zara in india case study

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Case Study: Zara’s Entry into Indian Retail Fashion Market

Zara is an extremely renowned brand, known for its latest designs and is among the top 100 best global brands in 2010 .It uses the unusual strategy of zero advertising and instead invests the revenue in opening new stores across the world. Zara is popular amongst old and young generations too because it is affordable fashion. It is crystal clear that Zara is successfully living upto the standard of its two winning retail trends firstly, it is fashionable and secondly it is low in price thus resulting in a very effective mixture out of it.

The first store of Zara was opened in a central street in Spain in 1977 by Amancio Ortega who also owns, other brands such as Massimo Dutti, Pull and Bear and many others. Spain is the headquarter of Zara. Zara have opened 95 stores around the world in quarter 1 of year 2009 alone, bringing the total to 4359 stores in 73 countries worldwide.

The Louis Vuitton fashion director Daniel Piette also described Zara as “possibly the most innovative and devastating retailer in the world.” They control most of the steps in the supply chain and also it designs, produces and supplies itself.

Taking into consideration the amount of competition and the need for sustainability in the human race, running a business or a brand is not an easy task. With existing big brands and busy markets around the world, it takes more than what is required to make a name for oneself and to succeed in it. Proper management and marketing strategies are required along with the detailed knowledge of the economy and the earning and spending of the locality or the country’s GDP (Gross Domestic Product) which measures the country’s economy and their ability to spend and grow should be known before taking a leap and spreading the arms around the world. This essay discusses about which mode of entry strategy Zara adapted to entered into the Indian market and whether the strategy proved to be beneficial for the company and the benefits/disadvantage sit is going tackling and lastly it also analyses in which country it is doing better and why.

Zara adopts a ‘Fast Fashion’ supply chain model. The latest fashions are supplied from design to delivery in just 2 weeks, compared to the 6 month industry average. They operate a vertical supply chain, so they themselves undertake everything from design, manufacture, sourcing and distribution. This allows them total control over the business, and leaves them less vulnerable to accusations of unethical practices such as sweatshop labor.

Entry strategy of Zara in India

While Zara owns a majority of its stores in Spain, the international expansion has adopted three different entry modes: Own subsidiaries, Joint ventures and Franchising.

According to the Indian policy on foreign direct investment (FDI) , Zara teamed up with the Tata Group, India, to form a joint enterprise in February 2009. Inditex has a share of fifty one percent of this collaboration while Tata’s subsidiary Trent Limited holds forty nine percent. Owing to several issues the Corporation undergoes, their extension of the store will stay slow, with just one additional store open Zara is the following Spanish Retailer to come into India, after Mango, even though Mango adopted the contract route to enter into the Indian market.

Jesus Echevarria Hernandez, Chief Communication Officer at Inditex Group. Says that “The entry in the Indian market has a significant strategic importance for Inditex. India is one of the top priorities in the Asia region when our retail offering has been very well received,” .

To enter the market in India, Inditex (the company behind Zara) used the strategy of pursuing a joint venture with Trent Limited, a Tata Group company, a highly recognized clothing line distributor. Zara took up joint ventures as its mode of entry in India because this is a co-operative strategy in which the manufacturing facilities and know-how of the local company are combined with the expertise of the foreign firm in the market, especially in large, competitive markets where it is difficult to acquire property to set up retail outlets or where there are other kinds of obstacles that require co-operation with a local company to which Zara regards its stores as one of the related elements in its business sculpt. The shop is regarded as the boundary among the buyer and the motor of the whole business – mode design, development, logistics and finally retail.

The main concerns that Zara had wile entering into the Indian market were Demography and cultural concerns. Speaking of demography India has a population of about 1.2 billion people and the target market would be no doubt wide than what is expected. As the income become larger in India, there will be more demand in the quality and fashionable clothing. Cultural Concerns: it is the major concern that has to be given tremendous attention when entering into a foreign market. It must accept the perspectives and beliefs of the role of culture in influence and as in India social security is given special attention.

In order to effectively achieve their goals, Zara pursued a strategy of selling a variety of its local clothing lines and international clothing lines, but maintaining Zara as the primary brand in India. Zara also targeted the larger positions including either the first or second positions in the Indian market of clothing lines. Any of these positions would be sufficient enough for Zara to create an outstanding level with regards to manufacturing, marketing and distribution. These positions can set up a stage from which Zara can sell their clothing lines and other special fashion products .

