Do you want to learn about the key to ZARA’s success in the fashion apparel industry? In this case study, we will learn about the SWOT Analysis of ZARA and answer the same. To gain a better understanding you can also check out ZARA’s Business Model. Now, let us learn more about ZARA, its founding, products, financial status, and competitors.

Zara is a Spanish brand, based in Galicia, Spain. It is one of the leading fashion apparel merchants in the world. Since 1975, Zara has expanded globally and has maintained its supremacy in the fashion industry. 

They manage to bring up to 20 clothing collections and fashion trends as of the research done in 2017. Zara is very popular for the “instant fashion” they bring to the market. These improvements were because of the new technologies and group of new-age designers. 

Zara is also known for its fast-fashion approach, with new designs hitting its stores every two weeks! They are located strategically in prime shopping districts, often in historic buildings that have been renovated to match the brand’s aesthetic. With its innovative approach to fashion, it’s no wonder that Zara has become a beloved brand.

Zara is one such reputed clothing brand that is very much loved by its consumers. Thus, they capitalize on the market expansion. Zara contributes up to 70% of Inditex’ s Revenue.

Products of Zara

Zara has been successfully rising in the fashion apparel market for half a century by selling – 

• Accessories

Competitors of Zara

They are a boatload of fashion brands in the industry. However, the top 5 major competitors are as follows – 

• Marks and Spencers

Now that we have tackled the areas that give us insight into the company’s core business. Let’s look into the SWOT Analysis of Zara

SWOT Analysis of Zara

SWOT Analysis of a brand is a study of its Strength, Weakness, Threat, and Opportunities. Learning the SWOT Analysis of Zara will help you in upgrading your knowledge about their business and increase your own regular problem-solving skills.

Let’s get into the details: 

1. Strengths of Zara

Starting off the SWOT Analysis of Zara, we have its Strengths. In this sub-section, we will learn about the organization’s unique capabilities that give it an advantage in capturing more market share, attracting more customers, and maximizing profits.

• Pioneer Advantage : The focal point of instant fashion is to design, produce and sell at a fast rate. Conventionally, this procedure is lengthy; but for Zara, it is only a matter of 3 weeks. As pioneers, Zara has the most developed, strategic practices in supply network management.
• Stores: Zara has outlets in 96 out of the 202 countries it sells in. Zara has the most fashion retail stores in the world, with 2249 locations. The number of retail stores is about double that of Nike, which has the second-highest number of retail stores.
• Supply Chain : Zara’s supply chain updates its online and retail collections twice a week. Zara’s ten logistic centers deliver within 48 hours to any region on the planet. Inditex also has an in-house software development team that is working to increase the company’s order fulfillment speed.
• Team of Designers: Zara has a design team of 700 trained designers who turn customers’ desires into designs. Each year, the design team produces 50,000 pieces of work. It also takes them only three weeks to get the designs from the drawing board to the shelves.
• Investing in Online Retail: Inditex is investing $3 billion to boost its online sales. The money will go into creating a fun online shopping experience and integrating the current physical infrastructure. By 2022, the corporation wants to generate a quarter of its income from online sales.

Zara’s success can be attributed to its mastery of the digital marketing game. Fast fashion, however, is proving to be a double-edged sword as environmental and ethical issues mount. In our next part on Zara’s weaknesses, we’ll go over this and more.

2. Weaknesses of Zara

Zara’s commitment to revising its collection every three weeks sets it apart from other fashion houses. Zara’s dedication has earned it a spot on the top of the industry. However, the advantage comes at a cost. Here’s some more information on Zara’s weaknesses: 

• Instant-fashion Trends: Surprisingly, the movement that propelled Zara to the top is also the source of its most serious flaw. Zara’s issue is to find a way of balancing sustainability with instant fashion, which is becoming more popular among buyers and policymakers .
• Physical Store Dependence : Zara’s efforts to reduce the number of physical stores were pushed by the pandemic. Zara was able to recover from a large reduction in sales due to COVID-19-related issues thanks to online sales. Even with the increase in online sales, sales are still only 89% of what they were in 2019.
• Expansion to the US and Asia-Pacific : Zara has a total of 99 stores in the United States, out of the total 2249 outlets, US stores only account for barely 4.4% of the total. However, the United States is the world’s largest apparel market. In addition, Asia-Pacific accounts for 38% of the global apparel market. Zara has a little presence in both geographies.
• Ethical Workplace Standards: Inditex works with 1520 different suppliers across 7108 different plants. Although Inditex deserves respect for developing a strict code of conduct, there is a significant gap in its enforcement. This gap is highlighted by an article in Buzzfeed about the treatment of employees in Myanmar.
• Prediction Aided by AI Systems: Zara is actively working with AI and Big Data companies to develop an AI-enabled market trend prediction system. On the other hand, the current system is still being tested. Once such a system is in place, Zara will have an unrivalled ability in forecasting and satisfy client wants.

3. Opportunities For Zara: 

Zara’s ability to quickly capitalize on fashion trends is one of its most significant assets. Zara is in a good position to take advantage of upcoming changes because of this edge. These are some of the opportunities:

• Rapid Cycle: Customers visit Zara’s stores an average of 17 times each year, indicating a rapid delivery cycle. This is due to the company’s proclivity for reacting to trends as soon as they emerge. Zara currently creates a trend from start to finish in about two to three weeks. The brand should be able to continue these cycles even further in the future.
• Personalization : Thanks to AI, collecting data and segmenting the client base after evaluating it is easier than ever before. This enables clients to receive customized recommendations. Zara should use this technology to its advantage.
• Sustainability: More than a third of Millennials and Gen Z look for “sustainable” and “environmentally friendly” labels on clothing, according to the Sourcing General. The two groups together account for half of the population. As a result, Zara must pay attention to and respond to this expanding need.
• Reselling: The resale market, which is currently worth $28 billion, is expected to expand to $64 billion in the next five years. Customers would be able to buy more with less waste if they included a resale plan into their present platform. This promotes consumerism while promoting environmental sustainability.
• Influencer Marketing: Influential marketing is the most effective technique for promoting lifestyle companies, according to Unbox Social. Zara’s #DearSouthAfrica campaign, which involved 60 micro-influencers, reached an audience of 8 million people. This should serve as a blueprint for the future. They can always go bang by investing in social media marketing  for their brand. Here are a few SMM strategies they can opt for as fashion brand.

4. Threats For Zara

In the last segment of SWOT Analysis of Zara, we will delve into the problems the brand might face. In the traditional sense, Zara’s largest competitor is H&M, on the other hand, the brand is now also facing a slew of internet-based competitors. But these rivalries are only part of Zara’s problems.

• Competition: Shein, the world’s largest apparel shop with an entirely online presence, is China’s fast-fashion behemoth. The Shein app received 10.3 million downloads in September while Zara got only 2 million downloads in the same period, spelling danger for the brand’s future.
• War of Prices: Zara’s core niche is fast-fashion, which offers the latest runway trends to clients swiftly and at a low cost. Imitators are conducting pricing wars to drain off Zara’s line, but the sector is vulnerable.
• COVID-19 Pandemic: Inditex reported a 44% reduction in revenues in the first quarter of 2020. According to Inditex’s report, the closure of 88% of its outlets due to the Coronavirus was the primary cause of the reduction in sales.
• Regulations And Restrictions: In Spain, Inditex has 13 factories. Only three of the 13 factories were operational in the early months of the epidemic due to the Spanish government’s lockdown efforts. The company can expect similar restrictions as Europe and India prepare for a Third wave.

With this, we come to the end of the SWOT Analysis of Zara. Let’s conclude this case study in the section below.

Zara’s current focus is on recovering from the COVID-19 situation and strengthening its web presence. Inditex’s financials are improving, and the company’s management is hopeful about increasing online sales. For the time being, we can say Zara has everything under control. But what about outside influences?

Zara uses multiple channels of digital marketing such as SEO , Emailing, and Content Marketing , and uses it to promote and educate its clients about newer products. Zara benefits from Digital Marketing because it is cost-effective and helps it connect to its target audience of young adults (18-30 years)

Getting the right knowledge about Digital Marketing and Completing Certified Courses may get you a chance to work with top companies including Zara. There are many online digital marketing courses in India that can help you gain the right knowledge and skills in this field. By completing these courses, you can open doors to numerous opportunities with top companies, including Zara.

If you want to get up to speed with digital marketing in just 5 days, check out IIDE’s short-term certification courses include courses on Social Media Marketing , Media Planning, Search Engine Optimization, and more.

If you like such in-depth analyses of companies, find more such insightful case studies on our IIDE Knowledge portal .

Thank you for taking the time to read this, and do share your thoughts on this case study in the comments section below.

Author's Note: My name is Aditya Shastri and I have written this case study with the help of my students from IIDE's online digital marketing courses in India . Practical assignments, case studies & simulations helped the students from this course present this analysis. Building on this practical approach, we are now introducing a new dimension for our online digital marketing course learners - the Campus Immersion Experience. If you found this case study helpful, please feel free to leave a comment below.

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Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs...... [Read full bio]

“Excited to explore the SWOT Analysis of ZARA! Their innovative marketing strategies and focus on non-toxic clothing have set them apart in the fashion industry. Looking forward to learning more about their success factors and business model.

This blog is very interesting for me to explore the SWOT analysis of Zara. Zara’s rapid fashion game is strong, but their online presence needs a boost. I gained a lot of knowledge from this blog- What is SWOT? How we use it.

This blog is very interesting for me to explore the SWOT analysis of Zara. Zara’s rapid fashion game is strong, but their online presence needs a boost. I gained a lot of knowledge from this blog- What is SWOT? How we use it

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Zara: fast fashion description.

Focuses on Inditex, an apparel retailer from Spain, which has set up an extremely quick response system for its ZARA chain. Instead of predicting months before a season starts what women will want to wear, ZARA observes what's selling and what's not and continuously adjusts what it produces and merchandises on that basis. Powered by ZARA's success, Inditex has expanded into 39 countries, making it one of the most global retailers in the world. But in 2002, it faces important questions concerning its future growth.

Case Description ZARA: Fast Fashion

Strategic managment tools used in case study analysis of zara: fast fashion, step 1. problem identification in zara: fast fashion case study, step 2. external environment analysis - pestel / pest / step analysis of zara: fast fashion case study, step 3. industry specific / porter five forces analysis of zara: fast fashion case study, step 4. evaluating alternatives / swot analysis of zara: fast fashion case study, step 5. porter value chain analysis / vrio / vrin analysis zara: fast fashion case study, step 6. recommendations zara: fast fashion case study, step 7. basis of recommendations for zara: fast fashion case study, quality & on time delivery.

