Zara has been the most popular Spanish fashion brand, which belongs to the Inditex group. The company was established in 1963 by Amanico Gaona and by the end of 2005, the holding company had become the largest manufacturer of fashion clothing, which was both trendy and affordable. Zara operates in 45 countries and owns about 2000 stores worldwide and also, aims at further expanding their stores. Throughout its expansion in different countries, the company has concentrated on the core fashion philosophy. The philosophy that they have followed is to respond to demand of the market with creative and quality designed clothing.
The chief success story of Zara lies in strategies undertaken by the company. The corporate strategies had helped the company to grow faster with creative, flexible and innovative business model. The business model has differentiated the company from rest of the companies in the same industry. It has provided Zara with the best competitive advantage, both at international and local level (Berfield and Baigorri, 2013).
Zara had regarded its target market as a “young educated one that likes fashion and is sensitive of fashion” (Wiggin, 2013). The company emphasizes on achieving competitive advantage over their rivals by integrating the manufacturing, production, logistics and customer handling staffs. The main activities, that escalate the speed of manufacturing and the supply chain, is the time taken to deliver Zara’s clothing from the manufacturing site (Hansen, 2012)
The three main corporate strategies that are followed by the retailer are the following:
1) They regard customers as the centre of every clothing design strategy. Customers are questioned about their preferred clothing designs. The sales team of Zara makes use of the hand-held PDA devices for capturing the daily and even hourly feedback from customers, which enables them to ideate new clothing designs. The device daily transfers design to the Research and Development section, which is known as Cube (Valerio, 2013). The Cube team makes new clothing pieces in just two weeks and those match the exact needs of customers. The business strategy of Zara is clear; if a company has to succeed in the long run in a competitive market, then it has to be customer-centric. The needs and desires of customers are taken into account, so that the company can cater to their needs in the exact manner that they look for (Ferdows, Lewis and Machuca, 2003).
2) The company concentrates on technology for managing and tracking inventory and also, controlling cost. The sales associates send daily reports to the management, regarding total sales of the day. The PDAs are also used for capturing items, which are sold out during the day and also, those that do not sell. It also helps the management to locate fashion trends or colours, which are popular or otherwise. The point of sales, which has sold the highest apparels, is also indicated in the PDA (Ferdows, Lewis and Jose, 2005).
3) The company controls and balances just-in-time production as centre for the location facilities. The issue of distance manufacturing kills responsiveness of products because late delivery affects sales of the business. So, Zara has undertaken fabric production facilities in Spain, which happens to be the central position for manufacturing purposes. The production system enables the company to save time and money for making its own fabrics. The company can, thus, closely monitor the demand of customers and fulfil their needs to an extent, which will allow them to draw more customers, making them brand loyal. Schedules for the daily production are tracked regularly, in an efficient way (Capell, 2008)
Zara aims at producing the fabric used in their products by themselves. They produce 40% of the fabric that is utilised by them for manufacturing of clothes. The fabrics that are outsourced are not dyed and are coloured by using subsidiary dye products of the company. These fabrics are later dyed by the company in order to make them appropriate for manufacturing of the clothes. The staple products, like, jeans and t-shirts, are outsourced for manufacturing. The shipment of fabrics takes months for its arrival to the company’s manufacturing units. The company intends to produce top products for their customers and schedules for the shipment are allotted twice per week (Slack, Chambers and Johnston, 2013). Thus, the company provides its customers with the latest stocks, which are piled up in their stores. Zara does not desire to keep their customers waiting for clothes that they want. So, they direct their efforts at improving the inventory and ensure that the same contains all products, which are most preferred by their customers (Lutz, 2013).
The company has always remained customer focused by applying the sophisticated methods of tracking the products and controls the inventory efficiently. The company is known to produce trendy clothes than its competitors in just two weeks. It is observed that other companies in the industry cannot respond so fast and it takes approximately 3-5 months (McAfee, Dessain and Sjoman, 2007)
The company believes that their brand needs to respond promptly to the changing tastes and preferences of the fashion world. The fashion world is very hard to predict and quite impossible to influence. The company targets the new young group of customers, who are very fashion conscious and also, influence their family, relatives and friends to create a style statement for even themselves (Kroenke, 2012).
Zara believes in delivering styles to their customers, rather than persuading them to buy their clothes through heavy marketing channels. Zara’s hallmark is the pull process that they apply. They employ disintegrated decision making and thus, has been the greatest advantage for the company (Writer, 2013).