To promote the organization and its clothing lines, Zara utilized video advertisements, print ads and the idea of e-marketing which fulfilled the varying needs of consumers from India and beyond; particularly those priority Indian markets or the consumers in the urban India areas. For this promotion campaign, the perfect information that Zara Company utilizes is “Providing quality and fashionable clothing lines that fulfills your needs. Zara has been able to set up its reputation as one of Spain’s primary clothing line companies for several years now. It is able to rise up to the challenges in most of its markets directly . This is made possible through the efficient promotional and positional strategies established in order to maintain not only large profits, but also on establishing the foundations of Zara’s clothes and fashion trends. The promotional strategies of Zara in India are easily implemented by the local employees themselves which enables the organization to vastly improve without the burden of implementing costly technologies. These initiatives can also lead in improved financial profit for the organization and will enable the foundation of networks for Zara clothing lines in India.

Target Market

Zara has maintained a reputation for targeting the teenagers, those in their twenties and even the individuals considered young at heart. This is a customer sector that other clothing companies have previously ignored in place of the adult consumers. Zara Company also has the unique strategy of portraying the generations in their campaigns. These campaigns in India will tell that Zara Company is not a mere simple clothing line for the next generation; its users are also a generation ahead of their competitors. Zara Company can establish an image for itself in India as the clothing line for the present generation. It has discovered that the purchasing power of the youth and the marketing power of celebrities were similar. They have garnered significant profit gains out of this strategy, and there is no reason why this won’t also work in India.

Nevertheless Zara undergoes quite a few hurdles like the existing rules on FDI in India require that foreign single-brand suppliers are obliged to surpass a 49% stake to a resident associate. This includes the vendor to share its organizations information and data it would usually not reveal. Moreover, franchising stores means that the merchant loses certain jurisdiction over how these are operated, which numerous businesses worry that it might harm their brand name. As a result, single-brand retailers are regularly cautious of entering the Indian market. For a apparel seller akin to Zara, further considerations contain the relative need of seasonal modification and the separate, consolidated manner of dress amongst Indian females that differs significantly to Zara’s offered ranges.

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Zara in China and India

By: Nirmalya Kumar, Sheetal Mittal, Havovi Joshi

In 2016, Inditex as a group with worldwide sales of US$24.9 billion, and Zara, as its flagship retail concept store, had recorded significant year-on-year growth in net sales at 11.5% and 13%…

Length: 26 page(s)
Publication Date: Jun 8, 2017
Discipline: Marketing
Product #: SMU300-PDF-ENG

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In 2016, Inditex as a group with worldwide sales of US$24.9 billion, and Zara, as its flagship retail concept store, had recorded significant year-on-year growth in net sales at 11.5% and 13% respectively. However, despite a presence across 93 countries, Inditex's regional sales contributions were skewed. Europe, comprising only 26% of the global apparel market and exhibiting declining growth, accounted for 60.8% of Inditex revenues. The Americas, the second largest market in the world with 30% share, had the least contribution at 15.3%, and Asia Pacific, the fastest growing and largest market with 36% share of the global apparel market, contributed only 23.9%. Unlike other apparel producers, Zara manufactured 60% of its merchandise in the 'near markets' of Europe and North Africa, close to its logistics centres in Spain. The labour costs in these markets were substantially higher than Asia, where the bulk of global apparel production took place. Would this put Zara at a disadvantage in reaching out to the high growth Asian consumer markets of China and India? Moreover, while Zara had been online since 2010, its online sales in 2016 accounted for only 7% of its total sales. As consumers increasingly shopped online, would Zara with its reliance on stores and impulse purchases become another retail casualty of e-commerce?

Learning Objectives

The discussion of this case study will enable students to understand strategic choice and execution in developing a unique business model. It would enable understanding of competitive advantage, international expansion, marketing/branding, retailing, and concepts such as value innovation and core competences/core rigidities. Furthermore, with the rise of China and India, the case can be used as a springboard to illustrate the differential potential of the two countries across various industries.

