zara case study in marketing

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)

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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Zara's Marketing Strategy: A Deep Dive into Fast Fashion Dominance

The Spanish retail giant's meteoric rise to become the world's largest clothing retailer is not just a result of trendy designs but a carefully crafted marketing strategy that sets it apart. In this article, we delve into the intricate layers of Zara's marketing , uncovering the secrets behind its success. Before dissecting Zara's marketing strategy , it's crucial to understand the brand's roots. Founded in 1975 by Amancio Ortega and Rosalía Mera, Zara started as a small family business in Galicia, Spain. Its initial claim to fame was offering affordable lookalikes of high-end brands. However, the turning point came in 1985, when Zara became part of Inditex, adopting the "instant fashion" model. With the help of investments in information technology and designer groups, this revolutionary approach sought to shorten lead times and quickly adapt to changing fashion trends.

Zara's marketing strategy revolves around a modern approach to fashion, with a keen focus on the younger demographic, especially millennials. Understanding the need for trendy yet affordable fashion, Zara delivers the latest styles at competitive prices. Unlike traditional retailers, Zara boasts a vast assortment of over 450 million products annually. The brand's responsive supply chain ensures a constant influx of new items into stores twice a week, catering to the ever-changing preferences of its target market .

The 4P's Marketing Strategy

To comprehend Zara's marketing strategy comprehensively, we turn to the classical 4P's framework: product, place, price, and promotion. Each element plays a pivotal role in shaping Zara's success and distinguishing it in the highly competitive fashion industry.

1. Products

Zara, known as an "instant fashion" brand , swiftly identifies and incorporates the latest trends into its designs. The core strength of Zara's product strategy lies in its agility to adapt swiftly to emerging fashion trends. Unlike traditional retailers with lengthy production cycles, Zara's "fast fashion" model enables it to identify and integrate the latest styles into its collections rapidly. This approach not only aligns with the dynamic nature of consumer preferences but also positions Zara as a trendsetting brand , consistently offering fresh and relevant designs. Products are tailored to suit local cultures and tastes, maintaining a balance between affordability and quality. Zara's commitment to catering to diverse markets is reflected in its localized approach to product offerings. Recognizing the importance of cultural nuances, Zara tailors its designs to suit the tastes and preferences of specific regions. This localization strategy not only enhances customer relevance but also contributes to the brand's global appeal. Furthermore, Zara strikes a delicate balance between affordability and quality, ensuring that its products are accessible without compromising on craftsmanship.

Zara's global footprint includes nearly 3000 stores strategically located in high-street retail areas of major cities. Zara's emphasis on physical retail locations is a fundamental aspect of its place strategy. With a presence in nearly 3000 strategically chosen stores, Zara ensures maximum visibility and accessibility . Placing stores in high-street retail areas of major cities positions the brand at the forefront of fashion hubs, attracting the target demographic—the young and fashion-conscious. This strategic placement contributes to the brand's identity as a trendsetting and aspirational choice for consumers. A vertically integrated retailer, Zara handles design, manufacturing, and distribution in-house, ensuring a consistent brand experience worldwide. Zara's vertical integration is a distinctive feature that sets it apart from many competitors. By handling design, manufacturing, and distribution in-house, Zara maintains meticulous control over its supply chain. This vertical integration not only accelerates the production cycle but also ensures a consistent brand experience worldwide. From the design studio to the store shelves, Zara's in-house approach fosters agility, quality control, and a seamless brand image .

Zara's pricing strategy targets price-sensitive buyers seeking the latest fashion items. Zara's pricing strategy is strategically aligned with the preferences of its target audience: price-sensitive buyers with a penchant for the latest fashion trends. By offering affordable yet stylish products, Zara caters to a broad demographic, making fashion accessible to a larger consumer base. This pricing approach also complements Zara's fast-fashion model, encouraging frequent purchases and brand loyalty among cost-conscious consumers. The pricing structure varies based on locations and customer demographics, maintaining a balance between affordability and quality. Zara's flexibility in pricing extends beyond a one-size-fits-all approach. Recognizing the diversity in consumer demographics and economic conditions across regions, Zara adjusts its pricing structure accordingly. This tailored approach ensures that Zara products are not only affordable but also perceived as valuable, striking a harmonious balance between accessible pricing and the brand's commitment to quality.

4. Promotion

Unconventional in its approach, Zara spends minimally on traditional promotion campaigns. Zara's promotional strategy defies conventional norms by minimizing expenditure on traditional advertising . Instead of splurging on billboards or TV commercials, Zara relies on alternative methods to create brand buzz. This unconventional approach aligns with the brand's ethos of letting the products and customer experience speak for themselves. By diverting resources from traditional promotions, Zara maintains a cost-efficient model, allowing the focus to shift towards other impactful aspects of the marketing mix. The focus lies on word of mouth, store experience, and the power of social media channels for effective brand building . Word of mouth, augmented by a remarkable in-store experience and the influential reach of social media, constitutes the heart of Zara's promotional strategy. Satisfied customers become brand ambassadors , sharing their experiences and fashion finds within their social circles. Zara's investment in creating aesthetically pleasing and experiential stores serves as a powerful promotional tool. Moreover, the brand harnesses the potential of social media platforms, leveraging its millions of followers to organically amplify its brand message. Through engaging content, trend showcases, and interactive communication, Zara cultivates a community of loyal customers who actively contribute to the brand's promotion . In essence, Zara's mastery of the 4P's demonstrates a holistic and adaptive approach to marketing , where each element is intricately woven into the brand's DNA. 

Marketing Tactics that Define Zara's Success

In a landscape where consumer preferences are ever-evolving, Zara employs distinct marketing tactics that set it apart, solidifying its position as a trailblazer in the fashion industry.

• Customer Experience Focus: Zara has astutely recognized that, in the new economy, customer experience reigns supreme, often overshadowing the product itself. The brand's fast-fashion formula is meticulously crafted to provide a frictionless shopping experience. This strategy goes beyond merely selling products; it creates an atmosphere of uniqueness and trendiness, resonating with buyers who seek not just items but an immersive shopping journey. ‍
• Value for the Price: While Zara may not be the cheapest player in the fast-fashion industry, it consistently delivers trend-right products at prices that appeal to its target demographic. The brand's pricing strategy reflects a deep understanding of customer values, acknowledging that value is measured beyond the mere transactional aspect of price. This nuanced approach contributes significantly to Zara's strong brand value and resonance with its audience. ‍
• The Power of Brand Loyalty: Zara has mastered the art of transforming frequent buyers into brand evangelists. The meaningful experiences and values associated with the brand inspire a sense of loyalty among customers. Social media channels serve as dynamic platforms for engagement, with Zara boasting millions of followers across various platforms. This digital presence not only amplifies the brand's reach but also nurtures a community of loyal enthusiasts who willingly become advocates for Zara. ‍
• Convenient Physical Store Locations: Zara places a strategic emphasis on physical store locations, investing heavily in flagship stores positioned strategically in major metropolitan areas. The brand understands the importance of a physical presence and the impact of in-store appearances on customer perception. Moreover, Zara's integration of technology and mobile connectivity enhances the overall shopping experience, allowing customers seamless access to inventory and blurring the lines between online and offline retail. ‍
• Data Analysis: Zara doesn't just follow trends; it actively shapes them through a sophisticated data infrastructure. Real-time analysis of market trends and customer insights empowers the brand to stay ahead of the curve. This data-driven approach encourages two-way communication, which ensures a continuous feedback loop and facilitates the improvement of services and goods. Zara's commitment to leveraging data underscores its agility and responsiveness to meet and exceed customer expectations in a rapidly changing fashion landscape. ‍

Noteworthy Campaigns and Examples

While Zara may not engage in extensive traditional marketing campaigns, its strategic communication initiatives are nothing short of impactful, showcasing the brand's agility and attentiveness to its customer base.

• Customer-Driven Product Creation: One notable instance of Zara's responsiveness to customer needs occurred when a simple request for a pink scarf went beyond individual preferences. Zara, true to its "fast fashion" ethos, swiftly transformed this customer request into a global product launch within a mere seven days. This instance underscores Zara's ability to not only listen to its customers but to act on their preferences promptly, turning a singular request into a worldwide fashion phenomenon. ‍
• Customization for Particular Buyers: The active participation of store managers and employees in gathering customer insights is an example of Zara's commitment to understanding its customers. This engagement goes beyond the transactional aspect, influencing product customization to align with specific needs. Whether it's considering cultural preferences, climatic conditions, or other personalized requirements, Zara's approach to tailoring its offerings based on individual insights showcases a level of customization that transcends the conventional retail experience. ‍
• Innovations in Products: The launch of the "Edited" collection represents Zara's foray into online sales and customer-centric offerings. This innovative approach allows buyers to personalize their clothes online, providing a unique and engaging shopping experience. The "Edited" collection not only aligns with the broader trend of personalized shopping but also reflects Zara's commitment to staying at the forefront of technological advancements and evolving consumer expectations. It represents a strategic move towards not just selling products but curating an interactive and personalized fashion journey for each customer. ‍

Zara, often lauded for its exceptional campaigns and lookbooks, stands shoulder to shoulder with luxury brands, showcasing an unparalleled knack for turning simple ideas into powerful, visually stunning images. Employing brilliant casting, meticulous set designs, and collaborations with renowned photographers like Steven Meisel, Zara's campaigns have become iconic moments in the fashion industry. Let's explore some of the brand's standout campaigns that have left an indelible mark.

Zara Women’s FW20 Campaign: Empowering Elegance

Zara's dedication to empowering elegance is best exemplified by the FW20 campaign, which Steven Meisel shot. Models like Rianne Van Rompaey and Mona Tougaard showcase the new collection through a series of black-and-white images. The campaign not only highlights the traditional tailoring codes but reinterprets them in a contemporary context, sending a powerful message of female empowerment. Tailored suits, Oxford shirts paired with vests, cozy coats, and punk-inspired brooches blend seamlessly to create a visual narrative that resonates with Zara's democratic style.

Zara Women’s SS20 Campaign: A Pandemic-Defying Experiment

Amid the challenges of the pandemic, Zara demonstrated its adaptability with the SS20 campaign. Unable to conduct traditional shoots, the brand turned to its models, including Malgosia Bela and Anja Rubik, to capture themselves at home. The result was a unique and intimate portrayal of models in their own environments, showcasing SS20 items. However, the experimental approach sparked both interest and controversy, with some criticizing the unconventional poses for hindering a clear view of the garments. This campaign not only addressed the constraints of the time but also raised questions about the balance between artistry and practicality in fashion marketing .

Zara TRF SS19 Lookbook: Roman Holiday Remixed

Matteo Montanari's lens takes us on a playful journey through Zara TRF's SS19 lookbook, titled "Bella Roma." Reminiscent of the classic film "Roman Holiday," models Elibeidy Dani and Laurijn Bijnen infuse the Eternal City with modern charm. The lookbook captures the essence of Vacanze Romane with silver-fringed dresses, sequins, metallic finishes, and bows. While not a traditional campaign, these images form a captivating lookbook that breathes life into the eternal allure of Rome.

Zara Women’s FW19 Campaign: Opulence Redefined

Steven Meisel and Fabien Baron collaborated to create opulent visuals for Zara's FW19 campaign. Through sophisticated and overlapping images, models like Julia Nobis and Adut Akech exude regal elegance. The campaign features printed dresses, Prince of Wales coats, and chunky golden jewels, all with an '80s aesthetic. Meisel's shots celebrate beauty, art, and fashion, elevating Zara's commitment to offering accessible yet luxurious styles.

Zara Women’s FW18 Campaign: Languid Luxury

The Steven Meisel-shot FW18 campaign immerses viewers in a world of extravagant luxury. Models like Lexi Boling and Fei Fei Sun recline on sofas and soft pillows, draped in long-sleeved dresses, velvet vests, and scarves. The images evoke the spirit of Yves Saint Laurent's 1976 Haute Couture winter collection, drawing inspiration from czarist Russia, Ballet Russes, and orientalist designs. Meisel's lens captures a nostalgic yet contemporary fusion of fashion influences.

Zara Women’s FW16 Campaign: Disco Forest Dream

Mario Sorrenti brings to life a Disco Forest for Zara's FW16 campaign, creating a dreamlike atmosphere. Amid sequins, white horses, swings, and river canoes, the campaign offers a boho-chic party in nature. Zara presents a modern interpretation of Sir John Everett Millais' works, inviting customers into a realm of fantasy and free-spirited celebration.

Zara TRF FW13 Campaign: British Punk Revival

Drawing inspiration from British punk-rock essentials, Zara TRF's FW13 campaign transports viewers to London. Featuring mini floral dresses, checkered shirts, and animalier coats, the campaign exudes the cool essence of British punk rock. The imagery recalls the rebellious collections crafted by Hedi Slimane for Louis Vuitton, portraying a group of effortlessly cool teenagers.

These examples highlight Zara's knack for turning customer interactions into meaningful campaigns. By incorporating customer requests into global product launches, tailoring products based on specific insights, and embracing innovations like personalized online collections, Zara's communicative strategies are not just about broadcasting a message but actively engaging with its audience to shape the brand's narrative . In essence, Zara's campaigns transcend the traditional and embrace a dynamic, customer-centric approach that resonates with the ever-evolving expectations of today's fashion enthusiasts.

Zara's Unconventional Use of Traditional Marketing

In an industry often dominated by flashy billboards and television campaigns, Zara charts an unconventional course, redefining the essence of fashion marketing . Bucking the trend of extravagant spending on traditional channels, Zara strategically minimizes its investment in billboards and TV advertisements, choosing instead to let the quality of its products take centre stage. With a focus on product excellence, immersive in-store experiences, and a potent social media presence, Zara's stores become silent ambassadors, and platforms like Instagram serve as dynamic canvases for visual storytelling. The brand's limited reliance on traditional marketing channels doesn't denote a lack of ambition; rather, it reflects a profound understanding of the contemporary consumer's desire for substance over spectacle. Zara's approach is a narrative of quiet confidence, where the clothes themselves, coupled with a robust online presence, speak volumes in a fashion landscape often characterized by noise and extravagance.

Artistic Presence on Instagram

Zara's Instagram account stands out in the crowded realm of fashion by adopting a distinctive visual strategy. With a staggering 40 million followers, the brand showcases its garments through a lens of artistic expression rather than conforming to traditional model poses. The platform becomes a canvas for creativity, featuring captivating images that transcend the conventional. By steering away from predictable fashion photography, Zara not only captures the attention of its diverse audience but also cultivates a unique aesthetic that aligns seamlessly with the brand's identity . This approach transforms the act of scrolling through Zara's Instagram feed into an immersive journey through a gallery of contemporary fashion art.

Engaging YouTube Channel

Zara's foray into YouTube extends beyond the typical promotional content. The brand strategically leverages its channel to offer viewers an exclusive glimpse behind the scenes, unravelling the intricacies of its production processes and fashion shows. This behind-the-curtain approach creates a sense of exclusivity, inviting the audience into the inner workings of the fashion world. What sets Zara apart is the presentation of its studio collections as pieces of art, elevating the viewing experience beyond mere product showcases. By blending the realms of fashion and art, Zara's YouTube channel becomes a dynamic platform that not only informs but also captivates, establishing a deeper connection between the brand and its audience.

Zara's marketing strategy is a masterclass in adapting to the evolving needs of the fashion industry. By focusing on the customer experience, offering value for the price, and leveraging unconventional marketing channels, Zara has positioned itself as an industry leader. Its ability to blend traditional retail with a digital edge, while maintaining a strong brand identity , sets it apart in the fiercely competitive world of fast fashion. As Zara continues to navigate the ever-changing landscape of consumer preferences, its marketing strategy will undoubtedly play a pivotal role in sustaining its global dominance.

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Zara Marketing Strategy: How Zara Weaved the Perfect Fast Fashion Business Model

Learn about zara's iconic marketing strategy and advertising campaigns. read how zara aces the 4ps of marketing mix - product, price, promotion & placement..