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Case Analysis of ZARA: Fast Fashion

ZARA: Fast Fashion is a Harvard Business (HBR) Case Study on Strategy & Execution , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. ZARA: Fast Fashion is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. ZARA: Fast Fashion case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. ZARA: Fast Fashion will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

ZARA: Fast Fashion case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Strategy & Execution, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of ZARA: Fast Fashion, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The ZARA: Fast Fashion case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Strategy & Execution Solutions

In the Texas Business School, ZARA: Fast Fashion case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis. We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – ZARA: Fast Fashion

Step 1 – Problem Identification of ZARA: Fast Fashion - Harvard Business School Case Study

The first step to solve HBR ZARA: Fast Fashion case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Zara Inditex is facing right now. Even though the problem statement is essentially – “Strategy & Execution” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Zara Inditex, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the ZARA: Fast Fashion. The external environment analysis of ZARA: Fast Fashion will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in ZARA: Fast Fashion case study. PESTEL analysis of " ZARA: Fast Fashion" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with ZARA: Fast Fashion macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for ZARA: Fast Fashion

To do comprehensive PESTEL analysis of case study – ZARA: Fast Fashion , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact ZARA: Fast Fashion

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Government policies have significant impact on the business environment of any country. The firm in “ ZARA: Fast Fashion ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Zara Inditex is operating, firms are required to store customer data within the premises of the country. Zara Inditex needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. ZARA: Fast Fashion has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Zara Inditex in case study ZARA: Fast Fashion" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Zara Inditex in case study “ ZARA: Fast Fashion ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Zara Inditex in case study “ ZARA: Fast Fashion ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ ZARA: Fast Fashion ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Zara Inditex can compete against other competitors.

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at ZARA: Fast Fashion case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Zara Inditex needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact ZARA: Fast Fashion

Social factors that impact zara: fast fashion, technological factors that impact zara: fast fashion, environmental factors that impact zara: fast fashion, legal factors that impact zara: fast fashion, step 3 – industry specific analysis, what is porter five forces analysis, step 4 – swot analysis / internal environment analysis, step 5 – porter value chain / vrio / vrin analysis, step 6 – evaluating alternatives & recommendations, step 7 – basis for recommendations, references :: zara: fast fashion case study solution.

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The Secret of Zara’s Success: A Culture of Customer Co-creation

Zara is one of the world’s most successful fashion retail brands – if not the most successful one. With its dramatic introduction of the concept of “fast fashion” retail since it was founded in 1975 in Spain, Zara aspires to create responsible passion for fashion amongst a broad spectrum of consumers, spread across different cultures and age groups. There are many factors that have contributed to the success of Zara but one of its key strengths, which has played a strong role in it becoming a global fashion powerhouse as it is today, is its ability to put customers first. Zara is obsessed with its customers, and they have defined the company and the brand’s culture right from the very beginning.

The Zara brand offers men and women’s clothing, children’s clothing (Zara Kids), shoes and accessories. The sub-brand Zara TRF offers trendier and sometimes edgier items to younger women and teenagers.

The Zara brand story

Zara was founded by Amancio Ortega and Rosalía Mera in 1975 as a family business in downtown Galicia in the northern part of Spain. Its first store featured low-priced lookalike products of popular, higher-end clothing and fashion. Amancio Ortega named Zara as such because his preferred name Zorba was already taken. In the next 8 years, Zara’s approach towards fashion and its business model gradually generated traction with the Spanish consumer. This led to the opening of 9 new stores in the biggest cities of Spain.

In 1985, Inditex was incorporated as a holding company, which laid the foundations for a distribution system capable of reacting to shifting market trends extremely quickly. Ortega created a new design, manufacturing, and distribution process that could reduce lead times and react to new trends in a quicker way, which he called “instant fashion”. This was driven by heavy investments in information technology and utilising groups instead of individual designers for the critical “design” element.

In the next decade, Zara began aggressively expanding into global markets, which included 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 2,264 stores strategically located in leading cities across 96 countries. It is no surprise that Zara, which started off as a small store in Spain, is now the world’s largest fast fashion retailer and is the flagship brand of Inditex. Its founder, Amancio Ortega, is the sixth richest man in the world according to Forbes magazine.

Today, Inditex is the world’s largest fashion group with more than 174,000 employees operating more than 7,400 stores in 202 markets worldwide including 49 online markets. The revenues of Inditex was USD 23.4 billion in 2019. The other fashion brands in the Inditex portfolio are:

Zara Home: Home goods and decoration objects founded in 2003. Operating in 183 markets, 70 of them with stores.

Pull & Bear: Casual laid-back clothing and accessories for the young founded in 1991. Operates in 185 markets, 75 of them with stores.

Massimo Dutti: High end clothing and accessories for cosmopolitan men and women acquired in 1995. Operates 186 markets, 74 of them with stores.

Bershka: Blends urban styles and modern fashion for young women and men founded in 1998. Operates in 185 markets, 74 of them with stores.

Stradivarius: Casual and feminine clothes for young women acquired in 1999. Operates 180 markets, 67 of them with stores.

Oysho: Lingerie, casual outerwear, lounge wear and original accessories founded in 2001. Operating in 176 markets, 58 of them with stores.

Uterqüe: High-quality fashion accessories at attractive prices founded in 2008. Operating in 158 markets, 17 of them with stores.

Apart from fashion brands, Amancio Ortega has also set up a global real estate investment fund, Pontegadea Inversiones, which manages corporate offices across 9 countries including United States (Seattle), Britain (London), France (Paris), Canada, Italy, South Korea. These corporate properties house large companies including Facebook, Amazon and Apple, and prestigious luxury and retail brands.

The Zara brand strategy

In 2019, Zara was ranked 29th on global brand consultancy Interbrand’s list of best global brands. Its core values are found in four simple terms: beauty, clarity, functionality and sustainability.

The secret to Zara’s success has largely being driven by its ability to keep up with rapidly changing fashion trends and showcase it in its collections with very little delay. From the very beginning, Zara found a significant gap in the market that few clothing brands had effectively addressed. This was to keep pace with latest fashion trends, but offer clothing collections that are a combination of high quality and yet, are affordable. The brand keeps a close watch on how fashion is changing and evolving every day across the world. Based on latest styles and trends, it creates new designs and puts them into stores in a week or two. In stark comparison, most other fashion brands would take close to six months to get new designs and collections into the market.

It is through this strategic ability of introducing new collections based on latest trends in a rapid manner that enabled Zara to beat other competitors. It quickly became the people’s favourite brand, especially with those who want to keep up with fashion trends. Founder Amancio Ortega is famously known for his views on clothes as a perishable commodity. According to him, people should love to use and wear clothes for a short while and then they should throw them away, just like yogurt, bread or fish, rather than store them in cupboards.

The media often quotes that the brand produces “freshly baked clothes”, which survive fashion trends for less than a month or two. Zara concentrates on three areas to effectively “bake” its fresh fashions:

Shorter lead times (and more fashionable clothes): Shorter lead times allow Zara to ensure that its stores stock clothes that customers want at that time (e.g. specific spring/ summer or autumn/ winter collections, recent trend that is catching up, sudden popularity of an item worn by a celebrity/ socialite/ actor/ actress, latest collection of a top designer etc.). While many retailers try to forecast what customers might buy months in the future, Zara moves in step with its customers and offers them what they want to buy at a given point in time.

Lower quantities (through scarce supply): By reducing the quantity manufactured for a particular style, Zara not only reduces its exposure to any single product but also creates artificial scarcity. Similar to the principle that applies to all fashion items (and more specifically luxury), the lesser the availability, the more desirable an object becomes. Another benefit of producing lower quantities is that if a style does not generate traction and suffers from poor sales, there is not a high volume to be disposed of. Zara only has two time-bound sales a year rather than constant markdowns, and it discounts a very small proportion of its products, approximately half compared to its competitors, which is a very impressive feat.

More styles: Rather than producing more quantities per style, Zara produces more styles, roughly 12,000 a year. Even if a style sells out very quickly, there are new styles waiting to take up the space. This means more choices and higher chance of getting it right with the consumer.

Zara only allows its designs to remain on the shop floor for three to four weeks. This practice pushes consumers to keep visiting the brand’s stores because if they were just a week late, all the clothes of a particular style or trend would be gone and replaced with a new trend. At the same time, this constant refreshing of the lines and styles carried by its stores also entices customers to visit its shops more frequently.

In the following sections, the key components of Zara’s winning formula in the fashion retailing industry are illustrated.

Customer co-creation: Zara’s principal designer is the customer

Zara’s unrelenting focus on the customer is at the core of the brand’s success and the heights it has achieved today. There was a fascinating story around how Zara co-creates its products leveraging its customers’ input. In 2015, a lady named Miko walked into a Zara store in Tokyo and asked the store assistant for a pink scarf, but the store did not have any pink scarves. The same happened almost simultaneously for Michelle in Toronto, Elaine in San Francisco, and Giselle in Frankfurt, who all walked into Zara stores and asked for pink scarves. They all left the stores without any scarves – an experience many other Zara fans encountered globally in different Zara stores over the next few days.

7 days later, more than 2,000 Zara stores globally started selling pink scarves. 500,000 pink scarves were dispatched – to be exact. They sold out in 3 days. How did such lightning fast stocking of pink scarves happen?

Customer insights are the holy grail of modern business, and the more companies know about their customers, the better they can innovate and compete. But it can prove challenging to have the right insights, at the right time, and have access to them consistently over time. One of the secrets to Zara’s success includes using Radio Frequency Identification Technology (RFID) in its stores. The brand uses cutting-edge systems to track the location of garments instantly and makes those most in demand rapidly available to customers. Additionally, it helps to reduce inventory costs, provides greater flexibility to launch new designs, and allows fulfillment of online orders with stock from stores nearest to the delivery location thereby reducing delivery costs.

Another secret of Zara’s success is that the brand trains and empowers its store employees and managers to be particularly sensitive to customer needs and wants, and how customers enact them on the shop floors. Zara empowers its sales associates and store managers to be at the forefront of customer research – they intently listen and note down customer comments, ideas for cuts, fabrics or a new line, and keenly observe new styles that its customers are wearing that have the potential to be converted into unique Zara styles. In comparison, traditional daily sales reports can hardly provide such a dynamic updated picture of the market. The Zara empire is built on two basic rules: “to give customers what they want”, and “get it to them faster than anyone else”.

Due to Zara’s competitive customer research capabilities, its product offerings across its stores globally reflect unique customer needs and wants in terms of physical, climate or cultural differences. It offers smaller sizes in Japan, special women’s clothes in Arab countries, and clothes of different seasonality in South America. These differences in product offerings across countries are greatly facilitated by the frequent interactions between Zara’s local store managers and its creative team.

In the fashion world, a trend starts small, but develops fast. Zara employees are trained to listen, watch and be attentive to even the smallest seismographic signals from their customers, which can be an initial sign that a new trend is taking shape. Zara knows that the quicker it can respond, the more likely it is to succeed in supplying the right fashion merchandise at the right time across its global retail chain. Zara has set up sophisticated technology driven systems, which enable information to travel quickly from the stores back to its headquarters in Arteixo in Spain, enabling decision makers to act fast and respond effectively to a developing trend. Its design teams regularly visit university campuses; nightclubs and other venues to observe what young fashion leaders are wearing. In its headquarters, the design team uses flat-screen monitors linked by webcam to offices in Shanghai, Tokyo and New York (the leading cities for fashion trends), which act as trend spotters. The ‘Trends’ team never goes to fashion shows but tracks bloggers and listens closely to the brand’s customers.

The fact that Zara’s designers and customers are inextricably linked is a crucial part of the brand strategy. Specialist teams receive constant feedback on the decisions its customers are making at every Zara store, which continuously inspires the Zara creative team.

