Zara was described by Louis Vuitton fashion director Daniel Piette as "possibly the most innovative and devastating retailer in the world." Zara has also been described as a "Spanish success story" by CNN.
Company history
The founder of Zara, Amancio Ortega, opened the first Zara store in 1977 in a central street in A Coruña, Spain.[3]
Its first store featured low-priced lookalike products of popular, higher-end clothing fashions. The store proved to be a success, and Ortega started opening more Zara stores in Spain. During the 1980s, Ortega started changing the design, manufacturing and distribution process to reduce lead times and react to new trends in a quicker way, in what he called "instant fashions". The company based its improvements in the use of information technologies and using groups of designers instead of individuals.[4]
In 1980, the company started its international expansion through Porto, Portugal. In 1989 they entered the United States and in 1990 France.
This international expansion was increased in the 1990s, with Mexico (1992), Greece (1993), Belgium and Sweden (1994), etc. until the current presence in over 73 countries.
Zara stores are company-owned, except where local legislation forbids foreigner-owned businesses. In those cases, Zara franchises the stores.
Zara's products
Manufacturing and distribution
Zara is a vertically integrated retailer. Unlike similar apparel retailers, Zara controls most of the steps on the supply-chain: It designs, produces, and distributes itself[6].
Regarding the design strategy, an article in Businessworld magazine[7] describes it as follows: "Zara was a fashion imitator. It focused its attention on understanding the fashion items that its customers wanted and then delivering them, rather than on promoting predicted season's trends via fashion shows and similar channels of influence, which the fashion industry traditionally used."
50% of the products Zara sells are manufactured in Spain, 26% in the rest of Europe, and 24% in Asian and African countries and the rest of the world.[8] So while some competitors outsource all production to Asia, Zara makes its most fashionable items -- half of all its merchandise -- at a dozen company-owned factories in Spain and Portugal, particularly in Galicia and northern Portugal where labour is somewhat cheaper than in most of Western Europe. Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia and Turkey.[9]
Zara can offer considerably more products than similar companies. It produces about 11,000 distinct items annually compared with 2,000 to 4,000 items for its key competitors. The company can design a new product and have finished goods in its stores in four to five weeks; it can modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences.[10] If a design doesn't sell well within a week, it is withdrawn from shops, further orders are canceled and a new design is pursued. Zara has a range of basic designs that are carried over from year to year, but some fashion forward designs can stay on the shelves less than four weeks, which encourages Zara fans to make repeat visits. An average high-street store in Spain expects customers to visit three times a year. That goes up to 17 times for Zara.[11]
On Sept 6 2010 Financial Times reported that Inditex has launched the first online boutique for its best-selling brand Zara. The long-awaited website will begin in Spain, the UK, Portugal, Italy, Germany and France – six countries that are among the most important of the company’s 76 markets. When asked about the company’s late arrival to internet retailing, Pablo Isla, chief executive, said they have been waiting for online demand to build before launching into cyberspace. All items on sale at its Zara outlets would be available online and at the same prices. Customers can choose from the usual range of paying methods and opt either for a free store pick-up or paid-for postal delivery. The online return and exchange policy is identical to the store system, with shoppers given 30 days to change their minds. Queries will be handled by customer service operators or via e-mail or chat messaging. Inditex said that iPhone and iPad applications that allowed purchasing would soon be available.[12]
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