• overview#goto" data-overview-topic-param="zara-s-fashion-legacy">Zara's Fashion Legacy
• overview#goto" data-overview-topic-param="zara-s-logo">Zara's Logo
• overview#goto" data-overview-topic-param="marketing-mix">Marketing Mix
• overview#goto" data-overview-topic-param="secret">Zara's Secret Sauce
• overview#goto" data-overview-topic-param="smart-marketing-tips">Smart Marketing Tips

Zara, the Spanish fast fashion giant under the Inditex group with a brand value of 13B USD , is always in the news circles for its unique business model and negative environmental impact.

Post successfully establishing the fast fashion industry, Zara experienced quick growth curves like its fast factories thanks to its innovative marketing strategy. In a world where trends come and go faster than a New York minute, Zara has managed to stay ahead of the curve by adopting a customer-centric business model. By listening closely to its customer demands, Zara has unlocked the secret to delivering fashion that is both on-trend, quick, and relevant to its target audience.

However, to achieve all this Zara spends only 0.3 percent compared to other fashion brands. So how does Zara spend so little yet gain so much?

In this marketing case study, we dive deeper into Zara's approach to marketing and business model that has set them apart from its competitors and established a loyal customer base across the globe.

From Spain to the World: Zara's Fashion Legacy

Zara, a Spanish fashion retailer, stands tall as a beacon of innovation and style in the global fashion industry. Founded in 1975 by the visionary duo of Amancio Ortega and Rosalía Mera, Zara has journeyed from humble beginnings as a single clothing store in Galicia, Spain, offering fashionable and affordable attire for women.

Source: HybeBeast

As the years went by, Zara began to make waves in the industry with its unique business model. While most retailers placed orders for clothing months in advance, Zara received new shipments twice a week, using customer feedback and data analytics to inform its designs and respond quickly to new trends in fashion. This approach won the brand a loyal following and a reputation for being at the forefront of fashion.

Source: Business Insider

The 1990s and 2000s saw Zara continue its upward trajectory, opening flagship stores in major fashion capitals across the globe, including Paris, London, and New York City. The company also expanded its product offerings by introducing accessories, footwear, and home goods to its product line. Throughout its journey, Zara has always embraced technology, utilizing data analytics and artificial intelligence to optimize its logistics management.

Today, Zara stands tall as one of the largest fashion retailers in the world, with over 3000 stores in 96 countries. Its innovative business model, trendy fashion clothing, and commitment to customer satisfaction have made it a household name and a symbol of fashion excellence. In recent years, Zara has also taken strides towards sustainability, demonstrating a commitment to preserving the planet for future generations.

As a subsidiary of Inditex group, one of the largest fashion groups in the world, Zara continues to leave a lasting impact on the fashion industry.

Target Audience

Zara appeals to the fashionable, trend-savvy person who embodies a sense of youth and a deep love of fashion. This group includes a wide range of men, women, and children who are all motivated to stay on trend and showcase their originality through their clothing choices. Zara targets the cosmopolitan, culturally aware consumer who isn't hesitant to invest in their particular style by emphasizing quality and design. /p>

Zara's Logo: The Crest of Catwalk Culture

The logo for Zara is a subdued depiction of understated beauty. Even though it's just a font, the message it conveys is powerful. The business name, etched in jet-black letters, emits a futuristic and minimalist attitude ahead of the always-evolving fashion trends.

Despite its seeming simplicity, Zara's brand strategy defies expectations and forges its own course. Unlike other fast-fashion brands, Zara wants to let its apparel speak for itself rather than overtly flaunt its branding. The business is sure that the quality of its apparel speaks for itself and does not require a logo to establish its authenticity.

Source: Logos-world

Instead of focusing on the logo, Zara invests in creating visually captivating clothing, with designs that are unparalleled and materials of the highest caliber. The brand's clothing is meant to be the centerpiece, commanding attention, and the absence of a logo only accentuates this concept.

Marketing Mix

Zara is a true trendsetter in the fashion industry, constantly pushing the boundaries with its stylish and on-point clothing collections. But behind the flawless must-have pieces, lies a carefully crafted marketing mix that has helped establish the brand as a leader in the fashion world. Let's explore Zara's Marketing mix to understand how Zara continues to captivate customers and define new benchmarks for the fashion world to follow. From product offerings and pricing strategies to promotion and place mix the ingredients that make Zara's marketing mix truly unforgettable.

Zara's product lineup is a tasteful synthesis of new trends, new styles practicality, and adaptability. The fashion brand offers a wide range of clothing and accessories to satisfy the various needs and preferences of its trendy customers.

The main component of Zara's product line is special women's clothes, which range from stylish gowns to casual tees and everything in between. The clothing brands menswear line, on the other hand, is a stylish combination of formal and casual apparel designed to meet the sartorial needs of the contemporary man.

Source: Zara

Zara provides fashion items for even the youngest members of the family, ensuring that they can enjoy both comfort and style. Zara's children's clothing line is stylish and practical. And Zara offers a wide range of accessories, like handbags, shoes, and jewelry, to complete the look and give any outfit the perfect finishing touch.

Additionally, Zara's assortment of goods goes beyond just apparel and accessories. To give customers a full fashion experience from head to toe and even at home, the business's home collection includes a variety of furnishings, including bedding, towels, and décor items.

In 2021, Zara also introduced its first cosmetics line, Zara Beauty. The brand's beauty line offers a range of cosmetics and skincare products including lipsticks, eyeshadows, blushes, face masks, and fragrances.

Every year, Zara creates close to 450 million items based on the latest trends and fashion seasons. It takes 15 days to create new collections and get them into stores, capitalizing on market trends. If the item doesn't sell, Zara removes it from stores right away, halts production, and pursues a new design.

Basic clothing that lasts for years being a staple of wardrobes and fashion-forward clothing that only lasts three to four weeks are both major products of this fashion brand.

The price structure of Zara seamlessly blends value and affordable prices. From the company's extensive inventory of products at different price points, customers can select the appropriate zara clothes to fit their style and budget.

For added customer appeal, Zara employs several promotional price techniques like promotions and discounts. These methods offer buyers the possibility to get their preferred things for a significantly lesser cost.

Zara's pricing strategy, though, extends beyond straightforward sales and discounts. The company employs psychological pricing techniques including anchoring and odd pricing to influence customers' perceptions of value and boost sales.

Additionally, Zara's pricing strategy considers the regional economic conditions of its various locations, adjusting prices as necessary to maintain its products' accessibility and global competitiveness.

Zara's pricing strategy is an adaptable, comprehensive plan created to meet the needs of its customers and provide them with affordable access to high-end fashion items.

Zara's distribution strategy is a seamless fusion of brick-and-mortar retail store locations and online sales channels.

Zara Stores

Zara gives customers the chance to connect with its items in a remarkable physical setting thanks to its enormous retail presence in global markets that covers more than 3,000 locations across 96 countries.

Source: Elle Australia

E-commerce platform

The Spanish fashion retailer, on the other hand, is aware that convenience is king and has enhanced its physical presence with a dynamic e-commerce platform, giving customers the option to purchase whenever they want from the comfort of their own homes. It first opened an online shop in Jordan in September 2010 before branching out internationally.

Supply Chain

Zara's distribution strategy is built around a flexible and efficient supply chain. To quickly and affordably meet customer expectations, the company works with various logistics firms in addition to its own distribution centers. Zara is able to respond quickly to the continuously evolving fashion environment and customer preferences because of this.

Customers can shop with ease from any corner of the world because of Zara's distribution strategy, which uses both physical and digital touchpoints. Whether customers want to purchase in-store or online, Zara promises them a simple and delightful experience.

Zara marches to the beat of its own drum when it comes to fashion marketing. While other fashion brands flood our screens with promotional marketing, Zara keeps things understated, allocating a mere 0.3% of its sales towards advertising strategy. Instead of relying on traditional promotional marketing methods like TV commercials, Zara places their faith in the power of their merchandise, store ambiance, and competitive pricing.

Source: Fashion Network

This unique approach allows Zara to remain laser-focused on delivering exceptional products, rather than overwhelming customers with a barrage of advertisements. And while you may not see Zara shouting from the rooftops about sales or promotions, rest assured that they are always curating a stylish and exciting shopping experience for their customers. Zara's main focus is opening new stores in new markets making clothing items available to everyone. This can be the main reason for Zara's success.

In-Store Magic

Shopping at Zara stores is like stepping into a fashion wonderland. From its prime urban locations to its carefully curated window displays, Zara knows how to captivate and charm its customers. With a keen eye for aesthetics, the company transforms its stores into artfully designed spaces that are impossible to resist.

Source: Architizer

The window displays are the epitome of Zara's fast fashion philosophy, constantly evolving to showcase the latest and greatest in the world of fashion.

Source: Wordpress

And, the store managers and sales associates at every store locations are not only knowledgeable, but they also embody Zara's commitment to connecting with its customers by wearing uniforms specifically tailored to reflect the unique socio-economic trends of each location.

Each visit to a Zara store is a treat for the senses. Every detail is meticulously planned to offer a truly immersive fashion experience, making it impossible for you to leave without feeling inspired and fashion-forward.

Sales Promotions

Zara is known for its strategic and frequent sales promotions to drive traffic to its stores and online platform. The company frequently offers discounts on select items, ranging from seasonal promotions to clearance sales. These promotions are often time-limited and rotate frequently to keep customers engaged and interested.

In addition to in-store and online sales, Zara also offers a loyalty program for its most frequent shoppers, providing special discounts and perks for members.

Public relations and Influencer Marketing

Zara places a significant emphasis on PR, using various tactics and strategies to communicate its brand identity and message to the public.

Some of Zara's PR initiatives include engaging with fashion influencers, hosting high-profile events, and collaborating with other brands and designers.

Direct Marketing

Zara utilizes various direct marketing tactics to reach its target audiences, such as email marketing, personalized promotions, SMS marketing, in-store events, and print advertising. These efforts help Zara connect with customers in a personal and relevant manner.

Source: MailCharts

Store managers at Zara also contribute significantly to marketing the business and its products by giving customers individualized attention and offering product recommendations.

Zara places high importance on brand communication through online communities, despite limited spending on traditional advertising, unlike other brands.

Social Media

Given that social media is the lifeblood of the younger generation, Zara uses well-known platforms like Facebook, Instagram, and Twitter, YouTube, TikTok to promote its new collections, partnerships, promotional offers, and events. Zara's Instagram boasts a following of 56.1 Million while its Facebook page boasts a following of 30M. Zara's social media presence generates the vast majority of its value organically. Zara's YouTube showcases the launch of new campaigns.

From Trendsetting to Trailblazing Marketing: Zara's Secret Sauce

Thanks to its creative marketing strategies that prioritize the needs of the customer, the fast fashion brand Zara has soared to new heights in the fashion sector. Here are some important fashion marketing strategies that set the fast fashion brand Zara apart from most brands.

Fast fashion phenomena

Zara excels at fast fashion, swiftly and skillfully adapting to the most new trends and customer preferences. Zara dominates the opposition and holds a commanding lead thanks to its exceptional agility curve.

Vertical Integration

Unlike many retailers, Zara has a vertically integrated supply chain, allowing it to control all aspects of its business, from design and production to distribution and sales. Zara is able to keep costs low while maintaining high product quality as a result of this.

The design and product development team, a highly talented and creative group of individuals tasked with bringing the latest fashion trends and styles to life, is at the core of Zara's supply chain. They accomplish this by leveraging a wealth of data and customer insights to ensure that each product offering reflects the current fashion landscape and customer preferences.

Once the designs are completed, Zara begins the process of obtaining the necessary supplies from a large network of dependable manufacturers. Every aspect of the company's operations reflects its high standards, and it collaborates closely with its suppliers to ensure that the quality of its products is unrivaled.

Production takes place in Portugal, Spain, and other countries as a result of collaborations with independent producers. Zara uses a just-in-time production technique to reduce waste and allow for quick changes in response to demand changes.

The main part of Zara's distribution network is a centralized distribution center located in Spain, which serves as the hub for its global logistics. From this central location, Zara is able to quickly and efficiently distribute its products to its retail stores and e-commerce platform, ensuring that customers around the world have access to the latest fashion offerings.

Customer Experience

Zara has earned a reputation for providing a superior brand experience that puts its consumers' needs and wants first. The company's dedication to this experience is visible in every facet of its operations, from the clean, contemporary aesthetic of its retail spaces to the thoughtfully chosen assortment of in-vogue clothing.

Zara, a pioneer in technical advancement, ensures a seamless and convenient shopping experience by integrating digital displays and mobile payment options into the in-store experience. Due to the business's robust online presence and user-friendly website and mobile app, customers can readily access its products from the comfort of their homes.

But Zara's commitment to providing a good customer experience goes far beyond the boundaries of traditional and online shopping. The company has a keen awareness of the needs of the modern customer and takes consumer feedback seriously.

A story that exemplifies this was when requests for a pink scarf started pouring in from various cities like Tokyo, Toronto, San Francisco, and Frankfurt. The customer's voice was heard loud and clear, and within a mere seven days, Zara had created a pink scarf that was not only aesthetically pleasing but also in high demand.

With 500,000 pink scarves selling out in just three days, it's clear that Zara's swift action and ability to turn customer insights into tangible products is what sets them apart. By having a direct link to their production process, Zara is able to be nimble, meeting customer needs with lightning speed and remarkable efficiency.

By constantly updating their style to fit a new trend, Zara empowers its customers and strengthens brand loyalty, with store managers who try to understand the customer's mind through their behavior and feedback at the forefront. Feedback from even one zara customer makes a big difference.

Sustainable Sensibility

Zara is not just a global fashion powerhouse, but also a responsible one. The business is dedicated to sustainability and often highlights its eco-friendly initiatives in its marketing campaigns, positioning it as a leader in the sustainable fashion movement. Zara is committed to reducing waste and promoting environmental friendliness, using eco-friendly materials, and implementing programs like "Closing the Loop" to minimize waste.

The brand also partners with NGOs and works towards a future free of toxic chemicals through initiatives aimed at reducing hazardous substances in production processes. With its focus on a greener future, Zara firmly establishes itself as a responsible and sustainable fashion leader.

In 2019, the brand launched its "Join Life" collection, which received widespread media attention and emphasized Zara's dedication to sustainability. Its LEAF COALITION initiative brings together companies and governments to protect tropical forests and promote sustainable growth, with the goal of ending deforestation.

Zara has set ambitious sustainability goals for future to drive change in the textile industry, working with the scientific community, social and environmental organizations, and other companies in the sector. The brand is also committed to eliminating single-use plastics for customers and using recycled or reused waste in its operations. Zara aims to have zero net emissions by 2040, solidifying its position as a responsible and innovative fast fashion leader.

Collaborative Couture

Zara is always searching for novel ways to engage and enthral its customers. The brand's various partnerships with designers and artists to create limited edition collections and exclusive products that light up the fashion industry provide customers with a shopping experience that is nothing short of spectacular. It has a reputation for working with brands like Nike, Kaia, and most recently, Clarks.

Source: Zara's Instagram

Zara's marketing methods, which are a symphony of innovation and customer focus, boost the brand above the competition. Additionally, they give customers a truly remarkable experience.

Smart Marketing Tips for Startup Success: The Zara Way

The ability of Zara to quickly identify and react to fashion trends is partly responsible for its outstanding performance in the fashion business. This makes it possible for the company to continually provide the latest styles to the market, retaining clients' interest.

Quality Matters

Despite focusing on fast fashion, Zara encourages quality in its products, setting it apart from its competitors and fostering brand loyalty. The commitment to quality made by the business helps to build customer loyalty.

Technology-Driven

Zara uses technology to streamline its logistics and accelerate the launch of new items. Additionally, the company uses social media and digital marketing to connect with customers and provide a seamless purchasing experience.

Stunning Store Design

Zara stores are made to be aesthetically pleasing and memorable, building a strong brand image and giving customers a unique shopping experience. The brand's stores are thoughtfully chosen to reflect the brand's mission and core principles, thus enhancing the brand's reputation.

Personalized Shopping

Through its app, Zara brand provides users a customized shopping experience that enables them to establish profiles and receive recommendations based on their preferences. This personalization fosters a strong bond between the company and its clients, giving them a feeling of exclusivity and individualized care. Explore customer experience analytics to learn how to assess customer experience when developing strategy.