Zara’s super-efficient supply chain

Zara’s highly responsive, vertically integrated supply chain enables the export of garments 24 hours, 365 days of the year, resulting in the shipping of new products to stores twice a week. After products are designed, they take around 10 to 15 days to reach the stores. All clothing items are processed through the distribution center in Spain, where new items are inspected, sorted, tagged, and loaded into trucks. In most cases, clothing items are delivered to stores within 48 hours. This vertical integration allows Zara to retain control over areas like dyeing and processing and have fabric-processing capacity available on-demand to provide the correct fabrics for new styles according to customer preferences. It also eliminates the need for warehouses and helps reduce the impact of demand fluctuations. Zara produces over 450 million items and launches around 12,000 new designs annually, so the efficiency of the supply chain is critical to ensure that this constant refreshment of store level collections goes off smoothly and efficiently.

Here are some of the characteristics of Zara’s supply chain that highlight the reasons behind its success:

Frequency of customer insights collection: Trend information flows daily into a database at head office, which is used by designers to create new lines and modify existing ones.

Standardization of product information: Zara warehouses have standardised product information with common definitions, allowing quick and accurate preparation of designs with clear manufacturing instructions.

Product information and inventory management: By effectively managing thousands of fabric, trim and design specifications and their physical inventory, Zara is capable of designing a garment with available stock of required raw materials.

Procurement strategy: Around two-thirds of fabrics are undyed and are purchased before designs are finalized so as to obtain savings through demand aggregation.

Manufacturing approach: Zara uses a “make and buy” approach – it produces the more fashionable and riskier items (which need testing and piloting) in Spain, and outsources production of more standard designs with more predictable demand to Morocco, Turkey and Asia to reduce production cost. The more fashionable and riskier items (which are around half of its merchandise) are manufactured at a dozen company-owned factories in Spain (Galicia), northern Portugal and Turkey. Clothes with longer shelf life (i.e. the one with more predictable demand patterns), such as basic T-shirts, are outsourced to low cost suppliers, mainly in Asia. Even when manufacturing in Europe, Zara manages to keep its costs down by outsourcing the assembly workshops and leveraging the informal economy of mothers and grandmothers.

Distribution management: Zara’s state-of-the-art distribution facility functions with minimal human intervention. Optical reading devices sort out and distribute more than 60,000 items of clothing an hour.

In addition to these supply chain efficiencies, Zara can also modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences. If a design does not sell well within a week, it is withdrawn from shops, further orders are canceled and a new design is pursued. Zara closely monitors changes in customer preferences towards fashion. It has a range of basic designs that are carried over from year to year, but some in-vogue, high fashion, inspired by latest trends items can stay on the shelves for less than four weeks, which encourages Zara fans to make repeat visits. An average high-street store in Spain expects customers to visit thrice a year, but for Zara, the expectation is that customers should visit around 17 times in a year.

This expectation for such a high frequency of repeat visits is evidence of Zara’s confidence that it is keeping on top of changing consumer needs and preferences and is helping them shape their ideas, opinions and taste for fashion. In reality, Zara is also helping in giving birth to new trends through its stores or even helping in extending the longevity of some seasonal styles by offering affordable lines.

Sustainability at the core of Zara’s operations

Sustainability has been a hot topic in business for the last decade and is now quickly becoming a must-have hygiene factor for companies that want to resonate with and win the loyalty of its global customers. For Inditex, this means having a commitment to people and the environment.

Commitment to people: Inditex ensures that its employees have a shared vision of value built on sustainability through professional development, equality and diversity and volunteering. It also ensures that its suppliers have fundamental rights at work and by initiating continuous improvement programs for them. Inditex also spends over USD 50 million annually on social and community programmes and initiatives. For example, its “for&from” programme which started in 2002 has enabled the social integration of people with physical and mental disabilities, by providing over 200 stable employment opportunities across 15 stores.

Commitment to environment: Being in a business where it taps on natural resources to create its products, Inditex makes efforts to ensure that the environmental impact of its business complies with UNSDGs (United Nations Sustainable Developmental Goals). Inditex has pledged to only sell sustainable clothes by 2025 and that all cotton, linen and polyester sold will be organic, sustainable or recycled. The company also runs Join Life, a scheme which helps consumers identify clothes made with more environmentally friendly materials like organic cotton and recycled polyester.

Additionally, Inditex takes wide-ranging measures to protect biodiversity, reduce its consumption of water, energy and other resources, avoid waste, and combat climate change. For example, it has outlined a Global Water Management Strategy, specifically committing to zero discharge of hazardous chemicals. It has also been expanding its waste reduction programme through which customers can drop off their used clothing, footwear and accessories at collection points in 2,299 stores in 46 markets today.

Zara’s culture: The word “impossible” does not exist

Zara has a very entrepreneurial culture, and employs lots of young talent who quickly climb through the ranks of the company. Zara promotes approximately two-thirds of its store managers from within and generally experiences low turnover. The brand has no fear in giving responsibility to young people and the culture encourages risk-taking (as long as learning happens) and fast implementation (the mantra of fashion).

Top management gives its store managers full liberty and control over their store’s operations and performance with clearly set cost, profit and growth targets with a fixed and variable compensation scheme. The variable component amounts to up to half of the total compensation – making store level employees heavily incentive-driven.

In addition, once an employee is selected for promotion, his or her store develops a comprehensive training program for that individual with the human resources department, which is followed up by periodic supplemental training – reflecting Zara’s commitment to talent development. The organizational structure is also flat with only a few managerial layers.

Customers are the most important source of information for Zara, but like any other fashion brand, Zara also employs trend analysts, customer insights experts, and retains some of the best talents in the fashion world. The creative team of Zara comprises of over 200 professionals. They all embody and enact the corporate philosophy that the word “impossible” does not exist in Zara.

For example, while many companies struggle with long lead times in discussions and decision making, Zara gets around this challenge by getting various business functions to sit together at the headquarters and also by encouraging a culture (through structures and processes) where people continuously talk to each other. The sales and marketing teams who receive trend feedback talk regularly with designers and merchandisers. It is important that there is constant two-way communication so that sales and marketing teams can talk about new lines to customers and designers / merchandisers have a strong visibility of customers’ needs and preferences enacted at a store level. The production scheduling is also closely coordinated so that there is no time wasted on approvals. The design team structure is very flat and focuses on careful interpretation of catwalk trends that are suitable for the mass market – the Zara customer. The design and product development teams, who are based in Spain, work closely to produce 1,000 new styles every month.

Besides being customer centric, another important reason why Zara’s employee strategy is so successful is the fact that it empowers its staff to make decisions based on data. Zara has no chief designer. All its designers are given unparalleled independence in approving products and campaigns, based on daily data feeds indicating which styles are popular.

Due to the unwavering focus on the customer, the entire business model is designed in such a way that the pattern of needs for the finished goods dictate the terms of the production process to follow, instead of having the raw materials determine the nature of the production process – something that is very rare in multinational companies of similar scale.

In sum, the entire brand culture is extremely customer-centric, which has been and continues to be a significant contributor to Zara’s success.

The Zara brand communication strategy

Zara has used almost a zero advertising and endorsement policy throughout its entire existence, preferring to invest a percentage of its revenues in opening new stores instead. It spends a meager 0.3 per cent of sales on advertising compared to an average of 3.5 per cent by competitors. The brand’s founder Amancio has never spoken to the media nor has in any way advertised Zara. This is indeed the mark of a truly successful brand where customers appreciate and desire the brand, which is over and above product level benefits but strongly driven by the brand experience.

Instead of advertising, Zara uses its store location and store displays as key elements of its marketing strategy. By choosing to be in the most prominent locations in a city, Zara ensures very high customer traffic for its stores. Its window displays, which showcase the most outstanding pieces in the collection, are also a powerful communication tool designed by a specialized team. A lot of time and effort is spent designing the window displays to be artistic and attention grabbing. According to Zara’s philosophy of fast fashion, the window displays are constantly changed. This strategy goes down to how the employees dress as well – all Zara employees are required to wear Zara clothes while working in the stores, but these “uniforms” vary across different Zara stores to reflect socio-economic differences in the regions they were located. This effectively communicates Zara’s focus on the mass market, yet another detail that reflects its close attention on the customer.

To tap into the emerging e-commerce trend, Zara launched its online boutique in September 2010. The website was initially available in Spain, the UK, Portugal, Italy, Germany and France, and was extended to Austria, Ireland, the Netherlands, Belgium and Luxembourg. Over the next 3 years, the online store became available in the United States, Russia, Canada, Mexico, Romania, and South Korea. In 2017, Zara’s online store launched in Singapore, Malaysia, Thailand, Vietnam and India. More recently in March 2018, the brand launched online in Australia and New Zealand. Today, its online store is available in 66 countries. As of 2019, online sales grew to constitute 14% of Zara’s total global sales.

As a fast fashion retailer, Zara is definitely aware of the power of e-commerce and has built up a successful online presence and high-quality customer experience.

Zara’s future brand and business challenges

Charting a new digital strategy in the COVID-19 crisis: With its primarily offline shopping experience, Zara has been hard hit by global store closures amid the COVID-19 crisis in 2020, with sales falling 44% year-on-year in Q1 2020 and the company reporting a net loss of USD 482 million. Inditex has announced that it will be closing between 1,000 to 1,200 stores worldwide, focusing on smaller ones in Asia and Europe. While online sales have been encouraging – Zara’s online sales for Q1 2020 grew 50% – it is not enough to mitigate the damage.

Amancio Ortega plans to spend USD 1.1 billion scaling up its digital strategy and online capabilities by 2022 and a further USD 2 billion in stores to improve integration between online and offline for faster deliveries and real-time tracking of products. Its goal is for online sales to constitute at least 25% of total sales. To achieve this goal, Zara will need to think of new ways to engage its customers digitally, not just through its online store, but through online communities and social media.

Mobile commerce: Zara woke up late to the potential of mobile commerce and needs to catch up fast with competitors. Different forms of market analysis strongly point towards a scenario wherein spends on mobile commerce will overtake desktop based ecommerce by 2021. On an average, most brands currently get about 15-20% of their website traffic via mobile devices and this is growing rapidly. With the deluge of investments planned in the mobile commerce space and Zara’s competitors already having an advantage on the mobile front, Zara needs to quickly make mobile shopping not only an effortless experience but also a delightful one.

Price is not an advantage anymore: Offering the latest fashion lines at affordable prices continues to be a strategic advantage for Zara, but cannot continue to be the only one. Across the world, and closer to home in Europe, competitors are cutting prices and refining their business models to cut the competitive advantage that Zara has. Swedish fast fashion retailer H&M, which is placed #30 just behind Zara on Interbrand’s list, launched an online store in Spain in 2014 to take own Zara in its home turf. Again in its home market, it now faces increasing competition from brands like Mango, which cut prices and started focusing on fashion segments in which Zara enjoyed popularity. In addition to H&M and Mango, other competitors like Gap and Topshop are all fighting for a share of the fast fashion retail market pie. Also with the rise of e- and m-commerce, the number of indirect competitors has mushroomed. We now have online fashion aggregators that bring in multiple brands under one single online platform and cut through borders and price segments. Some examples of such aggregators who are doing well include Lyst, Farfetch, Spring and Yoox Net-a-Porter.

