Kalyani Kala · Follow
11 min read · Dec 24, 2018
Written by- Kalyani Kala, Fashion Business Management, ISDI. Faculty- Belinda Bawa
The legend began when Ortega established a dress making factory in 1963 under the name of Inditex. The success of his foundation led him to the path of retail market for which he had a vision unmatched. Ten years after having set up a factory Ortega with Rosalía Mera started a small store called Zorba, which he had to rename as ZARA. Marking the year 1975 for a store setup, the investment was merely nothing and yet another feather was pulled out of Spain’s hat which has made a remarkable name all across the globe.
After setting up the forst store in A Coruña, Galicia, in Spain, ZARA slowly expanded its empire in the rest of the country and later in Portugal in 1988 and the year after that- 1989 ZARA made it to the United States of America.
This annual growth has not dropped since day one and every year Zara has been expanding in countries and places across the globe. France in 1990. During the 1990s, Zara expanded to Mexico (1992),Greece, Belgium and Sweden (1993). In the early 2000s, Zara opened its first stores in Japan and Singapore (2002), Russia and Malaysia (2003),China, Morocco, Estonia, Hungary and Romania (2004), the Philippines,Costa Rica and Indonesia (2005), South Korea (2008), India (2010),and South Africa and Australia (2011).
With about 6,500 stores across 88 countries ZARA has kept pace with the technologically advancing world. They pushed out their stock online in the year 2010 in Spain, the UK, Portugal, Italy, Germany and France. In November that same year, Zara Online extended the service to five more countries: Austria, Ireland, the Netherlands, Belgium and Luxembourg. Online stores began operating in the United States in 2011, Russia and Canada in 2013,and Mexico, Romania, and South Korea in 2014. India in 4 October 2017.
Amancio Ortega
The Spanish retail magnate, labelled the secretive billionaire, is the founder of high street chain Zara. He also owns a massive chunk of the rest of the high street brands. Today Inditex announced record half year sales and profits with a 3% rise in net income to £1.2 billion for the six months to July 1. From a small shop in the city of A Coruna to a global retail empire with over 7,000 stores, the brand’s visionary founder Amancio Ortega has made Zara the world’s largest fashion retailer.
With his first store, Ortega started keeping the vision of a low priced product from the higher end clothing brands. The idea was intself genious. During the 1980s, Ortega changed the design, manufacturing, and distribution process to reduce lead times and react to new trends in a quicker way, which he called “instant fashions”. The improvements included the use of information technologies and using groups of designers instead of individuals.
Setting up a brand in such a competitive world where bigger fish already sweep the ramps, setting up and making Zara successful is one of the most remarkable events in the history of Fashion. This kind of success does not go around name or brands waiting with silver spoons or luck, but is built on strong brand values and the utility that a brand creates for its consumers. Getting this step right, Ortega managed to inculcate values in his clothing items that are not recgonised as the USP of ZARA.
The USP of the brand which is the prime reason for it’s massive success today-
- Zara has remained faithful to its core values, expressed simply in the same four key words that define all our stores: beauty, clarity, functionality and sustainability.
- Only a few clothing brands can keep up with the latest fashion while maintaining high quality of products and selling then at an affordable price. It is no surprise that Zara, which started off as a small store in Spain is now the world’s largest retailer and its founder, Amancio Ortega, the 4th richest man in the world. Zara is one of the largest international fashion companies.
3. Yet no one seems to know very much about Ortega. But without him we’d never have heard of the term ‘fast fashion’ and our shopping habits would certainly be very different. To put it into context, in 1998 you had to be invited to a fashion show to see what was happening on the catwalk. And it took six months before the likes of you and me could buy something ‘inspired’ by a designer on the high street.Since the beginning of its establishment, the main idea of Zara is to make luxury products accessible to everyone. Thus, they managed somehow to democratize luxury manufacturer of products inspired by the evolution of fashion. With this policy, Zara is now an industry capable of offering trendy products at affordable prices. On the other hand, it is a company that wants to be close to young people. Also, this desire is felt in its recruitment policy. Zara young employees with styles very marked fashion. However, Zara understands what exactly the customers need and respond to their needs very quickly. That’s the main secret of Zara, which gives them a competitive advantage.
4. Zara’s value chain is vertically integrated, which offers many advantages. It can react quickly and it may have high control over the entire process from design to final product. Supply chain is efficient when they have a smooth use of distributions centers and warehouses. Its strategy also allows distributing the products within a wide geographic range within a very short time. The other thing also is that the products are close to market demand. Their products are made only in limited editions; consequently, they must sale their products in short period of time so they can be sold at full price without having them to be returned. This responsive approach involves both lower marketing costs, and higher profit margins for the company. IT integration is also an important aspect of Zara’s strategy which is significant as it enables information sharing between different joints within the company.
5. Online shopping became huge and significant market; customers can go online and order what they need. If Zara allows customers to purchase online, that would increase their sales. Pablo Isla is the first Deputy Chairman and Chief Executive says: “we view our entry into the Indian market to be of significant strategic importance.”
6. The competitive advantage of the company based on three factors: quality items, reasonable prices and very short response time.
7. Their philosophy is: “No Marketing”, “no communication”.
8. The customer is at the heart of our unique business model, which includes design, production, distribution and sales through our extensive retail network.