Strong Brand Image

The cornerstone of Zara's marketing plan is creating a strong, recognizable brand image that resonates with its target demographic. The company's carefully chosen visual content and consistent message across all media have helped it establish a distinctive and recognizable brand identity.

In the world of instant fashion, the Zara brand stands alone as a brilliant illustration of marketing brilliance. Through a marketing strategy that combines fast fashion, designer collaborations, and cutting-edge technology, Zara has developed a brand image that is both stylish and socially conscious. Due to their environmentally friendly activities and aesthetically pleasing store designs, Zara consistently captivates people and outperforms competitors.

To sum up, Zara's marketing strategy is a symphony of style, content, and sustainability that has elevated the brand as one of the successful fashion retail brands in the fashion industry and solidified its status as a true marketing prodigy.

Intrigued by Zara's success? Learn more about the fast fashion market by taking a closer look at Fashion Nova's marketing strategy. Discover how this business leveraged influencer marketing and TikTok to rise to the top.

You can also read marketing strategy case studies on Myntra and Nykaa for an online-first approach in fashion eCommerce industry.

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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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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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• April 2003 (Revised December 2006)
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ZARA: Fast Fashion

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• | Pages: 35

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• ZARA: Fast Fashion  By: Pankaj Ghemawat and Jose Luis Nueno

Zara's Secret for Fast Fashion

by Kasra Ferdows, Michael A. Lewis and Jose A.D. Machuca

Editor's note: With some 650 stores in 50 countries, Spanish clothing retailer Zara has hit on a formula for supply chain success that works by defying conventional wisdom. This excerpt from a recent Harvard Business Review profile zeros in on how Zara's supply chain communicates, allowing it to design, produce, and deliver a garment in fifteen days.

In Zara stores, customers can always find new products—but they're in limited supply. There is a sense of tantalizing exclusivity, since only a few items are on display even though stores are spacious (the average size is around 1,000 square meters). A customer thinks, "This green shirt fits me, and there is one on the rack. If I don't buy it now, I'll lose my chance."

Such a retail concept depends on the regular creation and rapid replenishment of small batches of new goods. Zara's designers create approximately 40,000 new designs annually, from which 10,000 are selected for production. Some of them resemble the latest couture creations. But Zara often beats the high-fashion houses to the market and offers almost the same products, made with less expensive fabric, at much lower prices. Since most garments come in five to six colors and five to seven sizes, Zara's system has to deal with something in the realm of 300,000 new stock-keeping units (SKUs), on average, every year.

This "fast fashion" system depends on a constant exchange of information throughout every part of Zara's supply chain—from customers to store managers, from store managers to market specialists and designers, from designers to production staff, from buyers to subcontractors, from warehouse managers to distributors, and so on. Most companies insert layers of bureaucracy that can bog down communication between departments. But Zara's organization, operational procedures, performance measures, and even its office layouts are all designed to make information transfer easy.

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

In each hall, floor to ceiling windows overlooking the Spanish countryside reinforce a sense of cheery informality and openness. Unlike companies that sequester their design staffs, Zara's cadre of 200 designers sits right in the midst of the production process. Split among the three lines, these mostly twentysomething designers—hired because of their enthusiasm and talent, no prima donnas allowed—work next to the market specialists and procurement and production planners. Large circular tables play host to impromptu meetings. Racks of the latest fashion magazines and catalogs fill the walls. A small prototype shop has been set up in the corner of each hall, which encourages everyone to comment on new garments as they evolve.

The physical and organizational proximity of the three groups increases both the speed and the quality of the design process. Designers can quickly and informally check initial sketches with colleagues. Market specialists, who are in constant touch with store managers (and many of whom have been store managers themselves), provide quick feedback about the look of the new designs (style, color, fabric, and so on) and suggest possible market price points. Procurement and production planners make preliminary, but crucial, estimates of manufacturing costs and available capacity. The cross-functional teams can examine prototypes in the hall, choose a design, and commit resources for its production and introduction in a few hours, if necessary.

Zara is careful about the way it deploys the latest information technology tools to facilitate these informal exchanges. Customized handheld computers support the connection between the retail stores and La Coruña. These PDAs augment regular (often weekly) phone conversations between the store managers and the market specialists assigned to them. Through the PDAs and telephone conversations, stores transmit all kinds of information to La Coruña—such hard data as orders and sales trends and such soft data as customer reactions and the "buzz" around a new style. While any company can use PDAs to communicate, Zara's flat organization ensures that important conversations don't fall through the bureaucratic cracks.

Once the team selects a prototype for production, the designers refine colors and textures on a computer-aided design system. If the item is to be made in one of Zara's factories, they transmit the specs directly to the relevant cutting machines and other systems in that factory. Bar codes track the cut pieces as they are converted into garments through the various steps involved in production (including sewing operations usually done by subcontractors), distribution, and delivery to the stores, where the communication cycle began.

The constant flow of updated data mitigates the so-called bullwhip effect—the tendency of supply chains (and all open-loop information systems) to amplify small disturbances. A small change in retail orders, for example, can result in wide fluctuations in factory orders after it's transmitted through wholesalers and distributors. In an industry that traditionally allows retailers to change a maximum of 20 percent of their orders once the season has started, Zara lets them adjust 40 percent to 50 percent. In this way, Zara avoids costly overproduction and the subsequent sales and discounting prevalent in the industry.

Excerpted with permission from "Rapid-Fire Fulfillment," Harvard Business Review , Vol. 82, No.11, November 2004.

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Kasra Ferdows is the Heisley Family Professor of Global Manufacturing at Georgetown University's McDonough School of Business in Washington DC.

Michael A. Lewis is a professor of operations and supply management at the University of Bath School of Management in the UK.

Jose A.D. Machuca is a professor of operations management at the University of Seville in Spain.