For Zara to effectively compete and maintain its strategic advantage, the focus needs to shift away from price but towards quality. Even today the Zara brand enjoys high levels of appeal, which is evident by the serpentine queues outside its stores when it launches in new markets. There is a need for Zara to start investing in building a strong brand positioning and aggressively communicate it. Additionally, Zara needs to adopt, imbibe and leverage social media and digital platforms in its advertising and communication strategies deeper going forward.

Need for marketing strategy to evolve: As discussed above, Zara does not engage in advertising and instead uses its store locations as a marketing strategy. However, brand communication is crucial in attracting new customers to the brand to support its growth. Without advertisements, Zara relies heavily on word of mouth or social media. This causes the perception of potential customers towards Zara to be heavily shaped by family and friends, which may not be accurate. In addition, Zara’s social media platforms such as Facebook and YouTube exists merely as a feed for updates rather than a platform that consumers can interact with. Its videos on YouTube are also seeing very low viewership in comparison with its follower count, which is not ideal as videos are a powerful medium for brands in the fashion industry. This is a gap that Zara needs to plug immediately as the reach and impact of social media marketing gets stronger. As Zara’s target customer segments start using more social and digital platforms for communication and for sharing their lives, it is important for Zara to have a strong presence on such platforms.

Family business planning and succession: With various technological and business disruptions in the past decade, leadership in the 21st century will be influenced by constant change, geopolitical volatility, and economic and political uncertainty. For Zara’s first 36 years in business, the brand has been controlled by its founder Amancio Ortega, who is currently 85 years old. In 2011, Ortega passed the chairman title on to Pablo Isla, Zara’s Deputy CEO since 2005.

Succession is currently taking place at Inditex and generational transfer will empower the next generation in one of the wealthiest business families in the world. Pablo Isla, chairman of Inditex since 2011, steps down in April 2022, and 37-year-old Marta Ortega will take over as chair in the company that her father Amancio Ortega started with his ex-wife Rosalia in 1975 in Galicia, Spain. Marta Ortega is the youngest of Amancio Ortega’s three children.

Marta Ortega will become a non-executive chair, and will head the Inditex group, the portfolio of companies including supervision of strategic operations. She has been with Inditex for over 15 years, starting out working in a Zara store at King’s Road in London, and as an assistant at the portfolio brand Bershka. In recent years, Marta Ortega has been involved in strategy, brand building and fashion proposals for the Inditex portfolio of brands.

Marta Ortega will not be involved in daily management of the financial performance to shield her and the family from too much public exposure. Amancio Ortega has always been known for appearing less in public and avoiding any media exposure. His photo did not appear in the Inditex annual report until 2000. Marta Ortega seems to be more open to media interviews and public appearance, and granted her first interview with Wall Street Journal in August 2021.

Óscar García Maceiras will be appointed CEO of Inditex in April 2022 and will run the daily business. He joined Inditex in March 2021 and is currently general secretary of Inditex and secretary of the board.

The sharing of executive powers between the chair and the CEO to enhance corporate governance has historically been less common in the corporate world in Spain but is often seen in Europe and elsewhere. Inditex will therefore return to dual leadership in April 2022 with Marta Ortega as chair and García Maceiras as CEO, the very same structure that ran for six years with Amancio Ortega as chairman and Pablo Isla as CEO until 2011.

Despite working at Inditex for over 15 years, Marta Ortega Pérez does not hold an office. Her father, Amancio Ortega, never had an office either and always preferred to work in an open space in the fashion design department to be close to teams around him.

To effectively manage the above changes, Zara’s next generation leadership needs to step up to the succession planning challenge by being resilient in staying true to the brand promise to consistently produce “freshly baked clothes” for its fashion-forward consumers, and by balancing both short-term (profitability) and long-term goals (growing the business and reaching more consumers).

More importantly, despite Zara’s global reach and consequent product standardization, it needs to constantly find new ways to serve local fashion needs and preferences of its consumers across the globe. This will be a challenge for the brand’s leadership in the next decade.

Conclusion: Take Zara’s cue and listen to your customers

The Zara brand was born with a keen eye on its customer – its ability to understand, predict and deliver on its customers’ preferences for trendy fashion at affordable prices. In addition to its effective supply chain, the brand’s ability to have its customers co-create designs is unique and provides it with a competitive advantage. Most fashion trends often start unexpectedly, originate from uncommon places and grow out of nowhere. With reference to the pink scarf trend mentioned above, it could have been that Hollywood actress Scarlett Johansson had worn a pink scarf to a charity gala the evening before in Los Angeles, or golf star Michelle Wie had showcased a pink scarf at a celebrity tournament in Asia. The fact that Zara was able to quickly jump on to this trend and provide hundreds of customers with the pink scarves they desperately wanted to buy.

In a world swamped with Big Data, and yet more collected at an even more rapid pace than before, brands still need to be careful and observant. Big Data does not provide answers to all business challenges, and it may be too hyped to be considered as the Holy Grail.

One of the secrets behind Zara’s global success is the culture and the respect for the fact that no one is a better, authentic trendsetter than the customer himself or herself – and this philosophy needs to be continually reflected in all its business strategies going forward.

So, why not consult your customers for a start? Zara always does.

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Why zara succeeds: it focuses on pulling people in, not pushing product out.

• Zara has evolved to the new 4Es of marketing strategy—Experience replaces Product; Exchange is new Price; Evangelism is now Promotion; and Every Place is new Place—that puts the customer at the center
• Zara fosters a highly-engaged workforce that translates into highly-engaged interactions with customers.
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Spain-based  Zara , the world’s largest clothing retailer and owned by Inditex, is introducing an augmented reality experience in its stores. Shoppers can engage their mobile phones to see models wearing selected fashions when they click on sensors in the store or displayed on AR-enabled shop windows. Initially launched in 120 stores worldwide, such technology is irresistible digital-honey to draw millennials into the store and shop.

Creating customer curiosity is a most powerful pull marketing strategy. Every human being is innately programmed to satisfy it. With this new AR application and in so many other ways, Zara excels by pulling customers into the brand, unlike its closest competitor H&M, which remains fixed on pushing its brand and product out to the customer.

In studying these two oft-compared brands, the essential differences revolve around their overall approach to marketing. H&M still is fixed on the old 4Ps of marketing model — Product, Price, Promotion and Place — where the company and the brand is the focus.

By contrast Zara has evolved to the new 4Es of marketing strategy—Experience replaces Product; Exchange is new Price; Evangelism is now Promotion; and Every Place is new Place—that puts the customer at the center around which the company and brand revolve.

For Zara, it is all about the customer —e xperiences for the customer, exchange with the customer, Evangelism through the customer, and being every place for the customer. Shelley E. Kohan, assistant professor Fashion Institute of Technology, recently shared an analysis of the Zara difference based upon the 4Es marketing concept.

Zara makes customer experience king

Product used to be king, but not anymore. In the new retail economy, experience matters more than product in the mind of the shopper. Zara understands this.

“While Zara is an excellent purveyor of product, it also capitalizes on the store experience by continuously offering reasons for customers to visit the stores and catch the hottest trends at affordable prices,” Kohan explains, noting that Zara has cultivated a loyal customer who visits about six times per year, as compared to other retailers in the contemporary market where two to three visits per year are the norm.

The fast-fashion experience formula for success combines frictionless shopping in a highly curated product environment offering scarce supply and new styles that rotate rapidly. “The more quickly and efficiently a customer can navigate through the store to explore and find hidden gems, the better the experience,” she says. “Zara nails that.”

Zara exchanges with customers for value

The old pricing formula — Pile it high, sell it cheap — worked well through the 20th century, but in the new experience economy, it has been replaced by the concept of exchange.

“Exchanging dollars for product is no longer meeting the needs of today’s shopper as they strive for deeper connections with the brand,” Kohan states. “Retailers must adapt to the changing consumer where the top characteristic is value. Today, value is measured beyond price, but also in time and convenience.”

Zara has a deep understanding of the entire value proposition it exchanges with the customers. Its fast-fashion deliverable is available in the quantity, format and time in which the customer needs the product. That translates into great value.

“Branded value aligns customer’s needs with a brand deliverable,” Kohan stresses. For example, the most loyal customers for retailers typically account for 80% of the sales. These brand loyalists are also less price sensitive. “Appealing to the loyal segment of the target market, like Zara does, allows for higher profit margins and caters to customers who seek out branded value,” she emphasizes.

Zara masters the concept of exchange as it is not the cheapest in the fast-fashion arena, but it consistently delivers branded value of trend-right product at appealing prices.

Zara creates brand evangelists

By making the brand experience meaningful and the exchange valuable, Zara taps the potential of its customers to evangelize the brand. Rather than push marketing out, Zara pulls customers in, cultivates them as brand influencers to improve operations, services and products and stimulates them to spread the word.

“Shopper frequency at Zara is 2x to 3x higher than traditional women’s apparel, which indicates super loyalty to the brand,” Kohan says. These loyalitsts become brand evangelists who share excitement about the brand with their networks. Zara, for example, has over 25 million Facebook followers, 16 million on Instagram and over one million in Twitter.

Zara has a highly evolved data infrastructure, Kohan also notes, that allows for super-efficient analysis of what’s selling and being said on social media platforms. This data is used to improve various aspects of the business from product offerings to service enhancements. “The two-way communication between the customer and Zara allows for continual improvement of product and services,” she says.

Zara is every place the customer needs it to be

Personal commerce is the every place where the customers are, rather than only in the physical place the brand is present. This is the new distribution model for retailers today: Delivering the brand experience and products when and where the customer demands it. Zara does that for them.

“Zara has devoted significant time, money and resources to develop a synchronized strategy between online and offline commerce,” Kohan explains. Through this technology and mobile connectivity, it links a customer’s shopping visit and provides access to inventory not present in the specific location. “It is a big win for both the customer and the company, ” she says .

And the company’s store location strategy is another aspect of its every place factor. It currently operates in 2,213 stores across 93 markets and 39 online markets. The flagship locations are located in the most critical markets that appeal to their most loyal shopper. “Zara has the courage to continually strengthen their portfolio of stores by closing unprofitable ones, opening new markets, and expanding sister brands in existing markets (Zara Home, Massimo Dutti),” Kohan says.

Zara is all about the customer

Zara has cultivated unique advantages with its 4Es approach to marketing by focusing on experience, exchange, evangelism and every place strategies for the customer, rather than the old product, price, promotion and place concept focused on the brand. “As the brand ethos is so embedded in the customers’ mind, the customer becomes the brand manager,” Kohan explains.

In 2016, the service agents responded to more than 17 million customer inquiries, Kohan found. “Zara actually listens and reacts to customer feedback as its most valuable brand asset to improve its products and services, ” she says.

Further, Zara focuses on its own people with corporate initiatives on diversity, respect, equal opportunity, work-life balance and professional development. Zara fosters a highly-engaged workforce that translates into highly-engaged interactions with customers.  Additionally, over 60% of the Inditex workforce is 30 or younger thus aligning with the target market of the brand.

“The result is the customer and the company work cooperatively together so that the Zara customer becomes the Chief Customer Officer providing feedback on all aspects of the business,” Kohan concludes. This is a fundamentally different alignment than brands using the 4Ps approach to marketing operate. Today the customer, not the company, calls the shots. Zara involves the customer interactively in the decision-making process. That is the Zara difference.