Jun 8, 2017

Discipline:

Geographies:

China, India

Singapore Management University

SMU300-PDF-ENG

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Global Game
Cross Border

Fast Fashion: Zara is Now in India

The latest catwalk designs, at affordable prices. That's Zara's promise. But to deliver that in India, it will have to tweak its centralised business model

Seema Kakkar has followed a simple routine for the past few weeks. At least once a day, without fail, she makes sure she pops over to her Mecca, a glittering new store that’s opened next to hers. As the entrepreneur who launched Remanika, a women’s wear brand, Kakkar has modelled her entire business concept on Zara, one of the most successful fashion retailers in the world, known for getting the latest designs into the market before anyone else. More than five weeks ago, Zara opened its first store in Delhi, followed soon by Mumbai. The Mumbai store in the Palladium mall is a few metres away from Kakkar’s shop-in-shop outlet inside Pantaloon department store in High Street Phoenix. The chance to observe Zara’s has proved hugely beneficial. “I wanted to be an Indian Zara, so this is like a school for me,” says Kakkar. Kakkar’s response isn’t surprising. Zara is indeed the Coca-Cola of the fashion world. Starting sometime in the mid-Seventies in Spain, Inditex, the Euro 11 billion (revenue) company that owns Zara and some other labels, built a hugely successful business model of taking the latest catwalk designs and converting them into affordable high street fashion in a matter of three weeks. Zara focusses on rapid product development and design and outsources the manufacture in small batch sizes to a network of dedicated suppliers. Its ability to bring changing fashion quickly to market has meant that while customers in Europe visit other fashion stores just three times a year, they visit Zara 17 times, according to one study. Many entrepreneurs have tried imitating Zara, but none of them have been quite as successful. For most part, Inditex remains notoriously secretive. It attends very few industry conferences and is guarded in revealing too much about its business model. Zara’s track record on globalisation has been enviable. Its flexible, high-speed business model has travelled from Spain to 77 markets around the world, including China. It entered mainland China in 2006 and has close to 44 stores there. Pablo Isla, the 46-year-old chief executive of Inditex, is now betting big on India. In earlier media interactions, he has also made it known that it may well be among its most challenging market entries yet. Zara’s global model will be tested in India on three counts. One, there aren’t too many seasonal variations. In most parts of the country, winter is non-existent or at best lasts barely a couple of months. So driving new fashions every season isn’t easy. Two, there is the cultural issue: Although the new mall culture is inducing buying habits to change, Indians still don’t change their wardrobe that quickly. And it is Zara’s ability to get customers to visit and buy several times a year that enables it to achieve scale. Three, as a concept, Western women’s wear is still catching on. For most part, traditional Indian wear tends to dominate the wardrobe. And there is a strong preference for bright colours as opposed to the limited colour palette — black, white and browns — in the West. So far, Zara has cranked out all its designs from a hub near Madrid and airlifted the finished product to its stores around the world twice a week. The added costs have been defrayed by charging a higher price in each of these foreign markets. In India, most foreign retailers have struggled to build a strong franchise based around import-led premium pricing strategy. This is why Isla is clear that he isn’t hoping for a quick ramp-up in India. Apart from the two stores in Mumbai and Delhi, Zara will in all likelihood add two more stores in Delhi and Bangalore — and then learn from its experiments, before it begins expanding. A 2002 study says Zara follows what it calls an “oil stain” strategy. It means Zara opens its first few stores in a country to get an understanding of a market and then uses that knowledge as it expands into that market. “The most important thing for us to enter a new market is the existence of potential customers: People sensible to fashion phenomenon. And, in an operational sense, the availability of suitable locations,” says Inditex’s official spokesperson via email. Now let’s look at its initial performance. The fact is that Zara has had an opening few foreign brands have had in India. Through the opening weekend, there were long queues outside its trial rooms as women jostled to try out clothes. According to industry sources (Zara itself is famously reticent about sharing numbers), it had sales of close to Rs. 1.25 crore in the first weekend in Delhi and nearly the same in its Mumbai store. Delhi’s Select Citywalk mall recorded 40 percent more footfalls than it usually does and Mumbai’s Palladium mall recorded close to 30 percent higher footfalls. “Any mall owner will want Zara now for free because it has an ability to bring more people of a certain kind into the mall,” says Arjun Sharma, promoter of Delhi’s Select Citywalk mall.

(This story appears in the 30 July, 2010 issue of Forbes India. To visit our Archives, click here. )

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Zara: Future Ready?