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Cost Calculator Logistic Cost Calculator ROI Calculator For Supplier Compliances Sustainability Our Technology Supply chain Management Our Smart Factory Fashion Designs Know Our Products Supply Chain Manufacturing Brands/Retail Meet Our Team Chat with us Zara Marketing Case Study Never Miss a Beat Get weekly email updates from Fashinza to your inbox Zara needs no introduction as it dominates the fashion world and is one of the most prominent international fashion brands. With more than 2000 stores in the upscale market, Zara caters to approximately 93 markets in the world’s urban communities. With these many stores, Zara manages to hit 18 billion Euros of surplus annually.  The renowned fashion brand has successfully maintained its central goal of delivering quick, elegant, and reasonable designs in the fashion industry. Zara’s approach of configuration dealing is firmly associated with the clients. This case study is all about Zara and how it became the phoenix of the fast-fashion world.  “Fashion is nothing but an emulation of any given example and meets the demand of social adaptation. The more the article becomes subject to rapid fashion changes, the more will be the demand for cheaper products of the same kind.”  - Georg Simmel, on ‘Fashion’ in 1904. Zara’s History: Excerpts of a Long Tale  The first Zara store was launched by Amancio Ortega in 1975 in Central Street, Galicia, Spain. The first store stocked low-price look-alike designs of popular and rich-quality dress styles.  The store soon became a hit, and Ortega opened more Zara stores all around Spain. It was the 80s (1980) when Ortega had a change of plan. He began assembling and distributing cycles to decline the lead times and react to new patterns in a snappy and concise manner, what they popularly called ‘Moment Fashions.’  The same year, Ortega and his company took their first step toward international expansion. Their international entries were made through Porto, Portugal, in the 1990s and Mexico in 1992. This international expansion was the turning point for both Ortega and Zara. Ortega continued to grow with new brands like Bershka, Pull & Bear, and Oysho and acquired groups such as Stradivarius and Massimo Dutti. These brands have been the key contributors to the success of the parent group - Inditex. Zara still boasts of being the primary growth driver.  Zara - The Undisputed Fashion Brand: Customer-Driven Value Chain  For Product Line-Up:  Unlike the other chains of Inditex, Zara focuses on manufacturing and delivering fashion-sensitive products. Following the changing customer preferences, its latest designs stay in production continuously.  When several competitors were focused on creating only a few thousand store-keeping units (SKUs), Zara ensured producing hundreds of thousands of stock-keeping units in only a year. However, these SKUs varied largely depending on the fabric, size, and color.  Zara and its products are not dependent on the design experts. Rather, its designers cautiously observe the latest trends and try blending and implementing them for the market. The designer groups keep on creating variations in a specific season, leading to expansion to successful designs.  For Fast Supply Chain:  Zara ensures a flexible supply chain, which enables it to deliver new ranges to store outlets two times a week from its central distribution center, which is a 400,000 sq m facility situated in Arteixo, Spain. This is a type of business system called ‘ vertical integration ’ that Zara adapted to eliminate the need for local warehouses. Here, Zara’s marketing strategy was reducing the ‘ bullwhip effect .’  Zara: Retailing Strategy  Instead of just enhancing manufacturing efficiency, Zara paid close attention to its retail strategy. It adopted the retailing strategy that would help it follow the fashion trends as quickly as possible, even if it involves some unmet demands.  Also, this helped Zara to create a FOMO for its products. However, the two significant components of Zara’s retailing strategy rely on its upstream operations: Stores and Merchandising.  Zara’s Anti-Marketing Approach Zara successfully retained a profit of 13%, whereas its significant competitors like H&M have only 6% of profitability. Apart from the efficient supply chain management, it was possible due to the no-advertising or limited marketing policy that Zara follows.  This is what makes Zara one of a kind in the fashion industry. The brand spends only 0.3% of its budget on promotion and advertising. The typical trend in the fashion industry is to spend about 3.5% on marketing and promotion. The brand doesn’t believe in marketing as it saves them a lot of money and helps them with exclusivity.  Through this article, you’ll get valuable insights into the journey of Zara - one of the biggest international apparel brands. You’ll learn all about its history, retailing strategy, value chain, and more.  Zara is the ideal case study for those who want to start their own apparel brand. Success is a ladder, and you have to take every step patiently and efficiently. However, if you’re planning to build something as colossal as Zara, you must source your clothing appropriately from the right manufacturer. For instance, top fashion brands trust the Fashinza platform to connect with clothing fabric manufacturers for their needs. Connect with Fashinza today! Share this Story Making Your 1 Minute Sales Pitch To Win Over Your Client: Tips For Fashion Brands How to Grow a Clothing Brand: 9 Easy Ways to Scale Plus-size formal dresses for special occasions 3rd floor, 91 Springboard, Building number 145, Sector 44, Gurugram - 122003. USA | UAE | India 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? Leave a comment Cancel reply You must be logged in to post a comment. Zara: Marketing in Fast Fashion a Case-Study A work project, presented as part of the requirements for the Award of a Masters’ Degree in Management from the Nova School of Business and Economics Carolina Lago Barbosa Ortigão de Oliveira | 1461 Zara: Marketing in Fast Fashion A Case-Study A project carried out for the Nova SBE Masters’ Degree, under the supervision of Professor Victor Centeno 30.05.2014 Zara: Marketing in Fast Fashion | Carolina Ortigão de Oliveira | 1461 Acknowledgements I would like to begin by thanking my advisor, Victor Centeno, without whom this work project would not have been successfully completed. His patient revision and comments allowed me to construct a cohesive and interesting case-study with the right guidelines for future teaching. His support has, without a doubt, shaped the development of this case- study and the final product presented. Moreover, I would like to thank some of my colleagues, friends and family who have helped me write this work project as a “good read” with dynamic content that reaches out to many areas besides those of Management and Marketing. Zara: Marketing in Fast Fashion | Carolina Ortigão de Oliveira | 1461 Abstract Title: Zara: Marketing in Fast Fashion Author: Carolina Ortigão de Oliveira “Possibly the most innovative and devastating retailer in the world.”1 Zara was founded in 1975 by Amancio Ortega Gaona, soon becoming the largest and most successful chain of the Galician group Inditex (Industria de Diseño Textil) and a pioneer of the rising fashion category of Fast Fashion. Its innovative vertically-integrated strategies, combined with its emphasis on quality and demand-based offer have shaped the world of fashion and brought forth many questions on its future sustainability and growth. Zara has always relied on its store network for advertising its product offer; allowing its garments to “speak for themselves”. With the continued pressure felt in the industry, management has pressed some concerns about future company growth and creative, innovating solutions must be implemented to guarantee Zara’s future growth. The case- study narrative focuses on these issues and leaves readers with an open question regarding what decision to implement. Keywords: Zara, H&M, Fast Fashion, Marketing, PoS Advertising 1 LVMH Fashion Director, Daniel Piette, 2001 (http://edition.cnn.com/BUSINESS/programs/yourbusiness/stories2001/zara/) Introduction The purpose of this Work Project will be to provide an analysis on Zara’s business strategy, namely its approach to marketing, in order to extract the main challenges faced by the company given the competitive environment of today’s Fast Fashion industry. The author has chosen to develop her work project as a case-study given the believed relevance it will have on future marketing courses and the added-value it may bring to the understanding of how certain companies can survive and sustain their competitive advantages through unconventional strategies in the industries they operate in. The author has also chosen to approach this theme given her interest in the industry studied and the belief that marketing courses could apply more examples on how “real world” companies apply strategies in ways that differ from the academic realm. As a result, the main intent of the Work Project will be to understand if Zara’s current marketing approach is sustainable in years to come, especially when placed against the competitive pressure from its key competitors, namely Sweden’s H&M. The main question that is sought to be answered is: “Can Zara continue to outshine competitors without waiving its unconventional approach to marketing?” Zara was founded in 1975 by Amancio Ortega Gaona, soon becoming the largest and most successful chain of the Galician group Inditex (Industria de Diseño Textil) and a pioneer of Fast Fashion. The first Zara store opened in La Coruña, Spain, with the intention of “selling fashionable clothing at low prices”2. The ability to produce and deliver new garments to stores in less than three weeks gives Zara its capacity to effectively respond to consumer demand within the fashion season. An inspiration to even 2In HBS Case “Zara: Managing Stores for Fast Fashion”, 2010 the most traditional retailers, Zara has continuously shaped the industry; setting new ways “to do business” and proving to be an exception to the rule. The present work project will have two main sections beginning with the case narrative where the author will describe Zara’s origin, its modus operandi and compare the brand’s strategy to its competitors. In this section, the reader will be able to quickly identify what actions need to be taken and, ultimately, answer the proposed assignment questions with the information provided. This part of the work project constitutes the following pages. In the second and final section, the author delineates a teaching note to facilitate in-class discussion of the case and useful notes on how to approach the main discussion blocks for the class session. For that purpose, this section will not only recommend assignment questions for the case’s resolution but also enlist the main discussion blocks (together with a class plan) that should guide professors when teaching the case, evaluating students’ answers and discussing the case in class. This second section can be found under “Appendix B) Teaching Note”, following the case exhibits, and is as relevant and important as the case narrative. Case-Study Narrative ZARA: Marketing in Fast Fashion In mid Spring/Summer season 2013, Óscar Pérez Marcote, Director of the Zara Business Unit at Inditex since 20113, sat in his office preparing for a meeting with Inditex CEO Pablo Isla Tejera. The intent of the meeting was to discuss Zara’s current strategy and marketing approach in the midst of the competitive pressure experienced in the industry. As Inditex’s founder (and Óscar’s brother-in-law4), Amancio Ortega, had always pressed – senior management should “once a month, come in here thinking that we are near bankruptcy”5 and come up with aspects within the business units that needed improvement/innovation, to push the group’s growth further. Óscar had been Zara’s director for the past 2 years, witnessing the opening of stores in over 10 new markets6, the continuous expansion of Zara’s e-commerce stores (available in 21 countries by the end of 20137) and the 2012 cutting-edge refurbishment, design and implementation of Zara stores worldwide. He knew that the stores were the key to Zara’s business model; the millions of euros invested annually in locating stores and designing each interior carefully explained why Zara needed no further advertising – the stores were the voice of Zara’s offer. Sales had almost stagnated compared to the previous year and stores were opening at a slower rate: something had to change, but what? On the one hand, competition in Fast Fashion was growing fierce and competitors were continuously investing in advertising and promotion to expose their offer so Óscar feared that Zara might eventually fall behind. On the other hand, however, there was the fear of harming Zara’s brand image (a strong 3 http://www.modaes.es/empresa/20121108/oscar-perez-marcote-releva-al-nuevo-ceo-de-esprit-en-sus-cargos-en-inditex.html 4 http://cincodias.com/cincodias/2011/01/19/empresas/1295447988_850215.html 5 In HBS Case “Zara: Managing Stores for Fast Fashion”, 2010 6 Inditex Annual Reports 2011 and 2012 7 http://www.inditex.com/en/press/press_releases/extend/00001002 one since its beginning in 1975) with heavy advertising, which could have a much higher impact on the overall brand. Fast Fashion Zara had been one of the pioneers of this new category in the fashion industry, known for its quick production-to-store operations. In recent decades, the world had begun to observe the rise of retailers such as Zara, H&M, Topshop, Primark and Mango; and there was no telling where innovation would take the industry in the future. These retailers all had one strategy in common: bringing haute couture and trendy, affordable items to the masses8; proving to people that fashion was available for all and not only for those who could afford its exclusivity. The need to “adapt merchandising assortment to current and emerging trends as quickly and effectively as possible9” was thus key in this category; retailers would compete not only on prices but also on time-to- market so as to ensure that their offer was the first to reach consumers. The realization that an effort should be made to understand customer preference and shopping behaviour was crucial for matching consumers’ needs to supply, but not all retailers understood how to do this. Zara was, undoubtedly, the best retailer in this matter; with its efficient supply-chain and integrated communications between points-of-sale and designers, the company was able to force even the most traditional fashion houses to adapt with the fear of losing business to “mass-merchandisers” 10. By the end of 2012, the Fast Fashion industry had three top players: Spain’s Zara, Sweden’s H&M and US’ Forever 21. In Europe, however, the battle was between Zara 8 In “Fast Fashion Lessons”, Sull & Turconi 2008 9 Ibid. 10 In “Fast Fashion: Responses to Change in the Fashion Industry”, Doyle, Morgan and Moore 2006 and H&M, with a slight pressure now coming from Ireland’s low-cost retailer Primark and Spain’s Mango. Industria de Diseño Textil The world’s largest fashion retailer, commonly known as Inditex, was created by the Spanish entrepreneur Amancio Ortega Gaona in 1985, 10 years after the opening of the first Zara store in La Coruña. Amancio Ortega had, since very little, established a zest for quality apparel and founded Confecciones Goa, S.A. in 1963 to provide women with quality garments at affordable prices and to put his belief, that retailing and manufacturing should be closely linked, in action. Confecciones Goa, S.A. eventually became Inditex’s first garment manufacturing factory. The group had now grown parent to over 100 companies operating in design, textile, manufacturing and distribution. In the 1990’s Inditex began its international expansion while establishing and acquiring new brands. Inditex’s IPO in 2001 had reached a 50% increase in stock price by 2002 and Amancio Ortega, who had begun his journey in apparel as an errand boy11, became the richest man in Spain (and the fourth richest man in the world by 201412). By the end of 2012, Inditex owned eight fashion retail chains (Zara being its main concept brand) with over 6000 stores in 86 markets worldwide (Exhibit 1 describes Inditex’s brands and store concepts), had a group worth of €15 billion and employed over 120,314 people13 (Exhibit 2 provides key details on the group’s performance). More than half of the group’s employees were based outside of Spain, with approximately 80% of them being women with an average age of 26. 11 In HBS Case “Zara: Fast Fashion”, 2003 12 http://www.bloomberg.com/billionaires/2014-03-10/cya 13 Inditex Annual Report 2012 Inditex’s headquarters were set in one of Spain’s poorest autonomous regions, Galicia, with a history in the apparel industry dating back to the Renaissance. A hip but simple glass building in the middle of Arteixo’s fields (La Coruña), also known as “The Cube” (Exhibit 4 contains images of “The Cube”), housed the Group’s headquarters. Inside, the overall group strategy was set, coordinating common brands’ operations and functions (namely, HR, IT, transportation and real estate). Inditex not only stressed a common strategic group vision but also that all garments be produced under the right social conditions; the group believed that having products made under the correct conditions was as important as “getting the right product to the right place at the right time and the right price” 14. Due to Inditex’s rapid expansion and successful chains, it accounted for four main operating centres by 2012, all of them in Spain: Arteixo and Narón (both in La Coruña), and Sallent and Tordera (both near Barcelona). Each business unit (retail chain) was, however, independently managed with different strategies, product designs, manufacturing models, image, stores and financial results15. Performance of older and more successful chains, such as Zara, served as “best practices” to be applied to all brands in order to install a more rapid and effective expansion. Finally, the group promoted high levels of autonomy and responsibility from all employees, regardless of function, and provided continuous feedback on every aspect of operations as a way to construct and enhance its performance; clearly emphasizing the importance of employee opinion and their cultural fit. “Inditex offers a dynamic and international environment where ideas are valued with a strong bet on internal promotion. We believe in job stability and continuous training.”16 14 In HBS Case “Zara: Managing Stores for Fast Fashion”, 2010 15 In HBS Case “Zara: Fast Fashion”, 2003 16 Inditex’s History document, provided by an Inditex employee The “Zara Way” Zara was the oldest and most international of all the Inditex brands, having been officially founded in 1975, before the creation of the Inditex Group. Its first milestone began in 1963 with Amancio Ortega’s creation of “Confecciones GOA” selling intimate apparel to women. However, it was only in 1975 that the first store opened, as Zara, with the intention of selling “contemporary fashion of medium quality at a good price”17. The brand made its international debut in Oporto, Portugal in 1988 and by the end of 2012 it accounted for over 1900 stores across 86 markets and for 66% of the group’s sales18. With a newly designed store concept recently installed worldwide, the brand seemed stronger than ever. Zara was known, by industry players, to have an extremely particular business model, especially given the fast-growing and quick-response industry it acted in, where most companies outsourced garment manufacture to reduce costs and, supposedly, enable higher flexibility. Zara, however, as a vertically-integrated retail chain, controlled all its garment production and outsourced only “basic” clothing that could be ordered in advance and easily adapted to future required styles. Production & Design Contrarily to the rest of the industry, Zara opted to keep around half of its merchandise production in-house under the operations of 20 fully-owned factories. Inditex purchased undyed garments from countries such as Italy, Turkey, India and China with the help of two purchasing offices, one in Barcelona and another in Hong Kong. Fabrics, and non- core items, were purchased as a finished product in small quantities through frequent orders, allowing Zara to quickly react to consumer demand by manufacturing and 17 In HBS Case “Zara”, 2003 18 Figures stated as per Inditex’s 2012 Annual Report under the assumption that 2013 figures are similar distributing at a high speed to stores (a new item could be in store shelves only 3 weeks after its need was detected). Moreover, outsourced production came as no obstacle for Zara’s quick response system: 80% of all outsourced manufacturing was done in Europe and 20% came from Asia and low-wage countries, where only the less fashionable and basic items were ordered. Fabrics would arrive at Arteixo, be sent to Zara’s factories close by for cut and colour and then to 400 traditional shops in Galicia and Northern Portugal for sewing and assembling. Even though these stores weren’t owned by Inditex, the company had close ties to all shops and helped provide them with all their production needs. Once sewing was completed, all products would come back to Arteixo for pressing, labelling, quality control and shipping. As such, regardless of origin, all products would pass through Arteixo before being shipped to stores around the world. Zara, similarly to other clothing retailers, introduced garments under two main seasons: Spring/Summer and Fall/Winter; however, in contrast to some of its core competitors, it continued to replenish the stores during the year. Zara’s apparel collection was divided into three main categories: Women, Men and Kids. All these lines were further complemented by accessories such as shoes, bags, jewellery and fragrances. Zara’s main apparel line, Women, was further sub-divided into three main categories: Zara Woman, an executive/fashionable look; TRF, with sporty/young merchandise; and Zara Basic, which provided younger informal looks19. Unlike most retailers that had small and elite designer teams, Zara had a team of 200 designers