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Zara SWOT Analysis

Zara is a Spanish multinational clothing retailer based in Arteixo, A Coruña, Galicia. It is the flagship chain store of the Inditex group, the world’s largest apparel retailer. Zara was founded in 1975 by Amancio Ortega Gaona and his ex-wife Rosalía Mera Goyenechea. The company operates over 3,000 stores in 96 markets. Its products range from clothing, accessories, shoes, swimwear, beauty, and perfumes. 

The company is known for its fast fashion business model, allowing it to quickly adapt to trends and bring new products to market. Zara ‘s success has been attributed to its vertically integrated supply chain, which enables it to design, produce, and distribute products quickly and efficiently.

Zara has been praised for its innovative business model and ability to stay ahead of the competition. However, the company has also been criticized for its labor practices and environmental impact. In 2022, Zara was ranked the world’s most valuable fashion brand by Interbrand. The company’s annual revenue is over €32 billion.

Zara has been very successful in terms of sales and revenue. The company has been able to adapt to trends and bring new products to market quickly. It has a strong brand identity recognized worldwide and a loyal customer base. However, the company has faced some challenges, such as criticism of its labor practices and environmental impact. It has been accused of copying designs from other brands.

Below, there is a detailed Zara SWOT Analysis to better understand its strengths, weaknesses, opportunities, and threats in the global market.

Zara Strengths

Zara has many enviable strengths, including data-driven decision-making, an innovative supply chain, and strong financial performance, among others. Below, there are more details about the strengths:

Data-driven Decision-making

Zara uses data from its stores, social media, and customer feedback to inform its design and production decisions. This data-driven approach allows the company to understand better and cater to its customer’s preferences. For example, Zara tracks sales data from its stores to see which items are selling well and which are not.

This information then determines which items to produce more and which to discontinue. This data-driven approach has allowed the company to quickly adapt to changing fashion trends, stay ahead of its competitors, and maintain a high level of customer satisfaction.

Corporate social responsibility 

Zara is a socially responsible company committed to giving back to the communities in which it operates. It has several sustainability initiatives in place, including programs to support sustainable development, help people in need and recycle clothing.

Its program to support sustainable development focuses on reducing the company’s environmental impact. Zara’s sustainability initiatives are a testament to the company’s commitment to positively impacting the world and have been recognized by many organizations, including the World Economic Forum and the United Nations.

Strong financial performance

The company is financially strong with a strong track record of profitability. The company’s revenue has grown steadily in recent years, and its profits have also increased.  For instance, Zara’s revenue in 2022 was €27.8 billion, and its net income was €3.8 billion. Its return on equity was 20%, and its return on assets was 12%.

Its strong financial performance has allowed the company to invest in new stores, products, and technologies. The company’s ability to generate strong revenue and profits has allowed it to grow its business and become one of the most successful fashion retailers in the world.

Effective branding and marketing

The brand relies primarily on word-of-mouth marketing and its reputation for trendy, affordable clothing. The company’s word-of-mouth marketing is so effective that Zara spends little on traditional advertising. Instead, Zara relies on its customers to spread the word about the brand through social media and word-of-mouth.

This strategy has been very successful for Zara, as it has helped the company to build a strong brand image and a loyal customer base. Its reputation for trendy, affordable clothing is also helped by its use of social media. The company regularly posts photos of its latest collections on social media, which helps to generate excitement and anticipation among its followers.

Fast-fashion Model

Zara is known for its fast-fashion model, which allows the company to quickly adapt to changing fashion trends and customer preferences. This is made possible by Zara’s vertical integration, which controls its supply chain from design to distribution. Its speed to market is one of its most important competitive advantages.

The company can design, produce, and distribute new clothing items in as little as 15 days, allowing it to respond quickly to changing fashion trends and customer preferences, which keeps customers returning for more. The company’s ability to quickly adapt to changing fashion trends and customer preferences allows it to stay ahead of the competition and offer customers the latest styles.

Strong global presence

In addition, Zara has over 2,000 stores in over 90 countries, giving it a solid global presence. This allows the company to reach a broad customer base and capitalize on international fashion trends. Zara’s global presence allows it to tap into local fashion trends and adapt its products accordingly.

For example, if a particular style is popular in China, Zara can quickly produce that style for its stores in China. This helps Zara to stay ahead of the competition and offer customers the latest styles in their respective countries. Zara’s global presence also allows the company to source materials from all over the world, which helps to keep its costs down.

Unique Designs

The brand’s designers are constantly working to create new and innovative designs that align with the latest fashion trends. This helps Zara to differentiate itself from its competitors. Zara’s designers are often inspired by street fashion and popular culture, which helps them to create designs that are both trendy and accessible. For example, Zara’s designers have been known to take inspiration from social media influencers and celebrities.

This helps Zara to stay ahead of the curve and offer customers the latest styles. The designs are also often simple and understated, which allows the company to focus on quality and fit. Zara’s clothes are often made from high-quality materials and are well-tailored to fit the body. This helps Zara to create clothes that are both stylish and comfortable.

Loyal customer base

With a loyal customer base attracted to the company’s affordable prices, unique designs, and high-quality products, Zara’s customers are often young and fashion-conscious, looking for stylish and affordable clothes they can wear regularly. The affordable prices are a significant draw for customers. The company’s clothes are often priced lower than other high-end fashion brands but are still made from high-quality materials and well-designed.

This makes Zara a popular choice for people who want to look stylish without breaking the bank. Zara’s unique designs are another major draw for customers. The company’s clothes are often well-tailored to fit the body. This helps Zara to create clothes that are both stylish and comfortable.

Zara Weaknesses

The company’s weaknesses include stiff competition from other brands, commitment to fast fashion, and poor customer service, among others. Below, there are more details:

Future uncertainty

The future of the fast-fashion industry is uncertain, and this could pose a challenge for Zara, as it is a major player in this industry. The fast-fashion industry is facing increasing scrutiny for its environmental and ethical impact. This could lead to consumer backlash, which could hurt Zara’s sales. Additionally, the rise of online shopping is a challenge for Zara, as Zara’s brick-and-mortar stores are a significant part of its business model.

Zara will need to adapt to the changing retail landscape to remain successful, such as changing its business model, product offerings, or marketing strategy. For example, Zara could focus on producing more sustainable clothing to address the environmental concerns raised about the fast-fashion industry.

Commitment to fast fashion

Zara’s commitment to fast fashion has led to environmental and ethical concerns. Fast fashion is a business model that relies on the rapid production and consumption of clothing. This can lead to environmental problems, such as the overconsumption of resources and the production of large amounts of waste.

Zara has also been criticized for its ethical implications. The company has been accused of using sweatshop labor and not paying its workers a fair wage. Zara has taken steps to address these concerns, such as introducing a code of conduct for its suppliers. However, the company still faces criticism, as some believe that Zara’s commitment to fast fashion is inherently unsustainable and unethical.

Poor customer service

Another major weakness is poor customer service. Customers have complained about long wait times, unhelpful staff, and a lack of transparency. This has led to some customers taking their business elsewhere. For example, some customers have waited hours to speak to a customer service representative. Others have been told they cannot return purchased items, even if they are defective.

Still, others have been given incorrect information about products or shipping. Zara has acknowledged the issue and is working to improve its customer service. The company has hired more staff and provided training to its employees. However, the company still has a long way to go.

Dependence on trend forecasting

More so, Zara’s success relies heavily on its ability to predict and respond to fashion trends accurately. It has a team of trend forecasters who travel the world to keep up with the latest fashion trends. This information is used to design and produce clothing likely to be popular with consumers. However, if Zara fails to predict trends accurately, it can lose market share to competitors who are more successful at forecasting trends.

Zara’s dependence on trend forecasting is a double-edged sword. On the one hand, it allows the company to stay ahead of the curve and offer customers the latest fashion trends. On the other hand, it makes the company vulnerable to changes in fashion trends and losing market share to competitors who are more successful at forecasting trends.

Disruption to the supply chain

Zara’s supply chain is a complex network of suppliers around the world. This agile supply chain allows the company to respond to fashion trends quickly. However, it is also vulnerable to disruptions caused by natural disasters, political instability, or labor strikes, which can lead to delays in production and delivery, disappoint customers, and hurt Zara’s sales.

Zara’s supply chain is a complex issue with positive and negative implications. The company’s success depends on maintaining a reliable supply chain. However, this also makes it vulnerable to disruptions. Zara will need to continue to monitor its supply chain and take steps to mitigate the risk of disruptions.

Stiff competition

Zara faces stiff competition from other fast-fashion brands, such as H&M and Forever 21, making it challenging to maintain market share and attract new customers. The fast-fashion industry is becoming increasingly competitive as more brands enter the market. This makes it even more difficult for Zara to maintain its market share and attract new customers.

Zara’s competitive advantage is its ability to respond to fashion trends quickly. However, this advantage is becoming less and less sustainable as other brands adopt similar strategies. Zara will need to find new ways to differentiate itself from its competitors, such as focusing on sustainability, offering more personalized products, or expanding into new markets.

Zara Opportunities 

The opportunities Zara can leverage include influencer marketing, developing sustainable products, launching loyalty programs, and personalization. Here are more details:

Influencer marketing

Influencer marketing is a powerful way for Zara to reach new customers and build brand awareness. By partnering with the right influencers, Zara can create engaging and authentic marketing campaigns that resonate with its target audience.

It could also partner with influencers with a large following in the target market, helping the brand reach a wider audience and generate more sales. Additionally, it could partner with influencers willing to create original content. This would help the brand to stand out from the competition and create more engaging marketing campaigns.

Sustainable products

Zara has already made some progress in sustainability, but there is still more that the company can do. It could develop more sustainable materials, such as recycled polyester and organic cotton, to help reduce the environmental impact of the company’s products. Zara could also improve its recycling and waste disposal practices, ensuring that the company is not contributing to the problem of waste pollution.

Also, Zara could make changes to its production processes. For example, the company could use more energy-efficient machines and adopt water-saving practices. These changes would help to reduce the environmental impact of the company’s operations.

  Launch a loyalty program

A loyalty program is a great way to build customer loyalty and encourage repeat purchases. Zara could launch a loyalty program that rewards customers with points for every purchase. These points could be redeemed for discounts, free products, or exclusive access to new products or events. 

Zara could also offer customers the chance to earn bonus points for referring friends or following the company on social media. A loyalty program is a great way to show customers that Zara values their business. It can also help to encourage customers to shop more often at Zara and to spend more money each time they shop.

Personalization

Zara is already known for its trendy clothes, but the company could do more to focus on personalization. Personalization is the process of tailoring the shopping experience to each customer’s individual needs and preferences, which can be done using data from the customer’s purchase history, browsing behavior, and social media activity.

Personalization can help Zara to improve the customer experience in several ways. It can help customers find the products they seek more quickly and easily. It can also help customers discover new products they might not have found. Finally, personalization can help to increase customer loyalty and repeat purchases.

Expand to new market

Zara is currently present in over 96 countries, but there are still many markets where the company could expand. The company could focus on emerging markets with growing middle classes, such as most African countries. These markets offer significant growth potential for Zara, as they have large populations with increasing disposable incomes.