The case discusses Zara, a clothing brand and the pioneer of fast fashion. Zara was owned by Inditex, a public listed company which also owned other popular clothing brands. Zara had a cult following of customers who flocked to its stores expecting something new each time and Zara lived up to their expectations every time. It brought the in-trend catwalk designs to its stores across the globe at affordable prices and replenished its stores twice a week – a feat no rival in the Industry was able to replicate. Zara provided such a customer proposition by being extremely agile in its manufacturing and sourcing practices. Inditex, Zara’s parent, also kept excess capacity in its factories (to be more responsive) and was heavily vertically integrated to maintain absolute control over its supply chain. In the 21st century, Zara witnessed more growth outside its home country (Spain) and Europe which had historically contributed to the major part of its top-line. The Far East, which was viewed as a low-cost manufacturing source for Zara, also became a consumer of its Fast-Fashion so much so that China had the largest number of Zara stores in the world by 2016. But though Zara was a truly global brand, it didn’t act locally. In some markets like India where there weren’t as many fashion seasons as in the Western countries, there was little customization to appeal to local customers. Zara’s operations were heavily centralized, which was seen as a competitive advantage for all the years of its growth. Analysts were of the view that Zara’s bottom line could be under pressure owing to its burgeoning global presence, especially when Zara used air-freight for its global deliveries. Moreover, every store across the world was served through its head office in Arteixo, Galicia (irrespective of the location of manufacturing), Inditex’s Spanish base. Such centralization for a global company was considered by many as counterintuitive. But for Zara, to act locally meant giving up its competitive advantage.

Understanding the key drivers of a supply chain.
Different trade-offs to align organizational strategy to the supply chain strategy.
Efficient Supply Chain and Responsive Supply Chain.

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How Zara is Tackling India and China

Home » Blog » How Zara is Tackling India and China

Zara has been described as “possibly the most innovative and devastating retailer in the world”.

Spanish clothes retailer Zara is a huge global phenomenon and it seems to have bold ambitions to grow in the major emerging markets of India and China. But the retailer is taking a very pragmatic approach to how it is tackling each of these very different markets.

The number of Zara stores in China grew 60 percent every year between 2007 and 2012, compared with only 3% in the United Kingdom.

What are they getting right in PRC? And how is the chain fairing in India, where there’s a less welcoming environment for foreign companies?

In its quest for international expansion, Zara takes a pragmatic approach to each market and selects an entry mode that will work best. It has used different approaches including forming JVs, franchising and running its own subsidiaries according to what it thinks is the best method for each new market.

This means the brand’s approached India and China very differently based on what it thinks is the winning strategy for each location.

Part of Zara’s success has to be attributed to its mastery of the supply chain. Zara retains control over many of the components in its supply chain. This means it not only designs but often also makes and distributes its own product. It’s a very short supply cycle , with new trends coming to store shelves within 15 days of being designed. Competitors can take as long as 6 months to complete this feat.

Zara’s ‘fast fashion’ approach means that customers tend to visit stores more regularly.

According to Forbes, European customers visit the stores 17 times a year but will typically visit another fashion retailer only 3 times a year. Zara’s strong feedback mechanism helps it to run a lean operation, so there’s less wastage. Inventory optimisation excellence helps the retailer sell 85% of its stock at full price, whilst rivals typically only manage 60-70%.

Zara in China

After its Spanish home market, PRC is Zara’s most important market. After its initial opening of a Shanghai flagship store in 2006, the brand took off quickly and had 120 stores by 2011.

It now has over 500 and it thought to be planning another 60 store openings in 2016. However, Zara faces stiff competition from other global brands keen to snatch market share in this important region. Key competitors here include H&M and Uniqlo.

Zara’s using local manufacturing to keep the supply chain short and maintain its cost leadership strategy in PRC.

It’s focused on differentiation, a wise move in a market jostling with rivals. Despite fears of an economic slump in this market, Chinese consumers are expected to increase their spending on clothing in the foreseeable future. In the first three quarters of 2016, Zara has already reported a rise in sales of 16% with profits up 20% to €2.02bn.

Zara continues to expand into new markets and capitalise on increased spending by Chinese consumers. Image credit: Shutterstock.com

Zara’s also chasing the homewares spend, opening more Zara Home outlets across the country. After opening the first Chinese Zara Home store in Shanghai in 2011, more quickly followed with more openings in major Chinese cities.

These are typically located in either fashionable locations or classy department stores. Again, Zara’s taking a ‘fast fashion’ approach, offering customers the chance to refresh the look of their home on a regular basis with constant updates to its collections.

With its Zara Home chain, the brand is chasing female customers with a sense of style. With the property market in PRC cooling and talk of a price crash, this could prove a risky strategy. The stores offer advice and ideas on creating a stylish home as well as incentives and membership schemes.

Whilst there are local competitors in the homewares field, the feeling is these are often better at manufacturing than they are at design and marketing. Although there are concerns about the housing market locally, Zara is certainly playing to its strengths by offering a stylish lifestyle for Chinese customers who are looking for ideas.

Zara in India

Market regulation requires that foreign brands find a majority partner to operate in India. Zara partnered with retail giant Tata Group to approach the Indian market in a 51:49 minority partnership.

