This case study is about Zara, a retail chain owned by Inditex. Zara does several different things than their competitors that give them an advantage. Also, whether they should stay in Europe or expand to other regions will be discussed.
An area that sets Zara apart from its competitors is its consumer driven supply chain. It is vertically integrated consisting of design team, sourcing, manufacturing, and distribution. This allows Zara to have complete control over the different aspects of production of its product. This gives them flexibility to be able to change their products and adapt to the latest trends.
Design Designers are given feedback from consumer activity in its retail stores. They use this information to create new designs. This allows Zara to stay ahead of their competition in the design of their merchandise.
Communication Zara’s ability to adapt to trends begins with its communication. TV, industry publications, Internet and film content are analyzed to discover the latest fashion designs. Other sources of information include store managers and young, fashion-conscious staff. This information is sent to headquarters and given to their in-house designers. Their flat structure supports this line of communication.
Sourcing and Distribution Unlike its competitors, Zara carries out all logistics and distribution functions internally. This also helps speed up the process from the designing of an item to its distribution in a retail store. Even the delivery schedule gives Zara an advantage over its competitors. Deliveries to the store are twice a week, which encourages customers to shop there more frequently. The store always has an updated look to it. Items are kept for a limited amount of time in order to create this sense of scarcity. Customers know that if they like an item they should purchase it at that time because it will not be there very long.
Retail Stores The retail store is an important part of Zara’s success. They do not spend much of their money on advertising. Instead they use the attractiveness of their stores in prime locations. They are located in highly visible areas and upscale shopping centers. Zara invests heavily in their stores, remodeling the older stores every three or four years. Control was also exercised in how the store looked. Both window…