Zara could enter these markets through various channels, such as opening new stores, launching an e-commerce platform, or partnering with local retailers. The company would need to adapt its marketing and product strategies to the specific needs of each market. By entering new markets, Zara could expand its customer base and generate new revenue streams.

Zara Threats 

The threats Zara faces include price wars, rising labor costs, product recalls, and economic downturns. Here are more details:

Zara’s core niche is fast fashion, which offers the latest runway trends to customers quickly and at low costs. This has made Zara vulnerable to price wars from imitators, who can produce similar products at even lower prices, putting a strain on Zara’s margins. In addition, price wars can lead to a decrease in the quality of Zara’s products.

Zara is pressured to keep its prices low, making it challenging to use high-quality materials and manufacturing processes. Therefore, it needs to find ways to differentiate its products from its imitators while keeping its prices competitive and maintaining its quality, even as it faces pressure to lower prices.

Rising labor costs

The company’s supply chain is based mainly in Asia, where labor costs have risen recently. This could strain Zara’s margins, as it will have to pay more for its products. In addition, the rising labor cost could lead to Zara moving some of its production to other countries with lower labor costs.

This could hurt Zara’s supply chain, making it more difficult for the company to quickly and efficiently get its products to market. As a result, the company needs to find ways to keep its production costs down while also maintaining the quality of its products. It must also be prepared to move some of its production to other countries, if necessary.

Product Recalls

Zara has been involved in several product recalls in recent years due to safety concerns, such as using harmful chemicals in clothing. Product recalls can damage Zara’s reputation and lead to lost sales. Furthermore, product recalls can lead to lost sales. When a product is recalled, it is often removed from store shelves, and customers are asked to return it.

This can lead to a decrease in sales for Zara, as customers may be hesitant to buy products from the company if they are concerned about safety. As a result, the company needs to be proactive in identifying and addressing safety concerns and transparent with customers about product recalls and how they are being addressed.

Economic downturn

An economic downturn or recession could hurt Zara’s sales. Consumers are less likely to spend money on discretionary items during tough economic times. Zara’s products are considered to be discretionary items, meaning that they are not essential for survival. As a result, consumers may be less likely to buy Zara products if they feel financially insecure.

Furthermore, an economic downturn could lead to Zara closing some of its stores, as Zara’s stores are often located in high-rent areas. If consumers are spending less money, Zara may not be able to afford to keep all of its stores open. As a result, the company needs to reduce costs while maintaining its brand image. It also needs to be prepared to close some of its stores, if necessary.

Zara is a global fashion brand that has faced some challenges in recent years. These challenges include price wars, rising labor costs, product recalls, and economic downturns. However, Zara has also responded to these challenges by innovating and investing in new technologies. As a result, the company has remained profitable and continues to grow. 

Even though the future of Zara is uncertain, the company has some strengths that could help it overcome its challenges. These strengths include its strong brand image, global reach, and innovative business model. If Zara can continue to innovate and invest in new technologies, it is well-positioned to succeed.

In the end, Zara will need to continue to innovate to stay ahead of the competition. The company will also need to address the challenges of rising labor costs and increasing competition from online retailers. If Zara can do these things, it is well-positioned to continue to be a successful fashion brand for many years.

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I love understanding strategy and innovation using the business model canvas tool so much that I decided to share my analysis by creating a website focused on this topic.

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Operations Transformation & Decentralization: ZARA Case Study

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Introduction

Identification, analysis and evaluation, recommendations, works cited.

Zara is a global retail brand that designs and sells clothes, shoes, and accessories for men, women, and children. The brand is a part of Inditex, a retail corporation that also features other clothing brands, such as Pull and Bear, Stradivarius, and Massimo Dutti. Zara was initially developed as an affordable brand with a strong focus on fashion. Most of its operations, such as production and distribution are based in Spain and the nearby European countries.

However, as the brand has developed a strong presence in the global research market, it might be beneficial to transform operations and allow for a significant degree of decentralization. The present paper will seek to provide an analysis of the case study by identifying and assessing the key issues affecting Zara, as well as providing recommendations for future development.

Zara was created in Spain, which remains the principal location of its operations. However, the company has also developed a truly global image, with thousands of stores all over the globe. The retailer operates both online and offline and has a robust supply chain with well-established suppliers. The company’s main strategy is to remain flexible in its operations, promote sustainability, and deliver excellent value to customers all over the globe. However, the implementation of this strategy is affected by several important issues.

Zara has three large distribution centers in Spain, which arrange for shipments to other locations. The production of the brand, however, is decentralized, with factories in a variety of European countries. The different levels of centralization in production and distribution are the main issue faced by the company, as they contribute to transportation costs while also contradicting the brand’s sustainability strategy.

Given that the three distribution centers in Spain serve all of Zara’s stores, including its online stores, the complex transportation chain also creates a risk of delivery delays and stock-outs, thus impacting its global sales and revenues. Another problem that was identified based on the information from the case is that Zara’s online store does not offer any significant benefits compared to other brands’ stores, thus relying on customers who are already familiar with the brand. This problem could affect the future of Zara’s online sales and thus needs to be addressed by the management.

In order to judge the brand’s financial performance, it is critical to perform a ratio analysis. Zara’s financials are included in Inditex’s consolidated financial statements; however, as the brand constitutes a vast part of the parent company’s operations, it is possible to evaluate the general financial health of Zara based on Inditex’s performance. As seen in Table 1, Inditex had a gross profit margin of 58.3% in 2014 compared to 59.3% in the previous year. Similarly, other ratios are stable and do not indicate any significant solvency, profitability, or liquidity problems. Hence, the overall financial health of Inditex is good, and there are no threats to the company’s profitability.

Table 1. Ratio Analysis of Inditex.

The financial information of Inditex also shows that the company’s capital structure relies predominantly on equity, although it also uses a significant share of current liabilities, mainly trade and other payables (Inditex 189). The share of non-current liabilities in the capital structure is low, which shows reduced reliance on financial debt and reduces the long-term financial risk for Inditex.

Based on the information in the case and the financial information available, the key strengths of Zara are its established position on the global scene and excellent supply chain management. The case shows that Zara fosters long-term relationships with most of its suppliers and has an extensive network of reliable supplies of products and raw materials. Nevertheless, stability in financial results despite opening new stores also indicates that the brand’s competitive position is not improving. Enhancing operations, promoting sustainability, and increasing the volume of online sales would help Zara to strengthen its competitive position.

There are two main recommendations that can help Zara to resolve its key problems. First of all, it would be helpful for Zara to improve distribution by opening regional distribution channels that would receive products straight from production facilities instead of the three main distribution centers in Spain. The proposed action plan here is to open regional distribution centers in North America and Asia and establish transportation of products from production facilities in Europe.

Secondly, Zara would benefit from improving its online sales by distinguishing itself from the key competitors. In order to do so, the brand should conduct market research to determine the type of unique selling point that would attract more customers to use its online stores. Examples of unique selling points in online clothing stores are next-day or same-day delivery, fitting services, and free online stylist consultations. These features would help Zara to increase the volume of online sales.

The two proposed developments would be useful for the brand in overcoming its main problems. For example, opening regional distribution centers that are directly connected to production facilities would decrease operations time, thus preventing delivery delays and stock-outs. It would also enhance the online shopping experience by allowing for faster delivery. In addition, reduced transportation would contribute to Zara’s sustainability goals.

Creating a unique selling point for Zara’s online store could help to attract more customers, thus boosting sales volume and achieving growth. Both parts of the action plan are feasible given Zara’s capital structure and will likely be accepted by the management due to their anticipated effects on the business. Based on the scale of Zara’s current operations and its experience in global distribution and sales, it is also evident that the brand has the competence to implement them and that there will be no constraints to implementation.

All in all, Zara is a profitable global brand that has a stable financial position. Nevertheless, the competitive environment of the market requires the brand to undertake new activities in order to develop further. The recommended options that should be applied by Zara are to improve distribution by opening regional distribution centers and to achieve increased online sales volume by creating a unique selling point. Using these recommendations, the brand will be able to attract more customers and increase net sales, thus enhancing its profitability.

Indetex. Annual Report 2014 . 2015. Web.

Snap, Inc. Form 10-K . 2018. Web.

The Change Foundation. Annual Report 2005/2006 . 2006. Web.

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IvyPanda. (2021, July 20). Operations Transformation & Decentralization: ZARA. https://ivypanda.com/essays/zara-case-study-analysis/

"Operations Transformation & Decentralization: ZARA." IvyPanda , 20 July 2021, ivypanda.com/essays/zara-case-study-analysis/.

IvyPanda . (2021) 'Operations Transformation & Decentralization: ZARA'. 20 July.

IvyPanda . 2021. "Operations Transformation & Decentralization: ZARA." July 20, 2021. https://ivypanda.com/essays/zara-case-study-analysis/.

1. IvyPanda . "Operations Transformation & Decentralization: ZARA." July 20, 2021. https://ivypanda.com/essays/zara-case-study-analysis/.

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IvyPanda . "Operations Transformation & Decentralization: ZARA." July 20, 2021. https://ivypanda.com/essays/zara-case-study-analysis/.

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• AI Case Studies

Case Study: Zara’s Comprehensive Approach to AI and Supply Chain Management

Zara, an international fashion retailer based in Spain, has integrated artificial intelligence (AI) into various aspects of its business operations to enhance efficiency, responsiveness, and customer engagement. Unlike many competitors, Zara’s use of AI is not limited to consumer behavior analytics but extends throughout its supply chain and inventory management systems. By embracing cutting-edge technologies like RFID tagging, real-time analytics, and machine learning, Zara aims to maintain its competitive edge in the fast-paced fashion industry.

Key Takeaways

• Zara employs a comprehensive use of AI across multiple facets of its operations, ranging from supply chain management to customer engagement.
• Unlike many competitors, Zara minimizes outsourcing, enabling them to exercise greater control and gather data at every stage of the business process.
• The company utilizes an advanced Just-In-telligent supply chain system, allowing for real-time optimization of inventory levels and logistics.
• Zara can rapidly respond to market trends and consumer demands, boasting a turnaround time for new designs that is as quick as one week.
• Their strategic use of AI has led to improved customer satisfaction and loyalty, as well as high rankings in global online fashion sales.

Deep Dive: Zara’s Comprehensive Approach to AI and Supply Chain Management

Zara’s approach to AI is holistic, involving every segment of its business operations. The company combines the principles of just-in-time inventory management with AI and real-time data analytics, creating a Just-In-telligent supply chain system. By doing this, Zara can closely monitor inventory levels, supplier performance, and even consumer behavior.

Implementation

Zara has collaborated with several technology partners to implement AI in its operations. For instance, it partnered with Tyco to embed microchips into its clothing’s security tags, enhancing inventory visibility. The firm also collaborates with Jetlore to predict customer behavior based on structured predictive attributes like size, color, fit, and style. RFID tags and sophisticated logistics systems further allow Zara to optimize transportation and inventory, reducing waste and ensuring that popular items are always available.

The results have been substantial. Zara’s turnaround time for new designs is as little as one week, far below the industry average of three to six months. It enjoys a loyal customer base and ranks among the top in global online fashion sales. The company’s unique approach to using AI for real-time monitoring and forecasting has also led to reduced lead times, improved delivery accuracy, and minimized inventory carrying costs.