Opening new stores was a significant challenge and expansion was slow, partly because of regulatory constraints that are hostile to foreign-owned business acquiring property and expanding.

General lack of retail space is also constraining expansion: there are few new malls for Zara to open sleek new stores in, making it difficult to decide where to cite new locations.Where Zara was able to open stores in major cities, the brand combined western and local clothing styles to offer a variety of lines to all customer tastes.

India’s considered a challenging market for this brand for a variety of reasons. Firstly, the majority of people wear traditional clothing and have less experience with the concept of rapidly-changing fashion. Secondly, the clothes market isn’t as affected by seasonal change, with many parts of India not really experiencing a cold season. Thirdly, Zara’s restrained colour palette is somewhat at odds with colourful Indian tastes.

In October 2017, Zara launched online in India to reach Indian consumers living in cities starved for fashionable brands. Image Credit: Victor Jiang / Shutterstock.com

Zara applied its feedback loop approach to the Indian stores, making sure that store managers were reporting back on progress. The brand also regularly updated storefronts and window displays to lure customers in regularly.

After seeing an initial strong performance after their entry into India in 2010, growth between 2009 and 2013 was better than that seen in China at around 6% compared to around 5% in PRC. But things are cooling slightly. In 2015 Zara saw CAGR of around 24%, but around 17% growth in the first quarter of 2015.

Zara now has 20 outlets in India , and the lack of commercial property suggests that adding more stores may be a struggle. In 2017, though, Zara opened its largest store in Mumbai – at five stories, it spans 51,300 sq ft.

More are planned, however, it’s very unlikely that Zara will achieve the same growth in stores as it has achieved in China. At the same time, old rivals such as Gap and H&M have now entered the market. This adds to competition for available retail space, as well as a share of the customer attention and wallet. Zara’s clearly optimistic though.

RELATED : Understanding the Quirks of India’s eCommerce Market

In both India and China, Zara finds itself taking a defensive position against major rivals. Clearly, the brand’s strategy is working so far despite the constraints it faces, including a lack of property to expand into in India.

With China’s property market looking at risk, there could be trouble ahead for the brand if it relies heavily on its homewares line. But so far the brand’s fast fashion approach and command of its supply chain seem to have translated well into the new locations.

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The Secret of Zara’s Success: A Culture of Customer Co-creation

Zara is one of the world’s most successful fashion retail brands – if not the most successful one. With its dramatic introduction of the concept of “fast fashion” retail since it was founded in 1975 in Spain, Zara aspires to create responsible passion for fashion amongst a broad spectrum of consumers, spread across different cultures and age groups. There are many factors that have contributed to the success of Zara but one of its key strengths, which has played a strong role in it becoming a global fashion powerhouse as it is today, is its ability to put customers first. Zara is obsessed with its customers, and they have defined the company and the brand’s culture right from the very beginning.

The Zara brand offers men and women’s clothing, children’s clothing (Zara Kids), shoes and accessories. The sub-brand Zara TRF offers trendier and sometimes edgier items to younger women and teenagers.

The Zara brand story

Zara was founded by Amancio Ortega and Rosalía Mera in 1975 as a family business in downtown Galicia in the northern part of Spain. Its first store featured low-priced lookalike products of popular, higher-end clothing and fashion. Amancio Ortega named Zara as such because his preferred name Zorba was already taken. In the next 8 years, Zara’s approach towards fashion and its business model gradually generated traction with the Spanish consumer. This led to the opening of 9 new stores in the biggest cities of Spain.

In 1985, Inditex was incorporated as a holding company, which laid the foundations for a distribution system capable of reacting to shifting market trends extremely quickly. Ortega created a new design, manufacturing, and distribution process that could reduce lead times and react to new trends in a quicker way, which he called “instant fashion”. This was driven by heavy investments in information technology and utilising groups instead of individual designers for the critical “design” element.

In the next decade, Zara began aggressively expanding into global markets, which included Portugal, New York (USA), Paris (France), Mexico, Greece, Belgium, Sweden, Malta, Cyprus, Norway and Israel. Today, there is hardly a developed country without a Zara store. Zara now has 2,264 stores strategically located in leading cities across 96 countries. It is no surprise that Zara, which started off as a small store in Spain, is now the world’s largest fast fashion retailer and is the flagship brand of Inditex. Its founder, Amancio Ortega, is the sixth richest man in the world according to Forbes magazine.