9. Another thing that sets Zara apart from the competition is that, unlike most other retailers, they don’t just produce one product range per season. Thanks to a huge design team, Zara has the ability to identify new trends and immediately put into production. This means they can produce four or five updated and relevant collections after the initial seasonal launch. This way they never miss a trend.
10. The key to their success is keeping these new introductory ranges small allowing mistakes to be discarded and the hits followed up quickly. These collections are in effect dictated by customer demand. The clever part being how quickly Zara responds to consumer behaviour.
11. Distribution is the key to the speed in which the company can respond. Every item of clothing produced comes through Spain.
12. At the company’s vast 10,000 sq ft base in Arteixo, not far from where it all began in A Coruna, an extensive tunnel network carries a huge carousel that transports clothing from the on-site factories to the distribution centre.
13. It is probably the amalgamation of all these qualities that made Zara, the Spanish clothing brand become the go-to fashion brand for all.
14. Ortega thought that customers would regard clothes as a perishable commodity — no different from yogurt or bread — to be consumed, rather than stored in closets.
Zara as brand offers a wide range of choices: the collections for women, men and children. The brand also launched a line of cosmetics, perfumes and household products.
Zara’s products are supplied based on consumer trends. Its highly responsive supply chain ships new products to stores twice a week. After products are designed, they take ten to fifteen days to reach the stores.
The business aspect-
- Zara as of 2017 manages up to 20 clothing collections a year.
2. Zara is a part of the € 4 billion Inditex group and 100% owned company, based in Barcelona. Over 80% of the group’s sales are contributed by Zara’s 600 stores. Women’s, men’s and children’s wear, over 724 stores in 56 countries.
3. Zara as of 2017 manages up to 20 clothing collections a year.
4. Zara currently has 1,751 stores worldwide. They incur an annual revenue of over $9 Billion dollars (2009).
5. Its parent company is owned 60% INDITEX by the Ortega family and Inditex has carried out in 2005 to 6.741 billion turnovers. Zara has about 2000 thousands branches around the world. Zara is a distributor of apparels.
6. On the face of it, none of it really makes sense. For starters the company doesn’t advertise and still manufactures most of its products in Europe. But when you look at the heart of Ortega’s business you start to see what a true retail visionary he is. Right from the outset Zara’s business model has been built with flexibility and speed at its heart. Instrumental to the company’s success is the connection between the stores, the in-house designers, and its factories. This has always been a key factor, coupled with the company’s deft logistical management.
7 .It’s these vital ingredients that enable him to interpret trends and get them from the catwalk to the high street within weeks. Before Zara came along it took five to six months. And once we’d had a taste of what is now commonly referred to as ‘fast fashion’ we just couldn’t get enough of it.
8. All of the clothing is processed through the distribution center in Spain. New items are inspected, sorted, tagged, and loaded into trucks. In most cases, the clothing is delivered within 48 hours. Zara produces over 450 million items per year.
Zara’s role in building the much needed passion for fashion has grown since its very introduction of the concept of fast fashion. In simpler terms, Zara has made the top level of fashion something that people from another market would want or aspire to own with designs that reflect the fashion trends that are currently breaking the market at the top level. This makes the buyers from a lesser buying capacity feel the desire to own bigger brands. By pleasing all of its buyers in different departments, Zara not only promotes high fashion but also keeps its customers satisfied and wanting for more at the same place which is clearly seen in the way it caters to the customers with its TRF collection.
Today, Inditex is the world’s largest fashion group with more than 170,000 employees operating more than 7,400 stores in 96 markets worldwide and 49 online markets. The revenues of Inditex was USD 31.1 billion in 2017.
The other fashion brands in the Inditex portfolio are:
- Zara Home: Home goods and decoration objects founded in 2003. Operating 520 stores.
- Pull & Bear: Casual laid back clothing and accessories for the young founded in 1991. Operates 979 stores.
- Massimo Dutti: High end clothing and accessories for cosmopolitan men and women acquired in 1995. Operates 780 stores.
- Bershka: Blends urban styles and modern fashion for young women and men founded in 1998. Operates 1,098 stores.
- Stradivarius: Casual and feminine clothes for young women acquired in 1999. Operates 1,017 stores.
- Oysho: Lingerie, casual outerwear, lounge wear and original accessories founded in 2001. Operating 670 stores.
- Uterqüe: High-quality fashion accessories at attractive prices founded in 2008. Operating 90 stores.
For brands like Zara that are not merely profit centric the prospect of growth is a piece of cake as their vision revolves around collaborative growth based on smart decisions instead of drastic ones. Keeping true to its unique selling proposition Zara has always kept its customers waiting new collections that inspire other fast fashion brands that make it stand out in the race of keeping at pace with the ever changing fashion trends over globe. The way and direction in which Zara’s success curve is headed since its very origin is in itself an inspiration for other brands and fashion aspirants.
Bibliography-
ZARA India — Official Websitehttps://www.zara.com/in/
ZARA ‘s Business Strategy — SlideSharehttps://www.slideshare.net/marigiok/zaras-business-strategy
https://www.ukessays.com/essays/marketing/a-background-to-zara-clothing-brand-marketing-essay.php
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