Challenges and Barriers

While Zara’s adoption of AI has been overwhelmingly positive, challenges remain. Managing the immense amount of data generated can be a monumental task. The integration of AI into existing systems and processes can also be complex and requires ongoing fine-tuning. Moreover, the reliance on sophisticated AI and machine learning models necessitates skilled human resources to maintain and optimize these systems.

Future Outlook

As AI and machine learning technologies continue to advance, Zara is well-positioned to further refine its algorithms for improved forecasting, supplier management, and customer engagement. Future plans may include even more robust machine learning algorithms for trend prediction and potential integration of blockchain for more transparent and efficient supply chain management.

Zara’s application of artificial intelligence in its operations serves as a benchmark for the retail industry. From supply chain optimization to personalizing customer experience, the company’s comprehensive AI strategy has yielded tangible benefits in efficiency, cost reduction, and customer satisfaction. As technology continues to evolve, Zara seems poised to remain a step ahead of its competitors, setting a precedent for what is achievable with the intelligent use of data and automation.

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Sources: H&M, Zara, Fast Fashion Turn to Artificial Intelligence to Transform the Supply Chain Zara’s Just-In-telligent Supply Chain Zara: Revolutionizing Fashion Retail with AI

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Home » Management Case Studies » Case Study: The International Growth of Zara

Case Study: The International Growth of Zara

The emergence of global fashion has transformed the way fashion is perceived in the contemporary world. In the recent years, there has been a surge of global fashion brands; triggered by the intensive involvement of internationalization processes in the fashion industry. Large retailers in search of sustained growth increasingly decide to expand overseas, responding and contributing to the globalization process .

During the initiation of an internationalization strategy, fashion retailers should reflect upon the congruence of their product ranges and brand images within the context of the prevalent cultural and trading conditions of the foreign markets. The Spanish fashion retail chain ZARA is one of the most prominent international Spanish brands and one of the most successful amongst fashion retailers, thus is a prime representation of global expansion.

Zara – Introduction

Founded in 1975, ZARA, a Spanish clothing and accessories retailer was originally the brainchild of the Inditex Group owned by Amancio Ortega . Headquartered in A Coruña, Galicia, Spain, Inditex is the world’s largest fashion retailer with ZARA as its international flagship chain store. Beginning with the single store in Spain to the recent launch into Australia, ZARA currently has over 1,700 stores in 78 countries providing exclusive fashion worldwide. ZARA, alone accounted for 64.6% of the Inditex group turnover in 2010. Over time, it has become one of the notable leaders amongst the fashion brands. ZARA was described by Louis Vuitton fashion director, Daniel Piette as “possibly the most innovative and devastating retailer in the world” and CNN described the brand as a “Spanish’s success story”.

Business Model of Zara

The core concept of ZARA’s business model is to provide medium quality fashion clothing to the masses at affordable prices. The key to this is vertical integration and quick response.

ZARA’s business model is characterized by a high degree of vertical integration . Time was the main critical factor for consideration, beyond production costs. The vertically integrated structure allowed ZARA to achieve great flexibility and shorten turnaround times; reducing stock to minimum and diminishing fashion risk. Furthermore, vertical integration helped reduce the “ bullwhip effect “, the tendency for fluctuations in final demand to get amplified as they were transmitted back up the supply chain.

• Design – ZARA manufactured its most fashion-sensitive products internally. Designers continuously track customer preferences and place orders with internal and external suppliers. Every year, about 11,000 distinct items are produced compared with 2,000 to 4,000 for key competitors. Production took place in small batches, with vertical integration into the manufacture of the most time-sensitive items. Predictable styles are outsourced to Asia for manufacturing. ZARA is able to design and have finished goods in stores within four to five weeks, and two weeks for modifications or restocking of existing items.
• Sourcing & Manufacturing – Comditel, a Inditex subsidiary does the purchasing of fabric for ZARA. Around half of the fabric purchased was “gray”, undyed to facilitate in-season updating with flexibility in manufacturing a variety of colours and patterns. This process cycle took one week for fabric to be completed. ZARA manufacture its most fashion-sensitive products internally and produce in small batches for the most time-sensitive ones.
• Distribution – ZARA has a centralized distribution system that minimises the lead-time of their goods. Products are received at either the central facility in Arteixo, Spain, or through satellite sites located in Argentina, Brazil and Mexico; where they are distributed simultaneously to all the stores worldwide on a highly frequent and constant basis; Shipped directly from the central distribution centre to retail stores twice a week, eliminating the need for warehouses and keeping inventories low.
• Retail – the store is not the end of the process but rather its restart, as the stores act as market information gathering terminals, providing feedback to the design teams and reporting the trends demanded by customers. Additionally, ZARA provides very limited volumes of new items in the most fashionable of ZARA’s stores and then uses the results of those sales to decide whether the items should also be sold in other locations. The limited volume and short available time successfully created a sense of ‘scarcity’ in consumer’s perception.

Internationalization of Zara

After opening its first store in La Coruña in 1975, ZARA expanded within the domestic market during the 1980s. International expansion started with the opening of a store in Oporto, Portugal in 1988. Currently, ZARA is already operating over the five continents with over 1,700 stores. International sales accounted close to 70% of its total turnover, with Europe being its largest market by far.

ZARA has been identified as a trans-national retailer. On the surface, this may appear as a peculiar classification since they appear committed to a highly standardized operating formula which provides little opportunity for market responsiveness. Analysis of ZARA’s internationalization strategy would indicate otherwise. While the brand image is highly standardized, its product development and merchandising strategy are very flexible and allows for the integration of pan-national fashion trends as soon as it emerges. This is evident by its approach to trading in the British market. ZARA recognizes the appeal that their Spanish origin provided for its brand and clearly understood the distinctive positioning they had within the United Kingdom as a fashion forward retailer. The company therefore focused upon the more fashionable lines within their British stores. Pricing policy within the United Kingdom has been more upscale than their home market in order to exploit their advantages within the British market.

Market Selection

One of the key decisions in the internationalization of a firm is the selection of a right country market. Then again, the attitudes of the management can decide where it chooses to expand. The concept of psychic distance, after much revision has been defined as the subjectively perceived distance to a given foreign country. Many factors affect this concept which includes ‘language, business practices, political and legal systems, education, economic development, marketing infrastructure, industry structure, and culture’. These factors form the basis of uncertainty of the management have with foreign markets.

The degree of uncertainty about foreign markets or psychic distance has been proved to be a critical aspect in deciding the direction of its international expansion. Consequently, psychic distance can be a significant deterrent, particularly to the early stages of overseas expansion. As firms become more internationally active, the influence of psychic distance on its market selection decisions diminish; overcoming the psychological barrier. This can be seen in the case of ZARA’s international expansion.

As mentioned earlier, psychic distance discourages the foreign expansion of firms. This spreading pattern, based on the concept of psychic distance, mirrors the stages approach to internationalization. There is a three stage model of expansion in geographical presence over time. Retailers passed through stages of reluctance, caution and ambition, as they became more pro-active in their response to international market opportunities and experience curve effects influenced managerial perceptions of risk. This is seen in ZARA’s international expansion, as it clearly divides into the three stages.

• Reluctance – 1975 to 1988 it focused expansion in its domestic market. The maturity of the market in Spain led ZARA to look for opportunities through foreign market for corporate growth.
• Cautious – Between 1988 and 1997 they had a more cautious approach, entering about one country per year. In this early stage new to the international environment, ZARA enters geographically and culturally close markets that resembled the Spanish market. For instance in 1990, ZARA started operation in France, Paris a geographically contiguous country and a fashion capital. Further in 1992, Mexico was added; though geographically distant, but is culturally close to Spain.
• Ambition – Experiential learning encouraged the retailer to become more ambitious in their international aspirations. As ZARA gain more international experience, overcoming the psychological barrier; they took an aggressive and rapid global expansion from 1998. This was regardless of cultural or geographical proximity. For example, stores were opened in 16 countries from 1998 to 1999. These countries include Canada, Great Britain, Middle East, Japan, and many more, which differs greatly in practices and culture.

Market Entry

Foreign entry-mode choice is one of a firm’s most important strategic choices. It influences the firm’s degree of control, resource commitment, investment risks, and share of profits. Choosing greenfield and acquisition entry mode would entail for a full control and ownership, whereas a joint venture provides a shared control and ownership. These full-equity entry modes are more susceptible to environmental uncertainties and involve greater exposure to economic and political risk. Furthermore, it requires a greater resource commitment with full-control entry modes with exception to management service contracts. It demands the deployment of assets that cannot be easily redeployed without incurring sunk costs.

ZARA’s business model requires a great control and flexibility, and hence has always tried to keep the maximum control over its operations; wholly owned subsidiaries. The rest of the strategies are carried out when the legal policies or political situation of the country or another intrinsic attributes of the market does not allow them this option. Mainly three different strategies are used for its international expansion, entering into new markets. They adopted different entry modes for different countries, depending on the situation of the target country.

• Greenfields – this is the mostly used and preferred choice of entry by ZARA. Chief advantage of this mode is the total control over the business; the flexibility is high and its adaptation power increases, and flexibility is one ZARA’s key factor of success. It however requires a high level of resources and high degree of commitment, causing a higher level of risk in the case of exiting the market. They adopted this mode in key, high-profile countries with high growth prospects and low business risk.
• Franchising – This mode of entry is typically used in countries where FDI is not viable. They are usually markets that are small, risky, or culturally distant or subject to administrative barriers which encouraged this mode of market participation. Examples are Andorra, Iceland, Poland and Middle Eastern countries where restrictions on foreign ownership ruled out direct entry. Franchisees were generally well established and financially strong players. They are given exclusive, countrywide franchises that encompass other Inditex chains; then again ZARA always retained the right to open company-owned stores as well.
• Joint Ventures – joint ventures agreements are adopted in larger, more competitive markets where there were barriers to direct entry; mostly related to difficulty of obtaining prime retail space in city centers. For instance, ZARA formed joint ventures in Germany and Japan, with firm Otto Versand and Bigi respectively. Otto Versand is the largest German catalog-based retailer and importantly a major mall owner. Bigi a Japanese textile distributor with its knowledge of the local property market encouraged ZARA to sign the agreement to enter Japan in 1998. Bigi’s knowledge was a particularly critical factor in Japan where wide spaces are limited and expensive assets. Nevertheless due to ZARA’s business model, which was difficult to be imposed in such an entry strategy, especially in situations where they have to unify its criteria with their partner in terms of strategy and control; ZARA bought back remaining shares sometime after to dissolve the joint ventures.

Marketing Approach

In the early years of international expansion, ZARA took a very ethnocentric approach with their subsidiaries as replicas of the stores operating in Spain. Reasoning given was that if ZARA’s international segment and product mix were the same, and store management system in Spain had established good results, it would be logical to transplant the same systems.

The ethnocentric approach encountered some managerial issues as well, with similar reason due to cultural differences in different parts of the world. For example, when the company established the first store in France, Spanish executives quickly discovered that apparently small differences in French and Spanish managerial style became significant aspects for the management of the operation. Thus, the personal relations between the store manager and the employees had to be reviewed and adapted to French idiosyncrasies. Whereas in Spanish stores, the communication flow and personal interactions between managers and employees were based on informal relationships, this did not work well with French employees who expected a formal and hierarchical relationship. The geocentric approach would allow the subsidiary to reach local sensibility without impeding the exploitation and utilization of its core competence .