Today, Inditex is the world’s largest fashion group with more than 174,000 employees operating more than 7,400 stores in 202 markets worldwide including 49 online markets. The revenues of Inditex was USD 23.4 billion in 2019. The other fashion brands in the Inditex portfolio are:

Zara Home: Home goods and decoration objects founded in 2003. Operating in 183 markets, 70 of them with stores.

Pull & Bear: Casual laid-back clothing and accessories for the young founded in 1991. Operates in 185 markets, 75 of them with stores.

Massimo Dutti: High end clothing and accessories for cosmopolitan men and women acquired in 1995. Operates 186 markets, 74 of them with stores.

Bershka: Blends urban styles and modern fashion for young women and men founded in 1998. Operates in 185 markets, 74 of them with stores.

Stradivarius: Casual and feminine clothes for young women acquired in 1999. Operates 180 markets, 67 of them with stores.

Oysho: Lingerie, casual outerwear, lounge wear and original accessories founded in 2001. Operating in 176 markets, 58 of them with stores.

Uterqüe: High-quality fashion accessories at attractive prices founded in 2008. Operating in 158 markets, 17 of them with stores.

Apart from fashion brands, Amancio Ortega has also set up a global real estate investment fund, Pontegadea Inversiones, which manages corporate offices across 9 countries including United States (Seattle), Britain (London), France (Paris), Canada, Italy, South Korea. These corporate properties house large companies including Facebook, Amazon and Apple, and prestigious luxury and retail brands.

The Zara brand strategy

In 2019, Zara was ranked 29th on global brand consultancy Interbrand’s list of best global brands. 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. From the very beginning, Zara found a significant gap in the market that few clothing brands had effectively addressed. This was to keep pace with latest fashion trends, but offer clothing collections that are a combination of high quality and yet, are affordable. The brand keeps a close watch on how fashion is changing and evolving every day across the world. Based on latest styles and trends, it creates new designs and puts them into stores in a week or two. In stark comparison, most other fashion brands would take close to six months to get new designs and collections into the market.

It is through this strategic ability of introducing new collections based on latest trends in a rapid manner that enabled Zara to beat other competitors. It quickly became the people’s favourite brand, especially with those who want to keep up with fashion trends. Founder Amancio Ortega is famously known for his views on clothes as a perishable commodity. According to him, people should love to use and wear clothes for a short while and then they should throw them away, just like yogurt, bread or fish, rather than store them in cupboards.

The media often quotes that the brand produces “freshly baked clothes”, which survive fashion trends for less than a month or two. Zara concentrates on three areas to effectively “bake” its fresh fashions:

Shorter lead times (and more fashionable clothes): Shorter lead times allow Zara to ensure that its stores stock clothes that customers want at that time (e.g. specific spring/ summer or autumn/ winter collections, recent trend that is catching up, sudden popularity of an item worn by a celebrity/ socialite/ actor/ actress, latest collection of a top designer etc.). While many retailers try to forecast what customers might buy months in the future, Zara moves in step with its customers and offers them what they want to buy at a given point in time.

Lower quantities (through scarce supply): By reducing the quantity manufactured for a particular style, Zara not only reduces its exposure to any single product but also creates artificial scarcity. Similar to the principle that applies to all fashion items (and more specifically luxury), the lesser the availability, the more desirable an object becomes. Another benefit of producing lower quantities is that if a style does not generate traction and suffers from poor sales, there is not a high volume to be disposed of. Zara only has two time-bound sales a year rather than constant markdowns, and it discounts a very small proportion of its products, approximately half compared to its competitors, which is a very impressive feat.

More styles: Rather than producing more quantities per style, Zara produces more styles, roughly 12,000 a year. Even if a style sells out very quickly, there are new styles waiting to take up the space. This means more choices and higher chance of getting it right with the consumer.

Zara only allows its designs to remain on the shop floor for three to four weeks. This practice pushes consumers to keep visiting the brand’s stores because if they were just a week late, all the clothes of a particular style or trend would be gone and replaced with a new trend. At the same time, this constant refreshing of the lines and styles carried by its stores also entices customers to visit its shops more frequently.

In the following sections, the key components of Zara’s winning formula in the fashion retailing industry are illustrated.

Customer co-creation: Zara’s principal designer is the customer

Zara’s unrelenting focus on the customer is at the core of the brand’s success and the heights it has achieved today. There was a fascinating story around how Zara co-creates its products leveraging its customers’ input. In 2015, a lady named Miko walked into a Zara store in Tokyo and asked the store assistant for a pink scarf, but the store did not have any pink scarves. The same happened almost simultaneously for Michelle in Toronto, Elaine in San Francisco, and Giselle in Frankfurt, who all walked into Zara stores and asked for pink scarves. They all left the stores without any scarves – an experience many other Zara fans encountered globally in different Zara stores over the next few days.

