Business Strategy of ZARA (2024)

FAQs

What business strategy does Zara use? ›

Zara is the biggest Spanish clothing retailer in the world based on sales value. Its success is due to its fast fashion strategy that is based on a strong supply chain and quick market feedback loops.

Zara's marketing strategy has always been to create something fresh and trendy for its customers. It is still controversial how Zara uses designers' work and sells it at lower pricing. But the thing to learn from here is the ability to create a unique selling point and build a brand on it.

Product Strategy of Zara

At Zara, what it does is to create new clothing designs all year round and only produce a limited number before moving on to the next designs. With these abbreviated production runs, designs get sold out faster, and there are virtually no leftovers.

In brief, Zara's statement is "to give customers what they want, and get it to them faster than anyone else." An effective mission statement is something clear and concise, and Zara's mission statement definitely gets a check-in both these criteria.

Zara's generic strategy is cost leadership. The brand holds a competitive advantage in the market by offering products similar to high-end fashion and designer brands' styles at modest prices.

Zara has remained true to its brand core values, expressed simply by four key characteristics that define their products: beauty, precision, functionality and sustainability.

Additionally, ZARA uses near-shore production for both fabrics and finishing, cutting out time in transportation to and from factories. The implications of this efficiency are real. Compared to a traditional player, ZARA will spend more to produce a similar garment AND sell it more cheaply (at regular price).

Zara's Three Success Factors: Speed, Speed, and Speed.

The Zara brand strategy

Its core values are found in four simple terms: beauty, clarity, functionality and sustainability. The secret to Zara's success has largely being driven by its ability to keep up with rapidly changing fashion trends and showcase it in its collections with very little delay.

The Zara target market includes women and men, mainly younger adults in the age range of 18 to 40. This places the Zara segmentation strategy as largely focusing on Millennials and Gen Z, who are both fashion conscious and tech savvy.

What are Zara's successful capabilities? ›

Zara is well known for its ability to be prompt in quickly delivering new clothes to their stores which are achieved by following a strict routine. Twice a week, at precise times, store managers order clothes, and twice a week, on schedule, new garments arrive.

Value Proposition – Zara's key value proposition lies in its ability to design, produce, and deliver the latest fashion trends to customers before its competitors. The company achieves this through agile supply chain management, fast production cycles, and a strict inventory control system.

Zara's business strategy allows the company to sell more items at full price because of the sense of scarcity and exclusiveness the company exudes. Zara's total cost is minimized because merchandise that is marked down is reduced dramatically as compared to competitors.

Because Zara manufactures only a limited supply of items, it doesn't have to deal with excess inventory or constant markdowns. Each store has a limited inventory of items in each style that are replenished based on demand. New styles based on latest trends arrive constantly.

Zara's strategy is to offer a higher number of available products than its competitors. While most clothing retailers manufacture and offer to the public for sale 2,000 to 4,000 different articles of clothing, Zara's production has been markedly higher, at over 10,000 pieces produced per year.

Generating more traffic

While most customers visit a fashion store four times a year (once per season), Zara's rapid turnover means customers eager to see new designs visit about 15 times a year — generating almost four times more traffic than the average store.

Business Model of Zara

Zara uses ideas like vertical integration, business strategy, efficient supply chain management, etc. that turn to be instrumental in the development of Zara. Because of its model, Zara has become one of the most successful clothing brands in the world.

Zara's Value Propositions

Zara value propositions consist of: The brand can provide cheap, low-quality clothing accessories which mimic current high-fashion trends.

Zara's strategy is to offer cutting edge fashion at affordable prices by following fashion and identifying which styles are “hot”, and quickly getting the latest styles into stores. They can move from identifying a trend to having clothes ready for sale within 30 days (whereas most retailers take 4-12 months).

The four stages are introduction, growth, maturity, and decline.

What is the core product of Zara? ›

It specialises in fast fashion, and sells clothing, accessories, shoes, beauty products and perfumes. The head office is in Arteixo, in A Coruña in Galicia. It is the largest constituent company of the Inditex group.

Its core values are found in four simple terms: beauty, clarity, functionality and sustainability. The secret to Zara's success has largely being driven by its ability to keep up with rapidly changing fashion trends and showcase it in its collections with very little delay.

Develop Time-Critical Value Proposition

Zara's value proposition focuses on keeping up with fast-changing fashion trends. Its activity configuration allows it to spot trends and launch new pieces in less than three weeks. Competitors show two collections per year and take over nine months to get items to stores.

Unlike many clothing suppliers that actively use outsourcing, Zara manufactures a significant number of its products using its own resources. The brand itself is engaged in the processes of design, storage, distribution, and logistics.

The whole production cycle – from initial design to point of sale – takes Zara around two weeks while competitors spend six months in average to introduce new product to the market [3].

The 4 stages of the product life cycle are introduction, growth, maturity, and decline. Learn how to leverage this into your business strategy.