What strategy does Zara use?
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.
Positioning strategy of brand Zara aims at democratizing fashion. The main objective of the company in India is to provide its customers with high fashion and trendy products at lower prices to accommodate their needs.
Strategy Goals
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's supply chain is a very good example of the strategic alignment because people, processes and practices support time-based strategy perfectly.
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.
Zara's business strategy is based on vertical integration and logistics trade-offs. Zara's success and global recognition are largely due to these two techniques. Vertical integrations assist the organization in maintaining control over all of its verticals, such as design, manufacturing, shipping, and distribution.
Zara's business model has been enabled by its innovative supply chain, which has shifted from push to pull & has reduced the time-to-market. Average fashion retailer has 2 to 5 collections that designs more than 5 months in advance and then “pushes” the manufactured merchandise to retailers or their own stores.
Based on Zara's company the business level strategy is based on focusing both and differentiation cost leadership. Most important point of this strategy is to maintain balance between low cost and differentiated products.
How does Zara use its supply chain capabilities to generate competitive advantage? Stocking clothing far in advance of sales to ensure in-stock availability. Buying new seasonal clothing lines in bulk to take advantage of volume discounts from suppliers.
1) What advantage does Zara gain against the Competition by having a very responsive supply Chain? They can introduce new design every week and thus change 75% display every 3-4 weeks.
How does Zara keep up with trends?
Just-in-Time Production
Known for staying ahead of the trends, Zara changes its apparel designs every two weeks on average; most of its competitors do so every 10–14 weeks. To maintain this lightning pace, Zara utilizes Just-in-Time (JIT) production methods to keep turnaround times as tight as possible.
One of the secrets to Zara's success includes using Radio Frequency Identification Technology (RFID) in its stores. The brand uses cutting-edge systems to track the location of garments instantly and makes those most in demand rapidly available to customers.
But throughout its nearly 50 year history Zara has more than held its own. Inditex, which is Zara's parent company, is the largest clothing company in the world and Zara generates two thirds of Inditex's sales. Last year while the COVID-19 pandemic was raging on Inditex generated 20.4 billion euros in sales.
The company created innovative manufacturing process allowing quickly responding and selling clothes to its stores. Zara controls key components of its supply chain: designing, manufacturing, distribution, and retailing.
Zara's target market is young, price-conscious, and highly sensitive to the latest fashion trends. They do not define their target by segmenting ages and lifestyles therefore giving them a much broader market and an advantage over traditional retailers.
