Company Case 19 Zara – the fast and furious giant of fashion
One global retailer is expanding at a dizzying pace. It is on track for what appears to be world domination of its industry. Having built its own state-of-the-art distribution network, the company is leaving the competition in the dust in terms of sales and profits, not to mention speed of inventory management and turnover. Wal-Mart, you might think? No! Tesco, possibly? No! The company is Zara, the flagship specialty chain of Spain based clothing conglomerate, Inditex. Forget football stars, the Costa del Sol and Real Madrid, they are nothing compared with Zara as Spain’s …show more content…
If customers are asking for a rounded neck on a vest rather than a V neck, such an item can be in stores in seven to ten days. This process would take traditional retailers months. Managers also consult a personal digital assistant every evening to check what new designs are available and place their orders according to what they think will sell best to their customers. Thus, store managers help to shape designs by ensuring that the creative teams have real-time information based on the observed tastes of actual consumers. Mr Ortega refers to this as the democratisation of fashion.
Kotler P. et al, (2008), Principles of Marketing, 5th European edition, Harlow, Pearson Education Ltd. When it comes to sourcing, Zara’s supply chain is unique as well. Current conventional wisdom calls for manufacturers in all industries to outsource their goods globally to the cheapest provider. Thus, most of Zara’s competitors contract out manufacturing to low-wage countries, notably Asia. But Zara makes 40 per cent of its own fabrics and produces more than half of its own clothes, rather than relying on a hodgepodge of slow-moving suppliers. Even things that are farmed out are done locally in order to maximise time efficiency. Nearly all Zara clothes for its stores worldwide are produced in its remote corner of Spain. As it completes designs, Zara cuts fabric in-house. It then sends the designs to one of several hundred local cooperatives