with a flat organization that would plan and present 50% of the core collection, 19 In HBS Case “Zara: Managing Stores for Fast Fashion”, 2010 on a “first guess” basis, six months before the beginning of each buying season. The remainder would be created throughout the year with the help of real-time information that designers would receive from the stores. These 200 designers were responsible for introducing more than 11,000 items per year. Zara’s products were made to be saleable, produced in short runs so as to allow no accumulation of unnecessary merchandise. Another reason for producing in limited quantities would be to produce the clothes “while they were hot” and test-run new merchandise in best-selling stores before producing for stores worldwide. This flexibility and control prompted Zara to conduct 35% of product design, 40%-50% of purchases of finished goods and around 85% of in-house production only after the beginning of each season; accusing a 1% “failure” rate (compared to the industry’s average of 10%) and making Zara unparalleled competition in the industry20. Retailing & Store Operations All 1,900 Zara stores received shipments with new items twice a week; centrally managed in Arteixo and ordered by store managers worldwide. Zara had, like all Inditex chains, its own Distribution Centre (henceforth DC): a 40,000 square-metre building located in Arteixo paired with smaller facilities in Southern America. Regardless of origin, all merchandise passed through Arteixo’s DC before being shipped to their respective locations. The warehouse was known as a “place to move merchandise and not store it21”, most garments only stayed for some hours and none would stay for more than three days. 75% of shipments were made by truck to stores across Europe and arrived typically 20 In HBS Case “Zara: Fast Fashion”, 2003 21 Ibid. between 24 and 36 hours after the order. Countries outside Europe received merchandise 48 hours after ordering, typically by airfreight or boat. Store managers had complete autonomy in ordering and managing their stores which included product placement (limited), information to head offices and their employees’ uniforms; managers were compelled to manage stores as if they were their own22. However, they were aware that production was limited and that, in the case of a shortage in supply, orders would be replenished according to each stores’ historical sales, among others performance indicators. For that reason, shelves were sparsely stocked, low on product density (with the objective of selling as little as possible on sale) and with rapidly changing merchandise (merchandise was only allowed a maximum time in store of one month)23. Stores had always been the key to Zara’s system: the face of the brand to the world and its main source of information on what consumers wanted. Built with a minimalist environment and big windows; stores were comfortable and designed to “create an atmosphere of chaos and excitement24”, always located in prime, highly noticeable locations that were fully-owned by Zara (with a few exceptions where cultural and political factors could act as obstacles). Stores averaged at a size of 1,400 square-metres, and were furbished with clear lights, white walls and ceilings in order to draw all the focus on clothing. Store refurbishment occurred every 4 years and window displays were changed every month. Store displays and interiors were planned at Arteixo where 25 window spaces and a full size 1,500 square-metre store were available to plan and test the next store changes. When 22 In HBC Case “Zara: Managing Stores for Fast Fashion”, 2010 23 In HBS Case “Zara: Fast Fashion”, 2003 24 In HBS Case “Zara”, 2003 the final design was closed, pictures were sent to each store manager and a team of designers would then visit each store to implement the store’s new concept. Each store environment, however, could and should be adapted to its surroundings, without compromising the overall store and brand image. Marketing It was in this particular area that Zara most contrasted with competition. While most of Zara’s competition, chains such as H&M and Mango, heavily advertised throughout the year, Zara made almost no investment in advertising. As such, Zara’s marketing expenditures would represent roughly 0.3% of revenues, against the industry’s typical Point-of-Sale (PoS) Advertising Zara’s main investment in communication was through its PoS and product offer. To that end, the annual collection, individual product quantities and size of production runs were three of the main responsibilities given to Zara’s marketing director, alongside definition of product displays and overall store image26. Zara’s stores provided commercial teams with the information on consumer demand. It came as no surprise, therefore, that Zara invested highly in locating its stores in prime locations and setting the right environments for their products to “speak”. Due to the rapid production cycles, Zara stores were tailored to transmit an environment of “scarcity and opportunity” where usual customers knew to buy products as soon as they saw them because the same item would probably not be there the next day, let alone on their next visit. 25 In HBS Case “Zara”, 2003 26 Ibid. Every element of the stores, even employees, were tailored to never disturb clients. Whole outfit combinations would display the offer in ways that would help clients envision how pieces could match with one another, only one size per item would be on display to show availability and enable the display of more products, tables displaying products were low and synched well with the store dynamic so customers could see “the whole” store upon entering, and employees were trained to only approach customers when called upon. Finally, the constant arrival of new items would create the need in consumers to visit the stores often in search for the next “bargain”. It was for this reason that Zara’s store visits per customer averaged at 17 times a year, compared to 4-5 for most of its competitors27. Public relations Zara relied massively on word-of-mouth and unpaid public relations; originating from photographs of celebrities that would be often seen wearing Zara clothing (Kate Middleton, for example, used many Zara garments which helped the brand enhance its image). Moreover, consumer studies28 had proven that Zara’s was cohesive in communicating its brand in line with its proposed corporate identity, thus sustaining that any alteration could harm the brand overall. Consistency was the key to the brand. Online Zara was, curiously, a late bloomer in the online business. Having had a website since 2010, the brand only began to sell online almost one year later. The brand’s managers had always been hesitant in entering the online realm but with the increasing user activity on the internet, and due to Zara’s high reliance on word-of-mouth, they believed that creating an online site would help increase channels for consumers’ pre-purchase interaction with 27 HBS Case “Zara: Fast Fashion”, 2003 28 Cheng, Hines and Grime, “Desired and Perceived Identities of Fashion Retailers”, 2007 the brand. Following the same specificity as stores, Zara’s sites were simple, white, with outfit combinations that allowed the clothes to speak for themselves (Exhibit 10 shows an example of Zara’s current website). In 2011, after observing the effectiveness of this strategy in captivating customers to product offer before the moment of purchase, measures were taken to implement the first e-commerce strategy for the brand. Main Competitors Mango Mango was a women’s clothing design and manufacturing company that opened its first store in 1984 on the Paseo de Gracia in Barcelona. Under the command of brothers Isak and Nahman Andic, the fashion retailer accounted for over 11,200 employees and had more than 2,400 stores across 104 countries worldwide by 2012. Similar to Zara, around 82% of employees were women and part of a young team with an average age of 3229. It opened its first online store in 2000 (Case Exhibit 11 shows Mango’s current website) and only introduced a men’s line, H.E. by Mango, in 2008. As Zara, it began its international expansion through Portugal in 1992 with the mission of “being present in all cities in the world30”. Inspired by the world’s largest fashion retailer, Mango also decided to keep control over its production process, which was centralized in Barcelona, and invest highly in store and window displays. More recently, Mango attempted to diversify its product offer by including a “plus-size31” collection, Violeta. The retailer also chose to invest heavily in marketing communications through outdoors and advertisements picturing famous models; two of the most recent campaigns being with Kate Moss and Daria Werbowy (Case Exhibit 13 shows an example of such campaigns). 29 As per the Group’s 2012 Annual Report 30 “Mango Group: Growth and Internationalization” UPC (Universitat Politècnica de Catalunya) Paper, 2009 31 Plus-sized collections, in fashion, entails clothing for women (typically) with measurements of a larger size than normal. Usually sizes starting at/above 42 in Europe. Primark Known as Penneys in Ireland, Primark was founded in 1969 in Dublin by Arthur Ryan, who was its CEO until 2009. The brand was a unique, “low-cost” fashion retailer providing clothing and accessories to women, men and children and their homes. Not such a direct competitor to Zara as Mango or H&M, Primark had slowly evolved from an unknown Irish brand to a fast-expanding European chain acting in 7 countries with over 250 stores32. Primark was mostly known for its extremely cheap prices and massive retail stores with bright lighting: “providing young, fashion-conscious under 35 with fashion basics at value-for-money prices”33. Originally locating stores in cheap, out- of-town and lower income areas, Primark had slowly moved to high-traffic shopping areas and malls across all its countries, and chose to avoid high expenditures on advertising (Case Exhibit 12 pictures Primark’s stores in Portugal). H&M Zara’s main competition in the industry came from once “biggest fashion retailer in the world” Hennes & Mauritz, also known as H&M. Founded in 1947, H&M began as Hennes (Swedish for “Her”) selling only women’s clothes through a store in Västeras, Sweden. In 1968, its founder Erling Persson bought Maurtiz Widfross to begin sales of men and children’s clothing; finally creating H&M. Its quick expansion into neighbouring countries and, eventually, worldwide, made H&M the largest fashion retailer in the world until 2005, when it was surpassed by Zara. By 2013, H&M accounted for over 2,700 stores in 48 markets, with more than half of its sales coming from outside its home 32 As per the Group’s 2012 Annual Report 33 FSP Retailer Profiles Report on Primark 2010, found at http://www.fspretail.com country. Similar to Zara, H&M was also part of a bigger group offering fashion through many concepts and H&M was the group’s first and biggest brand. Unlike Zara, however, the company outsourced almost all production and ordered items six to eight months in advance through 900 suppliers. Around a half of production occurred in Europe to enable fast delivery, but time-to-market was still significantly slower than Zara’s. The brand had a team of over 160 designers, “drawing inspiration from every corner of the globe34”, which were responsible for covering all the twelve categories available at H&M35. It strived to eliminate “middlemen” in the supply chain, employing 100 quality controllers to work with the company’s suppliers so as to ensure “fashion and quality at the best price36”. The brand sustained its competitiveness through its 1,000 to 1,500 square metres stores in high-traffic and premium city shopping areas, with some stores being as large as 4,000 square metres where all the twelve categories were available. Refurbishment, however, occurred less frequently than at Zara. The prices practiced were slightly lower than those of Zara and were prominently displayed across shelves. H&M also invested in being “the sustainable choice”, constantly introducing “greener” processes and clothing. Also unlike Zara, H&M ran very strong outdoor advertising campaigns with famous models (from Naomi Campbell to Pamela Andersen) and had heavy in-store imagery and pricing displays. More importantly, the brand continuously offered limited/exclusive clothing collections in partnership with some of the most influential personalities in the fashion industry; examples of such partnerships were pioneer 2004 collaboration with 34 In http://about.hm.com/en/About/facts-about-hm/idea-to-store/design-process.html 35 In HBS Case “Zara”, 2003 36 http://about.hm.com/en/About/facts-about-hm/about-hm/business-concept.html Karl Lagerfeld and a more recent 2012 partnership with Japanese Vogue editor Anna Dello Russo (Case Exhibit 15 shows an example of H&M’s exclusive collections). By 1998, H&M offered all its garments online and with constant investment in site innovation, especially with the “dressing room” application that allowed customers to visit their local H&M site and try on and combine different garments on virtual models before purchase (Refer to Case Exhibit 16). Even though Inditex had overtaken H&M as the world’s largest fashion retailer, both acted in a highly saturated market and were constantly facing challenges in transmitting their brand identity and sustaining what had, until then, made them unique. A Question for the Future Even though Zara remained extremely successful in inspiring competitors around the world, Óscar Marcote was hesitant. Sales were slowing down, alongside store openings, and maybe customers had grown tired of only seeing what the brand had to offer in its stores. A member of the team had suggested bringing Personal Shopping to some stores, free of charge. Óscar believed that the idea could have potential, especially in Zara’s most premium store locations, but offering a free service like this one could entail costs that revenues might not cover. Moreover, research had shown that “not being bothered” was one of the aspects that customers enjoyed the most about shopping at Zara in general37, so why start now? Innovation across the whole business was still fundamental and seeing smaller retailers like Primark winning over “basics” at a lower cost, pushed Óscar to further reflect on his choice of communication for the brand. 37 Gabrielli, Baghi and Codeluppi, “Consumption Practices of Fast Fashion Products: a Consumer-based Approach”, 2012 Should Zara integrate a completely new communication outlet, such as advertising? Or should he add components to the existing channels, through Personal Shopping, or Zara’s website? E-commerce had proven successful and H&M’s “fitting room” concept gave the brand an edge in customer interaction, so could Zara do something with the same effect? Or should Marcote rely on Zara’s existing communication strategy and merely attempt to improve its efficiency? Many questions spurred through his mind while thinking about this meeting but no clear option appeared to be in sight. Conclusion With this case study, the author intended to provide an interesting read regarding Zara’s main business strategies and the challenges it faces to sustain its competitiveness and success in the next years. The main objective was to create a dynamic narrative that would not only push readers to want to discuss the main issues described but that would also provide them with a true learning experience regarding how Zara operates. Similarly, the teaching note should be used to guide professors in propelling a heated and value-adding in-class discussion with students. Readers have access to this guide in the “Appendix B) Teaching Note”. In conclusion, the author believes that this case-study serves as an example of how companies, regardless of industry, do not always follow strategies that are academically taught. This case thus emphasizes that even though strategies might be theoretically correct, in “real life” decisions are commonly made within grey areas and all choices have great fall backs and benefits. Bibliography Arnold, D., D’Andrea, G. (2003). “Zara”. Harvard Business School Baykal, J., & Delagarde, M. (2011). “Differentiation Strategies in the Fashion Industry.” Bhardwaj, V., & Fairhurst, A. (2010). “Fast fashion: Response to Changes in the Fashion Industry.” The International Review of Retail, Distribution and Consumer Research, 20(1), 165–173. Doi: 10.1080/09593960903498300 Borden, N. H. (1964). “The Concept of the Marketing Mix.” Bruce, M., & Daly, L. 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Doi: 10.1108/02580540910936305 Roberts, M. J. (2012). “Developing a Teaching Case.” Rodriguez-donaire, S., Casi, E., & Carbonell, X. (n.d.). “Mango Group: Growth and Internationalisation.” Royo-Vela, M., & Casamassima, P. (2011). “The Influence of Belonging to Virtual Brand Communities on Consumers’ Affective Commitment, Satisfaction and Word- of-mouth Advertising: The ZARA case.” Online Information Review, 35(4), 517– 542. Doi: 10.1108/14684521111161918 Rust, R. T. (2010). “Rethinking marketing.” Doi: 10.1037/e641332009-010 Soloaga, P. D., & Monjo, M. (2010). “Zara: The Company Where Everything Communicates” Sull, D., & Turconi, S. (2008). “Fast Fashion Lessons.” Business Strategy Review Ton, Z., Corsi, E., Dessain, V. (2010). “Zara: Managing Stores for Fast Fashion”. Harvard Business School APPENDIX Zara: Marketing in Fast Fashion A Case-Study A Project carried out for the Nova SBE Masters’ Degree, under the supervision of Professor Victor Centeno 30.05.2014 A) Case Exhibits Exhibit 1 Inditex Chains  816 stores in 59 countries  Created in 1991  1925 stores in 86 countries  Accounted for 6.8% of Inditex’s sales in 2012  Created in 1975  11 new markets in 2012  Accounted for 66.11% of Inditex’s sales in 2012  For men and women, aged 14-28  5 new markets in 2012  “(…) to meet the needs of young fashion lovers.  For women, men, youth and infants up to age 50 Pull&Bear's collections have a laid back and fun  “Zara is always striving to meet the needs of its feel to them.” customers at the same time as helping to inform  Website: www.pullbear.com their ideas, trends and tastes.”  Website: www.zara.com  630 stores in 60 markets  Acquired by Inditex in 1991  885 stores in 62 markets  Accounted for 7.11% of Inditex’s sales in 2012  Created in 1998  10 new markets in 2012  Accounted for 9.31% of Inditex’s sales in 2012  For men and women of ages 25-45, and more  6 new markets in 2012 recently children.  Younger male and female targets, ages 13-23  “(…) epitomises elegant and universal style that  “(…) innovative fashion retail concept which connects with the independent, cosmopolitan men targets the youngest hipsters in the market.” and women of today.”  Website: www.bershka.com  Website: www.massimodutti.com  780 stores in 52 markets  524 stores in 35 markets  Acquired by Inditex in 1999  Created in 2001  Accounted for 6.03% of Inditex’s sales in 2012  Accounted for 1.97% of Inditex’s sales in 2012  7 new markets in 2012  4 new markets in 2012  For casual young women at attractive prices, ages  Women, ages 15-35 18-35  “At Oysho, customers can find fun yet  “Stradivarius takes a youthful and feminine sophisticated and feminine underwear, as well as approach to fashion.”  Website: www.stradivarius.com modern yet casual outerwear, comfortable loungewear and original accessories.”  Website: www.oysho.com  357 stores in 35 markets  92 stores in 18 markets  Created in 2003  Created in 2008  Accounted for 2.2% of Inditex’s sales in 2012  Accounted for 0.46% of Inditex’s sales in 2012  5 new markets in 2012  1 new market in 2012  Latest designs for the home  Sophisticated and eloquent women, ages 30-50  “Zara home is constantly refreshing its product  “Uterqüe is a sophisticated fashion accessory range throughout the year.” brand which boasts excellent quality at attractive  Website: www.zarahome.com prices. Its collections also include clothing and leather garments and are all designed exclusively by Uterqüe's creative team.”  Website: www.uterque.com Source: Inditex website (https://www.inditex.com/en/brands) and 2012 Annual Report Exhibit 2 Inditex Historical Financials 2013 2012 2011 2010 2009 2008 2007 Turnover (in millions of euros) Sales 16,700 15,946 13,793 12,527 11,048 10,407 9,435 Interanual Variation 4,7% 15,6% 10,1% 13,4% 6,2% 10,3% Zara Net Sales 10,804 10,541 8,938 8,088 7,077 6,824 6,264 Interanual Variation 2% 18% 11% 14% 4% 9% Zara Net Store Openings (number) 66 120 113 131 88 159 186 Results and cash flow (in millions of euros) Operating profit (EBITDA) 3,926 3,913 3,258 2,966 2,374 2,187 2,149 Operating profit (EBIT) 3,071 3,117 2,522 2,290 1,729 1,609 1,652 Net income 2,382 2,367 1,946 1,741 1,322 1,262 1,258 Net income attributable to the parent company 2,377 2,361 1,932 1,732 1,314 1,253 1,250 Cash flow 3,256 3,256 2,613 2,540 2,060 1,864 1,747 Financial structure (in millions of euros) Net Assets attributed to the parent company NA 8,446 7,415 6,386 5,329 4,722 4,193 Net financial position NA 4,097 3,465 3,427 2,380 1,219 1,052 Other relevant information Number of stores 6,340 6,009 5,527 5,044 4,607 4,264 3,691 Net openings 331 482 483 437 343 573 560 Number of markets with commercial presence 87 86 82 77 74 73 68 Number of employees 128,313 120,314 109,512 100,138 92,301 89,112 79,517 Financial and management ratios ROE 27% 30% 28% 30% 26% 28% 33% ROCE 35% 39% 37% 39% 34% 36% 43% Source: Compiled and calculated by casewriter from Inditex’s 2011 and 2012 Annual Reports and 2013 Financial Results report, available at: http://www.inditex.com/en/investors/investors_relations Exhibit 3 Inditex Management Structure Name or company name Office Antonio Abril Abadín General Counsel and Secretary of the Board Marco Agnolin Director of BERSHKA Lorena Alba Castro Logistics Director Eva Cárdenas Botas Director of ZARA HOME Carlos Crespo González Internal Audit Director José Pablo del Bado Rivas Director of PULL & BEAR Jesús Echevarría Hernández Chief Communication Officer Ignacio Fernández Fernández Chief Financial Officer Begoña López-Cano Ibarreche Human Resources Director Abel López Cernada Import, Export and Transport Director Marcos López García Capital Markets Director Juan José López Romero Procurement Director Luis Maseres Ghiloni Director of UTERQÜE Gabriel Moneo Marina IT Director Javier Monteoliva Díaz Legal Director Jorge Pérez Marcote Director of MASSIMO DUTTI Óscar Pérez Marcote Director of ZARA Felix Poza Peña Corporate Social Responsibility Director Ramón Reñón Túñez Director General Adjunto al Presidente y Consejero Delegado (Deputy General Manager) Carmen Sevillano Chaves Director of OYSHO Jordi Triquell Valls Director of STRADIVARIUS Source: Inditex 2012 Annual Report Exhibit 4 “The Cube” – Inditex and Zara HQ in Arteixo, La Coruña Source: http://www.inditex.com/en/media/multimedia_gallery/facilities Exhibit 5 Inditex’s Business Model* *Business Model valid for Zara Source: Inditex S.A., business model demonstration available at: http://www.inditex.com/en/our_group/business_model Exhibit 6 Inditex’s Support and Operating Centres Source: Compiled by author, based on Inditex S.A., Press Dossier pp. 19, available at: http://www.inditex.com/en/media/press_dossier Exhibit 7 Inditex Timeline 1963 Amancio Ortega, founder of Inditex, launches a 2001 Launch of the Oysho lingerie brand. Inditex goes clothing manufacturing business. Over a decade the public and listed on the stock market on the 23rd of May. business steadily evolves to a number of owned textile factories, selling merchandise across Europe. 