7 days later, more than 2,000 Zara stores globally started selling pink scarves. 500,000 pink scarves were dispatched – to be exact. They sold out in 3 days. How did such lightning fast stocking of pink scarves happen?

Customer insights are the holy grail of modern business, and the more companies know about their customers, the better they can innovate and compete. But it can prove challenging to have the right insights, at the right time, and have access to them consistently over time. 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. Additionally, it helps to reduce inventory costs, provides greater flexibility to launch new designs, and allows fulfillment of online orders with stock from stores nearest to the delivery location thereby reducing delivery costs.

Another secret of Zara’s success is that the brand trains and empowers its store employees and managers to be particularly sensitive to customer needs and wants, and how customers enact them on the shop floors. Zara empowers its sales associates and store managers to be at the forefront of customer research – they intently listen and note down customer comments, ideas for cuts, fabrics or a new line, and keenly observe new styles that its customers are wearing that have the potential to be converted into unique Zara styles. In comparison, traditional daily sales reports can hardly provide such a dynamic updated picture of the market. The Zara empire is built on two basic rules: “to give customers what they want”, and “get it to them faster than anyone else”.

Due to Zara’s competitive customer research capabilities, its product offerings across its stores globally reflect unique customer needs and wants in terms of physical, climate or cultural differences. It offers smaller sizes in Japan, special women’s clothes in Arab countries, and clothes of different seasonality in South America. These differences in product offerings across countries are greatly facilitated by the frequent interactions between Zara’s local store managers and its creative team.

In the fashion world, a trend starts small, but develops fast. Zara employees are trained to listen, watch and be attentive to even the smallest seismographic signals from their customers, which can be an initial sign that a new trend is taking shape. Zara knows that the quicker it can respond, the more likely it is to succeed in supplying the right fashion merchandise at the right time across its global retail chain. Zara has set up sophisticated technology driven systems, which enable information to travel quickly from the stores back to its headquarters in Arteixo in Spain, enabling decision makers to act fast and respond effectively to a developing trend. Its design teams regularly visit university campuses; nightclubs and other venues to observe what young fashion leaders are wearing. In its headquarters, the design team uses flat-screen monitors linked by webcam to offices in Shanghai, Tokyo and New York (the leading cities for fashion trends), which act as trend spotters. The ‘Trends’ team never goes to fashion shows but tracks bloggers and listens closely to the brand’s customers.

The fact that Zara’s designers and customers are inextricably linked is a crucial part of the brand strategy. Specialist teams receive constant feedback on the decisions its customers are making at every Zara store, which continuously inspires the Zara creative team.

Zara’s super-efficient supply chain

Zara’s highly responsive, vertically integrated supply chain enables the export of garments 24 hours, 365 days of the year, resulting in the shipping of new products to stores twice a week. After products are designed, they take around 10 to 15 days to reach the stores. All clothing items are processed through the distribution center in Spain, where new items are inspected, sorted, tagged, and loaded into trucks. In most cases, clothing items are delivered to stores within 48 hours. This vertical integration allows Zara to retain control over areas like dyeing and processing and have fabric-processing capacity available on-demand to provide the correct fabrics for new styles according to customer preferences. It also eliminates the need for warehouses and helps reduce the impact of demand fluctuations. Zara produces over 450 million items and launches around 12,000 new designs annually, so the efficiency of the supply chain is critical to ensure that this constant refreshment of store level collections goes off smoothly and efficiently.

Here are some of the characteristics of Zara’s supply chain that highlight the reasons behind its success:

Frequency of customer insights collection: Trend information flows daily into a database at head office, which is used by designers to create new lines and modify existing ones.

Standardization of product information: Zara warehouses have standardised product information with common definitions, allowing quick and accurate preparation of designs with clear manufacturing instructions.

Product information and inventory management: By effectively managing thousands of fabric, trim and design specifications and their physical inventory, Zara is capable of designing a garment with available stock of required raw materials.

Procurement strategy: Around two-thirds of fabrics are undyed and are purchased before designs are finalized so as to obtain savings through demand aggregation.