Pricing was market-based. However, customers effectively bore the costs of supplying the product from Spain. For instance, prices on average as compared to Spain are 40% higher in Northern European countries 10% higher in other European countries, 70% higher in the Americas, and 100% higher in Japan. The higher prices imply a different positioning for ZARA in the international market, in particular to emerging markets. For example in Mexico where they have a lower average income, the targeted customers are from the middle to upper class. The difference in positioning affected stores in a way that ZARA’s overall image had to be presented as high-end rather than a mid-market image.

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Spark analysis on the accidents-data

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Pyspark crash analysis.

This repository contains a PySpark project for analyzing crash data. The project includes various analyses using data from CSV files.

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• Analysis 1 : Find the number of crashes (accidents) in which number of males killed are greater than 2?
• Analysis 2 : How many two wheelers are booked for crashes?
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• Analysis 9 : Count of Distinct Crash IDs where No Damaged Property was observed and Damage Level (VEH_DMAG_SCL~) is above 4 and car avails Insurance
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What happened in the Kolkata rape case that triggered doctors’ protests?

Activists and doctors in India demand better safeguarding of women and medical professionals after a trainee medic was raped and murdered in Kolkata.

Activists and doctors across India continued to protest on Wednesday to demand justice for a female doctor, who was raped and murdered while on duty in a hospital in the eastern city of Kolkata.

Feminist groups rallied on the streets in protests titled “Reclaim the Night” in Kolkata overnight on Wednesday – on the eve of India’s independence day – in solidarity with the victim, demanding the principal of RG Kar Medical College resign. Some feminist protesters also marched well beyond Kolkata, including in the capital Delhi.

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While the protests were largely peaceful, a small mob of men stormed the medical college and vandalised property. This group was dispersed by the police.

This comes after two days of nationwide protests by doctors following the incident at RG Kar Medical College in West Bengal’s capital city. “Sit-in demonstrations and agitation in the hospital campus will continue,” one of the protesting doctors, identified as Dr Mridul, told Al Jazeera.

Services in some medical centres were halted indefinitely, and marches and vigils shed light on issues of sexual violence, as well as doctors’ safety in the world’s most populous nation.

What happened to the doctor in Kolkata?

A 31-year-old trainee doctor’s dead body, bearing multiple injuries, was found on August 9 in a government teaching hospital in Kolkata.

The parents of the victim were initially told “by hospital authorities that their daughter had committed suicide,” lawyer and women’s rights activist Vrinda Grover told Al Jazeera. But an autopsy confirmed that the victim was raped and killed.

Grover has appeared for victims in sexual violence cases in India in the past, including Bilkis Bano , a Muslim woman who was gang-raped during the 2002 Gujarat riots, and Soni Sori, a tribal activist based in Chhattisgarh state.

Thousands of doctors marched in Kolkata on Monday, demanding better security measures and justice for the victim.

On Tuesday, the Kolkata High Court transferred the case to the Central Bureau of Investigation (CBI).

The Federation of Resident Doctors Association (FORDA) called for a nationwide halting of elective services in hospitals starting on Monday. Elective services are medical treatments that can be deferred or are not deemed medically necessary.

On Tuesday, FORDA announced on its X account that it is calling off the strike after Health Minister Jagat Prakash Nadda accepted protest demands.

One of these demands was solidifying the Central Protection Act, intended to be a central law to protect medical professionals from violence, which was proposed in the parliament’s lower house in 2022, but has not yet been enacted.

FORDA said that the ministry would begin working on the Act within 15 days of the news release, and that a written statement from the ministry was expected to be released soon.

Press release regarding call off of strike. In our fight for the sad incident at R G Kar, the demands raised by us have been met in full by the @OfficeofJPNadda , with concrete steps in place, and not just verbal assurances. Central Healthcare Protection Act ratification… pic.twitter.com/OXdSZgM1Jc — FORDA INDIA (@FordaIndia) August 13, 2024

Why are some Indian doctors continuing to protest?

However, other doctors’ federations and hospitals have said they will not back down on the strike until a concrete solution is found, including a central law to curb attacks on doctors.

Those continuing to strike included the Federation of All India Medical Associations (FAIMA), Delhi-based All India Institute Of Medical Sciences (AIIMS) and Indira Gandhi Hospital, local media reported.

Ragunandan Dixit, the general secretary of the AIIMS Resident Doctors’ Association, said that the indefinite strike will continue until their demands are met, including a written guarantee of the implementation of the Central Protection Act.

Medical professionals in India want a central law that makes violence against doctors a non-bailable, punishable offence, in hopes that it deters such violent crimes against doctors in the future.

Those continuing to protest also call for the dismissal of the principal of the college, who was transferred. “We’re demanding his termination, not just transfer,” Dr Abdul Waqim Khan, a protesting doctor told ANI news agency. “We’re also demanding a death penalty for the criminal,” he added.

“Calling off the strike now would mean that female resident doctors might never receive justice,” Dr Dhruv Chauhan, member of the National Council of the Indian Medical Association’s Junior Doctors’ Network told local news agency Press Trust of India (PTI).

Which states in India saw doctors’ protests?

While the protests started in West Bengal’s Kolkata on Monday, they spread across the country on Tuesday.

The capital New Delhi, union territory Chandigarh, Uttar Pradesh capital Lucknow and city Prayagraj, Bihar capital Patna and southern state Goa also saw doctors’ protests.

Who is the suspect in the Kolkata rape case?

Local media reported that the police arrested suspect Sanjoy Roy, a civic volunteer who would visit the hospital often. He has unrestricted access to the ward and the police found compelling evidence against him.

The parents of the victim told the court that they suspect that it was a case of gang rape, local media reported.

Why is sexual violence on the rise in India?

Sexual violence is rampant in India, where 90 rapes were reported on average every day in 2022.

Laws against sexual violence were made stricter following a rape case in 2012, when a 22-year-old physiotherapy intern was brutally gang-raped and murdered on a bus in Delhi. Four men were hanged for the gang rape, which had triggered a nationwide protests.

But despite new laws in place, “the graph of sexual violence in India continues to spiral unabated,” said Grover.

She added that in her experience at most workplaces, scant attention is paid to diligent and rigorous enforcement of the laws.

“It is regrettable that government and institutions respond only after the woman has already suffered sexual assault and often succumbed to death in the incident,” she added, saying preventive measures are not taken.

In many rape cases in India, perpetrators have not been held accountable. In 2002, Bano was raped by 11 men, who were sentenced to life imprisonment. In 2022, the government of Prime Minister Narendra Modi authorised the release of the men, who were greeted with applause and garlands upon their release.

However, their remission was overruled and the Supreme Court sent the rapists back to jail after public outcry.

Grover believes that the death penalty will not deter rapists until India addresses the deeply entrenched problem of sexual violence. “For any change, India as a society will have to confront and challenge, patriarchy, discrimination and inequality that is embedded in our homes, families, cultural practices, social norms and religious traditions”.

What makes this case particularly prominent is that it happened in Kolkata, Sandip Roy, a freelance contributor to NPR, told Al Jazeera. “Kolkata actually prided itself for a long time on being really low in the case of violence against women and being relatively safe for women.”

A National Crime Records Bureau (NCRB) report said that Kolkata had the lowest number of rape cases in 2021 among 19 metropolitan cities, with 11 cases in the whole year. In comparison, New Delhi was reported to have recorded 1, 226 cases that year.

Prime Minister Modi’s governing Bharatiya Janata Party (BJP) has called for dismissing the government in West Bengal, where Kolkata is located, led by Mamata Banerjee of All India Trinamool Congress (AITC). Banerjee’s party is part of the opposition alliance.

Rahul Gandhi, the leader of the opposition in parliament, also called for justice for the victim.

“The attempt to save the accused instead of providing justice to the victim raises serious questions on the hospital and the local administration,” he posted on X on Wednesday.

Roy spoke about the politicisation of the case since an opposition party governs West Bengal. “The local government’s opposition will try to make this an issue of women’s safety in the state,” he said.

Have doctors in India protested before?

Roy explained to Al Jazeera that this case is an overlap of two kinds of violence, the violence against a woman, as well as violence against “an overworked medical professional”.

Doctors in India do not have sufficient workplace security, and attacks on doctors have started protests in India before.

In 2019, two junior doctors were physically assaulted in Kolkata’s Nil Ratan Sircar Medical College and Hospital (NRSMCH) by a mob of people after a 75-year-old patient passed away in the hospital.

Those attacks set off doctors’ protests in Kolkata, and senior doctors in West Bengal offered to resign from their positions to express solidarity with the junior doctors who were attacked.

More than 75 percent of Indian doctors have faced some form of violence, according to a survey by the Indian Medical Association in 2015.

What happens next?

The case will now be handled by the CBI, which sent a team to the hospital premises to inspect the crime scene on Wednesday morning, local media reported.

According to Indian law, the investigation into a case of rape or gang rape is to be completed within two months from the date of lodging of the First Information Report (police complaint), according to Grover, the lawyer.

The highest court in West Bengal, which transferred the case from the local police to the CBI on Tuesday, has directed the central investigating agency to file periodic status reports regarding the progress of the investigation.

The FIR was filed on August 9, which means the investigation is expected to be completed by October 9.

Bengal women will create history with a night long protest in various major locations in the state for at 11.55pm on 14th of August’24,the night that’ll mark our 78th year as an independent country. The campaign, 'Women, Reclaim the Night: The Night is Ours', is aimed at seeking… pic.twitter.com/Si9fd6YGNb — purpleready (@epicnephrin_e) August 13, 2024

Delineating bacterial genera based on gene content analysis: a case study of the Mycoplasmatales-Entomoplasmatales clade within the class Mollicutes

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Genome-based analysis allows for large-scale classification of diverse bacteria and has been widely adopted for delineating species. Unfortunately, for higher taxonomic ranks such as genus, establishing a generally accepted approach based on genome analysis is challenging. While core-genome phylogenies depict the evolutionary relationships among species, determining the correspondence between clades and genera may not be straightforward. For genotypic divergence, percentage of conserved proteins (POCP) and genome-wide average amino acid identity (AAI) are commonly used, but often do not provide a clear threshold for classification. In this work, we investigated the utility of global comparisons and data visualization in identifying clusters of species based on their overall gene content, and rationalized that such patterns can be integrated with phylogeny and other information such as phenotypes for improving taxonomy. As a proof of concept, we selected 177 representative genome sequences from the Mycoplasmatales-Entomoplasmatales clade within the class Mollicutes for a case study. We found that the clustering patterns corresponded to the current understanding of these organisms, namely the split into three above-genus groups: Hominis, Pneumoniae, and Spiroplasma-Entomoplasmataceae-Mycoides (SEM). However, at the genus level, several important issues were found. For example, recent taxonomic revisions that split the Hominis group into three genera and Entomoplasmataceae into five genera are problematic, as those newly described or emended genera lack clear differentiations in gene content from one another. Moreover, several cases of mis-classification were identified. These findings demonstrated the utility of this approach and the potential application for other bacteria.

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The authors have declared no competing interest.

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