2003 1st Zara Home store opening. Inditex inaugurates its 2nd Zara distribution centre, Plataforma Europa, in 1975 Zara is founded with a store in La Coruña’s central Zaragoza (Spain), supporting the Arteixo’s logistics hub. street. 2004 Inditex’s 2000th store opens in Hong Kong, 1976 Zara’s store network expands to major Spanish bringing its presence to 50 countries worldwide. cities after the acceptance and success of its concept. 1985 Inditex is founded as the head of the corporate 2007 Inditex adds 2 new logistics platforms in Onzonilla Group. (León) and Meco (Madrid), now accounting for 8 logistics platforms in Spain 1986 Group manufacturing companies sell all their output to Zara and lay the groundwork for a logistics system 2008 Fashion accessories concept store Uterqüe is capable of addressing expected rapid growth. launched. Inditex opens its 4000th store in Tokyo. 1988 Opening of first international Zara store in Oporto. 2009 Inditex signs joint venture with the Tata Group to open stores in India in 2010. Bershka, Stradivarius and 1989-1990 Inditex expands to US and France, opening Pull&Bear open first stores in China. stores in New York (1989) and Paris (1990). 2010 Inditex reaches 5000th store, launching a new eco- 1991 Pull&Bear chain is created and launched. Inditex efficient Zara store in Rome. Start of online sales through acquires 65% of the Massimo Dutti Group. Zara.com, available in 16 countries by the end of the year. 1995 Inditex buys 100% of Massimo Dutti’s share 2011 All Inditex chains have online stores. capital. 2012 Refurshibment of Zara’s store image worldwide. 1998 Launch of the Bershka chain, targeting a younger Inditex opens its 6000th store. female market. 2013 Zara opens 1st store in Algeria. Inditex continues to 1999 Inditex acquires its 5th concept store, Stradivarius. expan its brands online in new markets. 2000 Inditex’s HQ moves to a new building in Arteixo, La Coruña. Source: Compiled by author, based on Inditex S.A., Press Dossier pp. 19, available at: http://www.inditex.com/en/media/press_dossier Exhibit 8 Zara Store Locations 2012 2011 2010 2009 2008 2007 Europe 1,296 1,280 1,245 1,204 1,188 1,092 Americas 219 207 199 188 173 149 Asia & Rest of the World 410 343 279 216 159 120 Total 1,925 1,830 1,723 1,608 1,520 1,361 Source: Inditex, S.A., Annual Reports from 2007 to 2012, available at: http://www.inditex.com/en/investors/investors_relations/annual_report Exhibit 9 Example of Zara’s 2014 Store Display in Portugal Exhibit 10 Zara’s Website in 2014 Source: Zara’s website (http://www.zara.com/pt/pt/mulher-c390001.html) Exhibit 11 Mango Website and Store Display Source: Mango website in 2014, available at: http://shop.mango.com/PT/mango Exhibit 12 Primark Website and Store Display Source: Primark website in 2014, available at: https://www.primark.com/en/whats- new Exhibit 13 Inditex and Key Competitors in 2012 (Values in Millions of Euros) Inditex H&Mª Mango Primarkª Net sales 15,946 13,475 1,690 4,250 Cost of sales -6,417 -5458 NA NA* Gross profit 9,529 8,017 NA NA* Gross margin 59.8% 59,5% 56,4% NA* Operating expenses -5,605 -5,199 NA NA* Other net operating income (losses) -12 NA NA NA* Operating cash flow (EBITDA) 3,913 NA 0,209 NA* EBITDA margin 24.5% NA 12.4% NA* Amortization and depreciation -796 NA NA 160 Operating income (EBIT) 3,117 2,427 0,132 443 EBIT margin 19.5% 18.0% 7.8% 10.2% Taxes -764 -60 -0,019 0 Net income 2,367 2,486 0,113 443 Other Relevant Information Employees 120,314 72,276 12,211 43,000 Number of Markets Present 86 48 104 7 Sales in Home Country (%) 21% 6% 17% NA Number of Store Locations 6,009 2,776 2,598 484 Stores in Home Country (%) 32% 6% NA 7% Source: Compiled and calculated by the casewriter from the Groups’ 2012 Annual Reports. ªConverted to Euros for H&M (from Swedish Kronor, SEK) and Primark (from British Pound Sterling, GBP) *Information merely available for Associated British Foods Group Exhibit 14 Current Competitors’ Advertising Campaigns Source: Mango’s 2014 Spring/Summer Campaign with model Daria Werbowy, available online, on outdoors, magazines and at Mango.com (http://shop.mango.com/PT/mango/social) Source: H&M’s 2014 Summer Campaign with model Gisele Bündchen, available online (https://www.youtube.com/watch?v=bI768oyt71U), on outdoors, magazines. Source: Primark Spring/Summer 2014 Collection, available online and on social media (http://www.primark.com/en/whats- new/article/301, spring/summer-2014- womenswear-collection) Exhibit 15 H&M’s Exclusive Collections Source: H&M’s 2014 Conscious Exclusive Collection with actress Amber Source: H&M Exclusive Collection with Anna Valleta, available at: http://www.hm.com/pt/consciousexclusive Dello Russo in 2012. Picture from: http://models.com/people/anna-dello-russo Exhibit 16 H&M’s Online “Dressing Room”, website and store display Source: Extracted from website (http://poqstudio.com/2013/02/virtual-fitting-rooms-are-they-a-gimmick-or-an-essential- tool-for-fashion-ecommerce/), but formerly available at: http://www.hm.com/gb/dressingroom/LADIES Website available at: http://www.hm.com/pt/subdepartment/LADIES?Nr=4294963730 B) Teaching Note In this section, the author will propose a class plan to guide in-class discussion and assign relevant questions for complete comprehension and analysis of the case. Case Overview Zara’s innovations in IT, supply chain management and merchandising has pushed it to become one of the most recognizable names in the world. The brand has set the industry’s norms and become a miraculous “exception” in the world of fashion. However, in the beginning of 2013 the brand faces severe pressure in its sales due to the ever-changing dynamics of its industry, the economic constraints set by the European recession and the force of its competitors, specifically the Swedish fashion retailer H&M. Unlike its competition, Zara had never pursued an intensive advertising-based strategy, focusing more on consumers’ demands and their experience with the brand in its points of sale. How can Zara guarantee and sustain its growth in the following years? Should it seek advertising opportunities regardless of its initial standpoint on the matter? Or should it seek other alternatives that will enhance customer experience with the brand? Once again proving that heavy advertising isn’t key for company growth. These are some of the questions pointed out during the case that will encourage in-class debate and allow students to apply their course knowledge in order to come up with creative strategies/solutions for Zara to sustain its competitive advantage and growth. Teaching Approach The presented case study is most adequate for teaching in marketing courses under a Masters’ program. In the case of it being taught at Nova SBE, this case study is suitable for the first semester Masters’ course of “Marketing in a Dynamic World”, currently taught by Professor Victor Centeno or Professor Jorge Velosa. Learning Objectives This section is useful to guide the course’s professor in organizing and prioritizing class discussion. The key learning/teaching objectives set the main points students should apprehend upon reading and analyzing the case. After reading, analyzing and discussing the case in class, students should be able to: 1. Learn how to analyze and delineate the key success drivers of Zara’s business success and rapid 2. Understand how unique brand elements can impact a brand, its business model and the marketing tools used (i.e. comprehend that even the “right” choice/decision isn’t perfect); 3. Develop a critical analysis on business models and marketing strategies used within the fashion 4. Evaluate the dilemma faced by Zara’s management given the brand’s standpoint. Assignment Questions The following are recommended assignment questions that should be given to students to allow better case comprehension and analysis before class discussion1. AQ1 What is unique about Zara? Reflect on the difference between crucial and nice-to-have elements. a. What can be changed and what needs to be retained? b. What is Zara’s positioning in 2012? You may consider brands within the Inditex group for the positioning map2. AQ2 How is H&M different from Zara? AQ3 If you were Óscar Marcote, what recommendations would you make to Pablo Isla? a. Will these recommendations persist in 5 years’ time? Case Analysis Relevant Theory or Academic Literature Explaining case-studies through the concepts of marketing is a defying task that, given the vastness of the field, cannot be entirely explored within a 90 minute class, let alone a 12 page case-study. However, the main intent of this section is merely to suggest frameworks and tools that may be useful for the analysis of the case- study and resolution of the assigned questions. 1 Assignment questions may be altered or replaced. This is strictly for the class professor to decide. 2 A proposed Positioning Map is available to the professor in Exhibit TN2 Relevant Theory is thus provided in Exhibit TN1 for a full comprehension and analysis of the case in question. Teaching the Case A class plan is suggested to aid in class discussion and prioritization of topics to be reflected upon. This case is intended for a 90 minute class. Students should be requested to read the case beforehand, ideally on the previous course session3. The course’s professor should also give out the chosen assignment questions for delivery on the day of the session in which the case will be discussed. Discussion Block 1: Zara (20 minutes) The class should begin with a discussion on the actual brand. The author would suggest beginning with a question similar to: “Who has shopped at Zara?” Undoubtedly most of the class will acknowledge they have shopped at Zara at least once. Subsequently, the professor could ask students why they had chosen to shop at Zara. Moreover, the professor should dwell on the notion of the augmented product and reverse positioning. What is the downside of buying at Zara? Does Zara offer everything the other chains do? Is there a balancing act? Relevant talking points:  What Zara represents – i.e. consumers’ perception of the brand. Students may lean toward the following: . Style . Quality . Good price-quality ratio . Clean, simple image  The “Zara Way”, interesting discussion topics could be: . Zara’s design-to-manufacturing system . Store operations Zara’s Design-to-Manufacturing System A possible board plan for this section could begin with listing the main elements of each part of the production process4:  Design . Real-time design with feedback from stores . Flat organization 3 The gap between when students are requested analyze the case and the in-class discussion is dependent on the course’s scheduling. Normally at Nova SBE, courses have a one-week gap. 4 Please note that other elements might arise, these are merely suggestions of important elements that should arise in the discussion.  Buying . Fabrics from close by countries . Fabrics bought undyed  Production . Vertically integrated operations . In house production (over 50%) . “Produce while hot”  Distribution . Zero inventories . Production to shop in 3 weeks The professor might then ask how stores operate, key discussion points here would be:  Store appearance/display  Product placement  Store location  Store orders  PoS advertising  Communication between stores and HQ Finally, the professor should ask students to suggest a Positioning Statement for Zara. This will be helpful in introducing the next discussion block (a possible Positioning Statement can be found in Exhibit TN1). Discussion Block 2: Brand associations and Marketing Strategies of Zara and H&M (30 minutes). Now concerned with Zara’s main competitor, the professor should begin by spurring a discussion on the main differences between Zara and H&M. The professor might ask the same questions as in Discussion Block 1 but directed at H&M:  “Who has shopped at H&M?”  “How is H&M different from Zara?”  “What’s unique about H&M?”  “What is H&M’s Positioning Statement?” This will allow students to understand the differences between the brands through what they represent and develop a Positioning Map based on those differences – positioning statements can be written beside each other so as to show the key differences between the brands. A proposed positioning map for the brands can be found in Exhibit TN2 and should consider not only Zara’s main competitors outside Inditex but also within Inditex. Possible positioning axes could be “Affordability” and “Trendsetter/Follower” and/or “Affordability” and “Target Age”. These two positioning maps will enable a fuller comprehension of the market. For the marketing approach, students, and the professor, could construct a table where a comparison between the marketing tools used, namely the 7Ps, could be visible (please refer to Exhibit TN3). To that end, the professor might initiate discussion by asking: “How do Zara and H&M use marketing?” Digression: The Role of the Online World Another interesting point that could arise from class discussion, besides the fundamental differences between the brands’ associations, could be:  Is online important for these companies?  If so, in what ways? – with this question the following two main aspects should arise: . E-commerce . H&M’s “dressing room” . Social Media Interaction . Facebook, Instagram, Blogs, etc. This extra discussion step could help students analyze the uprising trend of the online world in the fashion industry, specifically in the Fast Fashion category where customers are younger and tend to be constantly seeking information and feedback on products. The twist of this digression might enable students to better envision possible strategies for Zara, considering (or not) current strategies pursued by its main competitors. Discussion Block 3: Future Steps (30 minutes) To begin this final discussion block, the professor should pursue discussion by asking students:  Why is it important for Zara to understand its customers? A list of students’ suggestions should be made on the board. For this question, what is important is the perception of students toward the importance of consumers’ presence in the production/design process and how this became a key element of Zara’s operations. The professor might also ask:  Do you believe consumers know that they are part of the design process? Did you know this before reading the case? The next step would be to detect the possible strategies/recommendations and evaluate their impact on Zara’s current business. The possible strategies are: 1. Attempt to improve productivity and efficiency of current general marketing mix/strategy; 2. Implement a completely new strategy, possibly through advertising such as: a. Catalogues b. Social media c. Traditional Media (Magazines, TV, radio, etc.) 3. Innovate on certain areas of the current strategy: a. Personal Shopping Note: Regarding the last strategy, students should, ideally, be able to evaluate not only the impact on the brand’s identity and perception but also the financial impact of such a decision. Unfortunately, information on store sales in Portugal and employee costs were not accessible to the case writer. However, future improvements on the case might enable access to said resources and thus, a more thorough analysis of this option. To debate the options presented, the professor could divide students into three groups, each defending one of the strategies. The students would be required to discuss between themselves the main advantages and disadvantages of their assigned option (during 15 minutes) and then present to the class why their strategy would be the “right decision” (5 minutes). The following pros and cons for each strategy should be mentioned5: 1. Attempt to improve productivity and efficiency of current marketing mix/strategy; a. Pros i. Acting on current elements of the marketing mix would allow the brand to maintain its standpoint on advertising, ultimately keeping its unique brand identity unharmed; ii. Given Zara’s intertwined communication between HQ and stores, store managers could be asked to assign some employees to suggest improvements on their activities; iii. Possibility of broadening the scope and reach of Zara.com through social media and the website without a need to add resources. b. Cons i. Zara’s current strategy is highly saturated 2. Implement a completely new strategy, possibly through advertising; a. Pros i. Increase Zara’s “high-end” perception in countries where Zara is more expensive; ii. Opportunity to divulge Zara’s simple, clean look through discrete ads that would enable a higher connection to the brand without compromising the brand’s identity. b. Cons i. Zara’s customer base expects a certain level of “mystery” to the brand which, if unveiled, could harm the brand’s perception and identity; 5 These are mere guidelines for discussion points, more points should come up in the discussion. ii. The costs incurred in when using advertising might not have a proportional positive effect on the brand’s sales. 3. Innovate on certain areas of the current strategy (i.e. Free personal shopping services in selected stores); a. Pros i. Zara’s main objective is to increase customers’ positive experience in-store, which would be enhanced with this option; ii. In many high-end store locations, customers usually expect this service; iii. Zara’s target segment is relatively young and may sometimes require advice on the appropriate clothing for a certain occasion but can’t afford the service if charged. b. Cons i. Zara’s customers aren’t used to being “bothered” by sales people and might interpret a personal shopper as an intrusion to their shopping experience; ii. The costs of offering the service for free might not increase the amount spent per person as people may merely use it as an experiment to buy what they would already buy; iii. If the service is free then it will harm the service’s perception and effectiveness as customers will feel as if the employee in charge of the service has no true knowledge on the subject. Finally, the teacher should conclude the discussion block by asking students which recommendation they would make, based on each groups’ arguments. On the board, the teacher may list the three options and count the number of votes for each option. Class conclusion (10 minutes) As a final block, the professor should briefly ask students what they thought of the case and summarize the main discussion points of the class. Finally, and merely as an attempt to spur students’ interest on the case post-class, the teacher might ask a final question such as “How serious is the competitive pressure coming from Mango (similar to Zara’s model)? And Primark (lower-cost model)?” C) Teaching Note Exhibits Exhibit TN1 Relevant Theory Positioning6 For a brand to define itself within a category, it needs to set a certain image in the mind of its target audience so as to establish brand preference over its competitors. Brands may achieve this distinctive image through focusing on a feature or benefit that is valued by its consumers and distinguishes it from its competitors 6 Information on Positioning was based on Professor Victor Centeno’s “Marketing in a Dynamic World” course slides on Positioning. (competition-based positioning), or it can choose to focus on how it can add value and bring relevance to its consumers through its brand personality and essence (customer-based positioning). Competition-based Positioning As above mentioned, in competition-based positioning the brand’s goal is to find a feature or benefit that not only brings value to its customer base but also distinguishes it within its category. To that end, through consumer insight on preferences and purchase motivations, brands target their individual competitive strengths to prove that they have what consumers look for but also have points of difference that make it unique, and better, than the other category members. Simply put, the main elements of competition-based positioning are:  Category membership/points of parity, to establish a frame of reference regarding what the brand has to offer. These are aspects that all brands within the category must have to belong in the category (points of parity);  Superiority within the frame of reference, to emphasize the brand’s point of difference. These are aspects that the brand has that are unique and favourable when compared with what others within the category offer. Customer-based Positioning Contrarily, when a brand chooses to position itself based on what is relevant and important for its consumers’, its intention is to show the essence and personality behind the brand. Thus, a brand focuses not just on the attributes it owns (quality clothing) but also on functional and emotional benefits that might push consumers to prefer its offer (affordable prices and fashionable items) together with its unique brand essence (“always in style” and for trendy men, women and children). This process is also known as laddering, i.e. it’s important to show the attributes of the brand but it’s essential to show how the brand can make consumers’ lives better. The brand’s essence should, therefore, be at the core of the brand’s positioning but its personality (trendy, high fashion), values (simplicity, chic), benefits (fashionable and affordable) and attributes (quality clothing) also have to appear evident. Positioning Statement7 The positioning statement serves as a summary of the desired positioning of the brand. As such, the main elements of a brand’s positioning statement entail: . Frame of reference (what is the need?) . Point of difference (what exactly are they looking for?) . Target group (what kind of people have that need?) For the Zara brand, a possible positioning statement could be: . Zara is a clothing and accessories fashion brand (frame of reference) . For men, women and children (target audience) . That brings the most fashionable and trendy clothing at affordable prices (point of difference) . Because they know where their items come from and guarantee the best quality. (reason to believe) Students’ proposed positioning statements must, thus, answer: . Who is the target? . Why should the brand be considered? o What category does it belong to? o What does it allow the target to achieve? . Why should the brand be chosen? o How is it different from other category members? . How will the brand help achieve targets’ goals? Marketing Mix (4Ps & 7Ps) A Marketing Mix typically includes the different decisions that a company must consider regarding its product-to-market strategy. In 1960, EJ McCarthy first mentioned the 4Ps of the Marketing Mix to define the different decision areas where companies should focus on when getting their product/service to consumers8. These decision areas typically have the objective of: meeting the customers’ needs correctly, charging the right price for the product, getting it to the right/most accessible place for customers and selecting the right communication and promotion strategies to make sure consumers understand and prefer the company’s offer9. In summary, the four decision areas (also known as 4Ps) are: Product, Price, Promotion and Place. 