Zara Case Study
Zara: The Technology Giant of the Fashion World
Introduction The term “fast-fashion” has come to revolutionize the world of fashion; this business model has created frenzy among competing retailers attempting to capture market share in this ruthless industry. Zara is the clothing and accessories retailer seated atop the industry; Zara is the flagship specialty chain of Spain-based conglomerate Inditex consisting of 1495 stores. Based in Arteixo, Galicia, and founded in 1975 by Amancio Ortega and Rosalía Mera, Zara maintains a competitive advantage through its “fast-fashion” business model; they’re able to take a product from concept through design, manufacturing, and retail store placement in a span of two weeks, while for their competitors the same feat takes months. Each year Zara is able to produce 11 000 new items on average while the main competition (H&M and the Gap) 2000 to 4000. Zara is able to launch an enormous quantity of merchandise in short time constraints because they are a vertically integrated retailer. They have their own factory in La Coruña which allows Zara to control the majority of the supply-chain domestically from designing, to manufacturing, to production and distribution to stores worldwide.
Situational Analysis
There are many factors influencing the expansion decision. Retail fashion is an extremely competitive industry with many players, most of whom are established brand names with a national presence and high advertising budgets to make sure consumers are aware of them. ZARA's policy is to do as little advertising as possible. But this will limit the rate of expansion, or limit the growth in sales volume at the new stores as word of mouth spreads. ZARA's main competitive advantage is its lean just in time delivery system that allows their stores to have the newest and hottest fashions on their shelves before their competitors. This system can work, but it will limit how quickly the company will
Introduction The term “fast-fashion” has come to revolutionize the world of fashion; this business model has created frenzy among competing retailers attempting to capture market share in this ruthless industry. Zara is the clothing and accessories retailer seated atop the industry; Zara is the flagship specialty chain of Spain-based conglomerate Inditex consisting of 1495 stores. Based in Arteixo, Galicia, and founded in 1975 by Amancio Ortega and Rosalía Mera, Zara maintains a competitive advantage through its “fast-fashion” business model; they’re able to take a product from concept through design, manufacturing, and retail store placement in a span of two weeks, while for their competitors the same feat takes months. Each year Zara is able to produce 11 000 new items on average while the main competition (H&M and the Gap) 2000 to 4000. Zara is able to launch an enormous quantity of merchandise in short time constraints because they are a vertically integrated retailer. They have their own factory in La Coruña which allows Zara to control the majority of the supply-chain domestically from designing, to manufacturing, to production and distribution to stores worldwide.
Situational Analysis
There are many factors influencing the expansion decision. Retail fashion is an extremely competitive industry with many players, most of whom are established brand names with a national presence and high advertising budgets to make sure consumers are aware of them. ZARA's policy is to do as little advertising as possible. But this will limit the rate of expansion, or limit the growth in sales volume at the new stores as word of mouth spreads. ZARA's main competitive advantage is its lean just in time delivery system that allows their stores to have the newest and hottest fashions on their shelves before their competitors. This system can work, but it will limit how quickly the company will