7 Information on Positioning was based on Professor Victor Centeno’s “Marketing in a Dynamic World” course slides on Positioning. 8 Source: http://www.mindtools.com/pages/article/newSTR_94.htm 9 Source: http://businesscasestudies.co.uk/business-theory/marketing/the-marketing-mix.html#axzz30r2801bi Initially, a company must decide what Product/Service it will offer to meet customer wants and needs in the marketplace. For such to happen, companies must define the key functionalities of its products/services and the unique attributes that will differentiate its offering from competition. Specifically within a service, such as Zara’s, it is important to not only define the core product (clothing) and how it will meet consumers’ needs and wants but also supplementary services (such as in-store help from employees) that will augment the product offering10. Subsequently, when Pricing its product/service a company must bear in mind if there are current price points for the same offerings and how much value will the given product/service bring to consumers. This process will enable companies to price products/services within a given range and justify said pricing through the product/services’ unique traits and functionality. To bring products/services to consumers in the most accessible ways, companies must look at which Places, or channels, are most adequate. As such, companies must look at the current channels used in the industry and at the trends in consumer purchasing, i.e. where they can expect consumers to shop (traditionally in retail, physical stores were the only option but recent consumption patterns tend to show that e-commerce is gaining momentum). Finally, the way a brand chooses to communicate its product/service’s message to consumers is as important as how the product fits consumers’ needs and wants, how much value it brings to consumers and where it is displayed for consumers to purchase. To that end, the company must not only know how to position its brand/product/service within the market but also choose communication channels that show how its offering can add value to consumers and is different (and preferable) from competition. More recently, a “more complete” version of the Marketing Mix was introduced which added decision areas to companies’ implementation plans. This new version added three Ps to the existent four: Physical Evidence, Processes and People. Even though these new Ps might not be useful in all industries, the author strongly believes that, due to Zara’s peculiar marketing strategy and the fact that the brand provides a service, these 10 Source: “Services Marketing. People, Technology, Strategy”. 20 decision areas within the Marketing Mix become of high importance. This is a factor that students should be able to apprehend from the case reading and interpretation: Zara relies massively on Physical Evidence, its Processes and its People (from store employees to office employees) to execute its main competitive advantages and strengths. Physical Evidence, also known as experience environment, is the environment in which the service is offered to consumers. From the buildings chosen to the furnishing, layout, colour, and staff uniforms; physical evidence aims to create an ambiance where the desired brand image is communicated. Thus, any tangible item, and surroundings, that might impact consumers’ experience with the service must be carefully planned and designed in order to provide the most compelling shopping experience. To that end, decisions on store image, store smell and the feel of the items being sold must be taken in order to push consumers to shop at that store11. At the core of consumer experience, Processes are designed to engage the company with consumers’ processes and create value so as to provide a mutually beneficial experience. For that to happen, procedures must be implemented to shape how the service will be delivered to consumers. It is thus critical to not only operate a service that meets consumers’ needs and the company’s objectives but also to deliver it in a way, and through personnel, that will increase consumers’ level of satisfaction and loyalty with the company12. Lastly, a major contributor to the level of consumer satisfaction is having the right People in charge at the customer interface. Service personnel can be crucial for customers to form impressions on the overall brand image and, as such, companies need to train them and establish objectives so as to ensure that almost all interactions turn into positive experiences (and that negative experiences can be easily handled and resolved). A resumed table on the key issues within each “P” follows and highlights the factors that students should consider when answering AQ313. “P” Key issues/questions Product What do our consumers want? What needs do they need satisfied? What does our product/service have that will meet these needs and wants? 11 In “Marketing Management”, Pearson 2nd Edition 12 Ibid. 13 The author compiled the issues with the help of Kotler, Keller, Brandy, Goodman and Hansen’s “Marketing Management”, Pearson 2nd Edition. How is our product different from competitors’? In what sizes, colours, and styles should we present it? Place Where do consumers shop for this product/service? How can we get our product/service there? How do competitors do it? How can we be different or more efficient? Do they prefer physical shops or websites? Price What value does our product/service bring to consumers? What are competitors charging for similar products/services? How will our price compare with competitors’? How will we justify this difference? How price sensitive are consumers? Promotion How can our message be transmitted to consumers? How are products/services in this area typically promoted/communicated? How are our competitors doing it? How does that influence consumer preference? How can we differentiate our message? Physical Evidence How do existent stores look like? How have our competitors differentiated between them? How can we show our image and message through physical stores? Which buildings, store layouts and furnishing should we use? What features do consumers value the most in stores? How can store environment influence consumers’ shopping experience/behaviour? Processes How is this service delivered in the industry? How do our competitors design their processes? How will staff and consumers perform the service? How can we differentiate service delivery? How much of the service should be visible to consumers? How customized should our process be? People How do store employees influence consumers’ shopping behaviour/experience? How should our people communicate and act in the store? How should they interact with consumers? How are competitors doing it? How do they differentiate themselves in this area? How can we train our staff to accomplish the tasks? Exhibit TN2 Zara’s Positioning Map For a more thorough and complete view of the market where Zara acts, students should be able to construct a map which translates the idea of the fast fashion industry (similar to the ones below). It is important that, in this question, students understand the difference in perception within Inditex’s brand portfolio and main competitors. Thus, the key understandings that the professor must look for are: . Students realizing that Zara and H&M are trendsetters when compared to the rest of the group; . H&M is slightly more affordable than Zara: in line with Stradivarius, Pull&Bear and Bershka; . Mango and Zara are perceived as having similar pricing strategies; . Massimo Dutti and Uterqüe are the least affordable; . Primark is the most affordable of all the brands. The second positioning map allows readers to understand the offer of each brand regarding gender, whilst maintaining the “Affordability” axis. Here, one can see that the only brands that do not currently offer male clothing are Uterqüe and Stradivarius. However, it would also be useful for students to understand that Zara, H&M and Primark have a more established male brand than Mango, Massimo Dutti and Bershka. Exhibit TN3 Zara vs. H&M Marketing Mix Comparison Applying the learnings of Exhibit TN1 on the Marketing Mix, this table was constructed to guide professors when looking at students’ answers to AQ3. The table lists the main differences in the Marketing Mix of each brand and uses the 7Ps due to the extreme relevance of Physical Evidence, People and Processes in the experience sold by the brands14. Zara H&M Product - Fashionable and trendy clothing and - Affordable, fashionable garments, accessories for men, women and accessories, underwear and beauty children. products for men, women and children - High quality garments at affordable of all ages and sizes. prices. - Medium quality, trendy garments at - Fresh inventory quickly distributed to low prices. stores every 3 weeks. Place - Over 1,925 stores across 87 different - Over 2,500 stores across 43 markets markets worldwide. worldwide. - 1,400 square-metre stores, located on - 1,800 square-metre stores, located on high traffic streets, city centres and busy areas, city centres and high relevant/premium fashion districts. traffic streets with other relevant - Online store and website available. fashion brand. - Online store and website available. Price - Price range from 3.95€ to over 150€, - Price range from 1.50€ (accessories) depending on product category, target to over 200€ (exclusive collections), segment and product quality. depending on product category, target - Prices set centrally at HQ, market-based, segment, collection and product with an average 40% increase for quality. Northern European countries, 10% for - Cost-based pricing but more or less other European countries, 70% for the equal worldwide (a 15.95€ shirt in Americas and around 100% for Asia and Europe will cost $15.95 in the USA). similar countries (due to costs of international distribution). Promotion - Two relevant sales seasons with an - End-of-season and mid-season sales average 15-20% markdown on prices. with around 30-40% markdown on - No advertising, focus on powerful word- prices. of-mouth and free PR of public figures - Massive advertising on outdoors, TV, using their pieces. magazines and social media with - PoS Advertising. influential models and public figures - Interaction with target via social media. of the fashion industry. - Interaction with target via social media and website. Physical Evidence - 1,400 average sized stores in city centres - 1,800 average sized stores in city and fashion districts. centres and fashion districts. - Clean, white interiors – simple, to let - “Chaotic” interiors, with great “product speak for itself”. emphasis on product pricing and sales. - “Runway” feel, store mannequins - Product placement varies once/twice dressed in outfit combinations (product per season. blocks) to suggest pieces that might be - Abundance in product display (many used (and bought) together. sizes and colours). - Product placement varies every 3-4 - Store mannequins also dressed in weeks. different outfit combination to suggest 14 The information listed on this table was the product of the author’s consumer knowledge of the brands and bibliographic research made for the development of the case-study. - Scarcely displayed products – to create pieces that might be used (and bought) sense of “scarcity”. together. - Online store “decorated” similar to - Average 2-3 floored stores, especially physical stores: white, clean, and with in city centres and relevant fashion emphasis on the product itself. districts. People - Highly attentive employees; employees - Scarcely staffed, employees not easy should note important customer requests to find on all floors. for specific garments. - Employees may prompt customers on - Employees trained not to “bother” and their needs/wants at any point. solicit customers; should only talk to - Employees are knowledgeable on customers when approached with any store offer. inquiry. - Sense of fashion and fashion pieces, - High sense of fashion and fashion although no known linkage exists pieces, thus able to share feedback on between store employees and HQ. trendiness of current collections and suggest modifications. Processes - Store customers request or ask whether - No concrete process is noted in-store pieces exist in other colours, or are still or between the store and HQ/designers available. of store offer. - Store employees retrieve customer feedback/requests of existent collection, report back to store manager. - Store manager sends daily reports on sales and feedback to designers and merchandise department which, in turn, suggest and design new garments for production. The 2024 Axios Harris Poll 100 Levi's: Shining In Celebrity Star Power Lululemon: A Show Of Brand Confidence Brand Bowl 2024 Harris Poll COVID-19 Tracker Cryptocurrency: An Industry Snapshot Harris Quest Request a Demo Request a demo to see how our software can transform your business. Zara Case Study An ill-timed ad campaign. Zara’s “The Jacket” Came Under Fire for Parallels to Conflict in Gaza To illustrate the value of brand tracking, we examined how Zara’s controversial ad campaign impacted brand momentum. 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MBA Knowledge Base Business • Management • Technology Home » Management Case Studies » Case Study: Zara’s Entry into Indian Retail Fashion Market Case Study: Zara’s Entry into Indian Retail Fashion Market Zara is an extremely renowned brand, known for its latest designs and is among the top 100 best global brands in 2010 .It uses the unusual strategy of zero advertising and instead invests the revenue in opening new stores across the world. Zara is popular amongst old and young generations too because it is affordable fashion. It is crystal clear that Zara is successfully living upto the standard of its two winning retail trends firstly, it is fashionable and secondly it is low in price thus resulting in a very effective mixture out of it. The first store of Zara was opened in a central street in Spain in 1977 by Amancio Ortega who also owns, other brands such as Massimo Dutti, Pull and Bear and many others. Spain is the headquarter of Zara. Zara have opened 95 stores around the world in quarter 1 of year 2009 alone, bringing the total to 4359 stores in 73 countries worldwide. The Louis Vuitton fashion director Daniel Piette also described Zara as “possibly the most innovative and devastating retailer in the world.” They control most of the steps in the supply chain and also it designs, produces and supplies itself. Taking into consideration the amount of competition and the need for sustainability in the human race, running a business or a brand is not an easy task. With existing big brands and busy markets around the world, it takes more than what is required to make a name for oneself and to succeed in it. Proper management and marketing strategies are required along with the detailed knowledge of the economy and the earning and spending of the locality or the country’s GDP (Gross Domestic Product) which measures the country’s economy and their ability to spend and grow should be known before taking a leap and spreading the arms around the world. This essay discusses about which mode of entry strategy Zara adapted to entered into the Indian market and whether the strategy proved to be beneficial for the company and the benefits/disadvantage sit is going tackling and lastly it also analyses in which country it is doing better and why. Zara adopts a ‘Fast Fashion’ supply chain model. The latest fashions are supplied from design to delivery in just 2 weeks, compared to the 6 month industry average. They operate a vertical supply chain, so they themselves undertake everything from design, manufacture, sourcing and distribution. This allows them total control over the business, and leaves them less vulnerable to accusations of unethical practices such as sweatshop labor. Entry strategy of Zara in India While Zara owns a majority of its stores in Spain, the international expansion has adopted three different entry modes: Own subsidiaries, Joint ventures and Franchising. According to the Indian policy on foreign direct investment (FDI) , Zara teamed up with the Tata Group, India, to form a joint enterprise in February 2009. Inditex has a share of fifty one percent of this collaboration while Tata’s subsidiary Trent Limited holds forty nine percent. Owing to several issues the Corporation undergoes, their extension of the store will stay slow, with just one additional store open Zara is the following Spanish Retailer to come into India, after Mango, even though Mango adopted the contract route to enter into the Indian market. Jesus Echevarria Hernandez, Chief Communication Officer at Inditex Group. Says that “The entry in the Indian market has a significant strategic importance for Inditex. India is one of the top priorities in the Asia region when our retail offering has been very well received,” . To enter the market in India, Inditex (the company behind Zara) used the strategy of pursuing a joint venture with Trent Limited, a Tata Group company, a highly recognized clothing line distributor. Zara took up joint ventures as its mode of entry in India because this is a co-operative strategy in which the manufacturing facilities and know-how of the local company are combined with the expertise of the foreign firm in the market, especially in large, competitive markets where it is difficult to acquire property to set up retail outlets or where there are other kinds of obstacles that require co-operation with a local company to which Zara regards its stores as one of the related elements in its business sculpt. The shop is regarded as the boundary among the buyer and the motor of the whole business – mode design, development, logistics and finally retail. The main concerns that Zara had wile entering into the Indian market were Demography and cultural concerns. Speaking of demography India has a population of about 1.2 billion people and the target market would be no doubt wide than what is expected. As the income become larger in India, there will be more demand in the quality and fashionable clothing. Cultural Concerns: it is the major concern that has to be given tremendous attention when entering into a foreign market. It must accept the perspectives and beliefs of the role of culture in influence and as in India social security is given special attention. In order to effectively achieve their goals, Zara pursued a strategy of selling a variety of its local clothing lines and international clothing lines, but maintaining Zara as the primary brand in India. Zara also targeted the larger positions including either the first or second positions in the Indian market of clothing lines. Any of these positions would be sufficient enough for Zara to create an outstanding level with regards to manufacturing, marketing and distribution. These positions can set up a stage from which Zara can sell their clothing lines and other special fashion products . To promote the organization and its clothing lines, Zara utilized video advertisements, print ads and the idea of e-marketing which fulfilled the varying needs of consumers from India and beyond; particularly those priority Indian markets or the consumers in the urban India areas. For this promotion campaign, the perfect information that Zara Company utilizes is “Providing quality and fashionable clothing lines that fulfills your needs. Zara has been able to set up its reputation as one of Spain’s primary clothing line companies for several years now. It is able to rise up to the challenges in most of its markets directly . This is made possible through the efficient promotional and positional strategies established in order to maintain not only large profits, but also on establishing the foundations of Zara’s clothes and fashion trends. The promotional strategies of Zara in India are easily implemented by the local employees themselves which enables the organization to vastly improve without the burden of implementing costly technologies. These initiatives can also lead in improved financial profit for the organization and will enable the foundation of networks for Zara clothing lines in India. Target Market Zara has maintained a reputation for targeting the teenagers, those in their twenties and even the individuals considered young at heart. This is a customer sector that other clothing companies have previously ignored in place of the adult consumers. Zara Company also has the unique strategy of portraying the generations in their campaigns. These campaigns in India will tell that Zara Company is not a mere simple clothing line for the next generation; its users are also a generation ahead of their competitors. Zara Company can establish an image for itself in India as the clothing line for the present generation. It has discovered that the purchasing power of the youth and the marketing power of celebrities were similar. They have garnered significant profit gains out of this strategy, and there is no reason why this won’t also work in India. Nevertheless Zara undergoes quite a few hurdles like the existing rules on FDI in India require that foreign single-brand suppliers are obliged to surpass a 49% stake to a resident associate. This includes the vendor to share its organizations information and data it would usually not reveal. Moreover, franchising stores means that the merchant loses certain jurisdiction over how these are operated, which numerous businesses worry that it might harm their brand name. As a result, single-brand retailers are regularly cautious of entering the Indian market. For a apparel seller akin to Zara, further considerations contain the relative need of seasonal modification and the separate, consolidated manner of dress amongst Indian females that differs significantly to Zara’s offered ranges. 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Required fields are marked * SUGGESTED TOPICS The Magazine Newsletters Managing Yourself Managing Teams Work-life Balance The Big Idea Data & Visuals Reading Lists Case Selections HBR Learning Topic Feeds Account Settings Email Preferences How Retailers Became Ad Platforms Sebastian Gabel, Duncan Simester, Artem Timoshenko It’s a major growth opportunity — if companies can navigate the strategic challenges. Major retailers are today, most notably Amazon, are creating and operating their own advertising platforms — and they’re making millions doing it. McKinsey estimates that by 2026, retail media will add $1.3 trillion to enterprise values in the U.S. alone, with profit margins between 50% and 70%. In this article, the authors introduce readers to the main kinds of retail media, discuss three strategic challenges that they present, and provide guidance for effectively managing those challenges. A rapidly growing number of major retailers are today creating and operating their own advertising platforms — a phenomenon widely referred to as retail media.  Nobody has had more success in the space than Amazon, which in 2023 earned $46.9 billion from advertising, comprised primarily of sponsored ads on its site. This figure exceeds the annual global revenue of Coca-Cola and makes Amazon the third-largest advertising platform in the United States, behind only Google and Facebook. SG Sebastian Gabel is an assistant professor of marketing at Erasmus University. His research focuses on developing deep learning for targeting applications in retailing. Prior to his academic career, Sebastian co-founded a retail-media services company that was sold to the Schwarz global retail group. DS Duncan Simester is the NTU Professor of Marketing at the MIT Sloan School of Management. His research focuses on marketing strategy, go-to-market strategies, and the use of artificial intelligence and experiments to improve business decisions. He regularly consults with companies on these topics. AT Artem Timoshenko is an assistant professor of marketing at the Kellogg School of Management, at Northwestern University. His research focuses on applications of AI to marketing analytics and customer insights. Partner Center More From Forbes The power of empathy: leveraging emotional intelligence for more effective marketing campaigns. Share to Facebook Share to Twitter Share to Linkedin Leslie Poston: Media Psychologist, Marketing Executive, Communications Professional, Educator, Researcher • Ever.Ag Data Labs • FGU In marketing's dynamic landscape, emotional intelligence (EI) is a critical driver of success. EI goes beyond mere transactional relationships to create genuine, lasting connections with audiences. By recognizing and responding to the emotional dynamics of their audience, marketers can foster a deeper rapport and drive engagement. The surge of EI in marketing reflects a broader shift toward consumer-centric approaches that prioritize emotional connection over straightforward sales pitches. This focus on emotional resonance helps brands differentiate themselves in a crowded market, turning casual interactions into lasting relationships. EI enables marketers to craft messages that not only appeal to the logical aspects of decision-making but also resonate emotionally. This dual approach is vital in today's market, where emotional engagement significantly impacts consumer behavior and brand loyalty. The Importance Of Emotional Intelligence In Marketing Emotional intelligence involves perceiving, evaluating and responding to emotions effectively. In marketing, this means crafting campaigns that resonate on a deeper level, enhancing consumer engagement and loyalty. Studies such as those linked above highlight EI's role in improving communication and decision-making—skills essential for effective marketing. Best High-Yield Savings Accounts Of 2024 Best 5% interest savings accounts of 2024. Furthering the case for EI in marketing, the research underscores its role in enhancing team dynamics within marketing departments. Teams that communicate with EI foster a more collaborative and innovative work environment , leading to more effective marketing solutions. As emotional intelligence cultivates a better understanding among team members, it also leads to more cohesive and unified marketing strategies. Moreover, EI is instrumental in crisis management. From what I've seen, brands that navigate crises with empathy are more likely to maintain consumer trust. By applying EI principles, marketers can address potential issues thoughtfully, ensuring responses align with consumer sentiments. This proactive approach mitigates potential damage to brand reputation and demonstrates a genuine commitment to customer well-being, further strengthening brand loyalty. Empathy: Connecting On A Human Level Empathy allows marketers to step into their customers' shoes and tailor messages that resonate personally. I once worked with a client who struggled to connect with their audience. By conducting empathy mapping exercises, we uncovered key emotional triggers that allowed us to craft a campaign that spoke directly to their customers' needs and aspirations. The result was a significant increase in engagement and customer loyalty. Empathy extends beyond customer interactions to content creation. By employing empathetic marketing strategies, brands can create content that truly speaks to the audience, leading to higher engagement rates. This approach ensures that marketing messages are not only seen but felt for more impact. In practice, empathy allows marketers to anticipate and respond to changes in consumer preferences and market conditions more swiftly and effectively. By staying attuned to the emotional pulse of their audience, brands can adapt their strategies to maintain relevance and resonance. This agility is particularly crucial in times of uncertainty or rapid change, where consumer needs and sentiments can shift quickly. Integrating EI Into Marketing Strategies To integrate EI effectively, marketers should: 1. Use data-driven insights to understand consumer behavior and preferences on an emotional level. By leveraging advanced analytics tools, marketers can uncover deeper insights into what drives their audience emotionally, enabling more targeted and effective campaigns. 2. Personalize customer experiences at scale using advanced analytics and AI-driven tools. These technologies can help identify emotional patterns and preferences, allowing marketers to tailor their outreach to individual consumers, creating a more intimate and engaging brand experience. 3. Segment audiences by understanding the emotional triggers unique to different demographics. By recognizing that different groups may respond to different emotional cues, marketers can create more nuanced and effective campaigns that resonate with specific segments of their audience. Integrating EI into marketing strategies requires a commitment to continuous learning and adaptation. As consumer preferences and emotional landscapes evolve, marketers must remain agile and responsive, consistently refining their approach to maintain emotional resonance. Case Studies: Emotional Intelligence In Action 1. Dove's "Real Beauty" campaign leveraged EI to challenge beauty stereotypes and engage women on issues of self-esteem. By addressing common emotional struggles, Dove created a powerful bond with its audience , leading to increased brand loyalty. The campaign's success demonstrates the power of aligning marketing messages with the deeper emotional needs of the audience. 2. IBM utilized EI by employing Watson to analyze customer service interactions for emotional content, allowing them to tailor responses to customer mood and context. This responsive strategy led to higher customer satisfaction rates, showcasing the potential of AI-driven tools in enhancing emotional intelligence in marketing. 3. Salesforce's AI models are trained to pick up on subtle cues in customer data that indicate preference and sentiment, allowing for dynamic adjustment of marketing strategies in real time. This responsiveness bolsters customer engagement and ensures alignment with clients' evolving expectations. By leveraging AI to enhance emotional intelligence, Salesforce demonstrates the potential for technology to augment and scale human empathy in marketing. These case studies illustrate the tangible benefits of incorporating EI into marketing strategies. By prioritizing emotional connection and leveraging advanced technologies to enhance empathy at scale, these brands have achieved significant gains in customer engagement, loyalty and marketing effectiveness. The integration of EI into marketing campaigns offers substantial benefits, from improved customer relations to enhanced campaign effectiveness. By prioritizing empathy and emotional understanding, marketers can create meaningful connections with their audience, driving both immediate engagement and long-term loyalty. How can you start leveraging EI in your marketing efforts? Begin by actively listening to your customers and seeking to understand their emotional needs. Use this insight to inform your content creation and campaign development. Invest in technologies that can help you scale empathy and personalize experiences. And most importantly, foster a culture of emotional intelligence within your marketing team, encouraging open communication, collaboration and a deep commitment to understanding and serving your audience. Remember, the most effective marketing doesn't just sell products—it builds relationships. In a world where consumers are increasingly seeking authentic, emotionally resonant experiences, EI is no longer a nice-to-have—it's a critical component of marketing success. Forbes Communications Council is an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies. Do I qualify? Editorial Standards Reprints & Permissions LHH Success Stories in Marketing Recruitment At LHH, our expertise in the marketing sector is demonstrated through a track record of substantial success across a variety of industries. From national commercial real estate to major retail chains, our ability to provide both temporary and permanent staffing solutions helps companies achieve their creative and strategic goals. Here, we explore four key case studies that highlight our capability to address complex staffing needs and drive tangible results. Case Studies of Recruitment Success with LHH 1. National Commercial Real Estate Company: A leading company in commercial real estate sought to outsource their creative services nationally. LHH was chosen to support the marketing and communications directors across the organization. Our contributions have ranged from developing C-level presentations for national townhalls to designing websites aimed at boosting sales efforts. Our growing partnership now extends to direct-hire and contract roles, including Creative Directors, Web Designers, and Communication Managers. 2. Major Retailer: Tasked with developing an in-house photography and video studio, a large retailer partnered with LHH to manage and payroll a dynamic team. Our sourced talent was pivotal in exceeding financial and operational targets, helping the studio scale from a core team of 30 to a peak season strength of 60 contractors. The roles filled include Photographers, Videographers, Photo Retouchers, and Marketing Coordinators. 3. Professional Services Firm: A professional services giant launched a strategic initiative to develop a scalable shared services model for marketing. As a preferred partner, LHH supplied a bench of specialized marketers to support global campaigns. Our strategy focused on retaining brand consistency and enhancing international client support, filling roles such as Global Marketing Leads and Digital Marketing Managers. 4. Fortune 50 Retail Company: A top pharmacy chain relies on LHH for freelance and direct hire talent in creative and marketing roles to support their e-commerce and creative studios. Our staffing solutions have placed key roles, from Interactive Retail Creative Directors to Senior Managers in User Experience, enhancing their marketing and creative capabilities. These case studies showcase LHH’s breadth of expertise and our commitment to delivering recruitment solutions that empower businesses to excel in a competitive landscape. Whether you need interim support or a permanent addition to your team, our tailored approach ensures the right fit for your strategic needs. Interested in transforming your team with expertly matched talent? Reach out today and let's craft a staffing solution that propels your business forward. 188 IMAGES Zara Fast Fashion Case Study Harvard Business School (DOC) International Marketing-Zara Case Study ZARA Marketing Communication Plan Zara Marketing Strategy Case Study Example Zara Zara Case Study VIDEO Why Zara Is So Successful Zara case study PART 2 #zudio Followed Zara’s Playbook! Study Vlogs ZARA success story in hindi / Amancio Ortega Life Story / Jasmin Patel / Easy Explained zara case study COMMENTS (PDF) ZARA'S CASE STUDY -the Strategy of the Fast ... Learn how Zara, the fast fashion pioneer, achieved success with its unique strategy and supply chain management. Read the case study on ResearchGate. How Zara's strategy made her the queen of fast fashion Zara's marketing is its own stores. {{cta('ba277e9c-bdee-47b7-859b-a090f03f4b33')}} 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 ... How Zara became the undisputed king of fast fashion? 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 Conclusion. Zara is a perfect case study to learn the perfect operations strategy, perfect marketing strategy, perfect pricing strategy, and whatnot. Zara's Marketing Strategy: A Deep Dive into Fast Fashion Dominance In this article, we delve into the intricate layers of Zara's marketing, uncovering the secrets behind its success. Before dissecting Zara's marketing strategy, ... A 2024 Comprehensive Case Study. How to Market Your Finance Blog In 2024. Sonder Marketing Strategy. NBA Marketing Strategies And 4Ps In 2024. Similars. Zara Marketing Strategy: How Zara Weaved the Perfect Fast ... In this marketing case study, we dive deeper into Zara's approach to marketing and business model that has set them apart from its competitors and established a loyal customer base ... You can also read marketing strategy case studies on Myntra and Nykaa for an online-first approach in fashion eCommerce industry. Copy link 19 8 2 1 19 8 0. Copy ... Zara Case Study: How Zara Lead The Fast Fashion Market? In 2020, Inditex, Zara's parent company, held a market capitalization of an impressive $73.7 billion. This substantial valuation highlights Inditex's influential position in the market. Zara's Value. As of 2022, Zara's value soared to nearly $13 billion. Why Zara Succeeds: It Focuses On Pulling People In, Not ... Analysis of Zara's fast-fashion retailing strategy with FIT Shelley E. Kohan, based on the 4Es model of marketing, where Experience replaces Product, Exchange in new Price, Evangelism is now ... The Secret of Zara's Success: A Culture of Customer Co-creation Zara is one of the most successful global fast fashion retail brands competing on design & styles, strong retail marketing, lean supply chain and strong corporate culture, Inditex is the world's largest fashion group with 170.000 employees, operating more than 7,400 stores in 96 markets worldwide and 49 online markets Case Study of Zara: A Better Fashion Business Model Zara's 'Fast Fashion' Business Model. Zara's business model is basically based on the principle that it can sell "medium quality fashion clothing at affordable prices". Basically vertical integration and the ability to come up with a quick-response is a key factor to Zara's successful business model otherwise they would be no ... ZARA: Fast Fashion 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. ... Harvard Business School Case 703-497, April 2003. (Revised December 2006.) Educators; Purchase; Related Work. April 2003 (Revised December 2006 ... PDF ZARA: Fast Fashion ZARA: 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) PDF Zara'S Case Study This Case Study has the objective of study Zara's strategies, from their supply chain until their marketing and communication strategies, and the strategy in the physical stores versus at the online store. Then the study will focus on the consumer: their behavior according to the different generations and the brand perception according to them. Zara's Secret for Fast Fashion Zara's Secret for Fast Fashion. 2/21/2005. Spanish retailer Zara has hit on a formula for supply chain success that works. By defying conventional wisdom, Zara can design and distribute a garment to market in just fifteen days. From Harvard Business Review. by Kasra Ferdows, Michael A. Lewis and Jose A.D. Machuca. Zara Marketing Case Study This is what makes Zara one of a kind in the fashion industry. The brand spends only 0.3% of its budget on promotion and advertising. The typical trend in the fashion industry is to spend about 3.5% on marketing and promotion. The brand doesn't believe in marketing as it saves them a lot of money and helps them with exclusivity. The Digital Brand Identity of Fast-Fashion Brand Zara. A Case Study Zara's product strategy is to create a sense of scarcity with a small number of items, thereby satisfying consumers' personalized needs for varied and unique clothing (Chunling 2020) . During the COVID-19 crisis, Zara has strengthened its digital presence (Popović-Šević et al. 2021). Currently, Zara offers online ordering, in-store pick- ZARA: Achieving the "Fast" in Fast Fashion through Analytics 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 ... (PDF) How Should Zara Optimize Its Marketing Strategies ... This poses a challenge for fast fashion brands represented by ZARA. The study used questionnaires to survey more than 300 Chinese consumers, understand their consumption habits, and measure ZARA ... Case Study on Zara: Revolutionizing Fast Fashion Retail. 3.The Rise of Online Retail: The growth of online retail has changed the fashion industry. Consumers now have access to many online shopping options, including fast food stores. Zara competes to ... PDF Zara'S Case Study From Zara, I would like to show appreciation for the help given by Pedro Vidigal, Marketing Director of Zara in Portugal, in the beginning of my thesis. Even though he could not give any ... Zara case study allows an overview on how good strategic decisions, product management and marketing management can be essential for a company's success ... Zara: Marketing in Fast Fashion a Case-Study Case-Study Narrative . ZARA: Marketing in Fast Fashion In mid Spring/Summer season 2013, Óscar Pérez Marcote, Director of the Zara Business . Unit at Inditex since 20113, sat in his office preparing for a meeting with Inditex CEO . Pablo Isla Tejera. The intent of the meeting was to discuss Zara's current strategy and marketing approach in ... Zara Case Study Zara's "The Jacket" Came Under Fire for Parallels to Conflict in Gaza. To illustrate the value of brand tracking, we examined how Zara's controversial ad campaign impacted brand momentum. How did consumer perception of Zara change after the launch of their campaign? Download our case study to find out! Case Study: The International Growth of Zara 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 ... Case Study: Zara's Entry into Indian Retail Fashion Market Case Study: Zara's Entry into Indian Retail Fashion Market. Zara is an extremely renowned brand, known for its latest designs and is among the top 100 best global brands in 2010 .It uses the unusual strategy of zero advertising and instead invests the revenue in opening new stores across the world. Zara is popular amongst old and young ... How Retailers Became Ad Platforms Major retailers are today, most notably Amazon, are creating and operating their own advertising platforms — and they're making millions doing it. McKinsey estimates that by 2026, retail media ... How To Leverage Emotional Intelligence For Effective Marketing Case Studies: Emotional Intelligence In Action 1. Dove's "Real Beauty" campaign leveraged EI to challenge beauty stereotypes and engage women on issues of self-esteem. LHH Success Stories in Marketing Recruitment Here, we explore four key case studies that highlight our capability to address complex staffing needs and drive tangible results. Case Studies of Recruitment Success with LHH . 1. National Commercial Real Estate Company: A leading company in commercial real estate sought to outsource their creative services nationally. LHH was chosen to ... assignment essay homework paper phd report resume review speech