Manufacturing approach: Zara uses a “make and buy” approach – it produces the more fashionable and riskier items (which need testing and piloting) in Spain, and outsources production of more standard designs with more predictable demand to Morocco, Turkey and Asia to reduce production cost. The more fashionable and riskier items (which are around half of its merchandise) are manufactured at a dozen company-owned factories in Spain (Galicia), northern Portugal and Turkey. Clothes with longer shelf life (i.e. the one with more predictable demand patterns), such as basic T-shirts, are outsourced to low cost suppliers, mainly in Asia. Even when manufacturing in Europe, Zara manages to keep its costs down by outsourcing the assembly workshops and leveraging the informal economy of mothers and grandmothers.

Distribution management: Zara’s state-of-the-art distribution facility functions with minimal human intervention. Optical reading devices sort out and distribute more than 60,000 items of clothing an hour.

In addition to these supply chain efficiencies, Zara can also modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences. If a design does not sell well within a week, it is withdrawn from shops, further orders are canceled and a new design is pursued. Zara closely monitors changes in customer preferences towards fashion. It has a range of basic designs that are carried over from year to year, but some in-vogue, high fashion, inspired by latest trends items can stay on the shelves for less than four weeks, which encourages Zara fans to make repeat visits. An average high-street store in Spain expects customers to visit thrice a year, but for Zara, the expectation is that customers should visit around 17 times in a year.

This expectation for such a high frequency of repeat visits is evidence of Zara’s confidence that it is keeping on top of changing consumer needs and preferences and is helping them shape their ideas, opinions and taste for fashion. In reality, Zara is also helping in giving birth to new trends through its stores or even helping in extending the longevity of some seasonal styles by offering affordable lines.

Sustainability at the core of Zara’s operations

Sustainability has been a hot topic in business for the last decade and is now quickly becoming a must-have hygiene factor for companies that want to resonate with and win the loyalty of its global customers. For Inditex, this means having a commitment to people and the environment.

Commitment to people: Inditex ensures that its employees have a shared vision of value built on sustainability through professional development, equality and diversity and volunteering. It also ensures that its suppliers have fundamental rights at work and by initiating continuous improvement programs for them. Inditex also spends over USD 50 million annually on social and community programmes and initiatives. For example, its “for&from” programme which started in 2002 has enabled the social integration of people with physical and mental disabilities, by providing over 200 stable employment opportunities across 15 stores.

Commitment to environment: Being in a business where it taps on natural resources to create its products, Inditex makes efforts to ensure that the environmental impact of its business complies with UNSDGs (United Nations Sustainable Developmental Goals). Inditex has pledged to only sell sustainable clothes by 2025 and that all cotton, linen and polyester sold will be organic, sustainable or recycled. The company also runs Join Life, a scheme which helps consumers identify clothes made with more environmentally friendly materials like organic cotton and recycled polyester.

Additionally, Inditex takes wide-ranging measures to protect biodiversity, reduce its consumption of water, energy and other resources, avoid waste, and combat climate change. For example, it has outlined a Global Water Management Strategy, specifically committing to zero discharge of hazardous chemicals. It has also been expanding its waste reduction programme through which customers can drop off their used clothing, footwear and accessories at collection points in 2,299 stores in 46 markets today.

Zara’s culture: The word “impossible” does not exist

Zara has a very entrepreneurial culture, and employs lots of young talent who quickly climb through the ranks of the company. Zara promotes approximately two-thirds of its store managers from within and generally experiences low turnover. The brand has no fear in giving responsibility to young people and the culture encourages risk-taking (as long as learning happens) and fast implementation (the mantra of fashion).

Top management gives its store managers full liberty and control over their store’s operations and performance with clearly set cost, profit and growth targets with a fixed and variable compensation scheme. The variable component amounts to up to half of the total compensation – making store level employees heavily incentive-driven.

In addition, once an employee is selected for promotion, his or her store develops a comprehensive training program for that individual with the human resources department, which is followed up by periodic supplemental training – reflecting Zara’s commitment to talent development. The organizational structure is also flat with only a few managerial layers.

Customers are the most important source of information for Zara, but like any other fashion brand, Zara also employs trend analysts, customer insights experts, and retains some of the best talents in the fashion world. The creative team of Zara comprises of over 200 professionals. They all embody and enact the corporate philosophy that the word “impossible” does not exist in Zara.

For example, while many companies struggle with long lead times in discussions and decision making, Zara gets around this challenge by getting various business functions to sit together at the headquarters and also by encouraging a culture (through structures and processes) where people continuously talk to each other. The sales and marketing teams who receive trend feedback talk regularly with designers and merchandisers. It is important that there is constant two-way communication so that sales and marketing teams can talk about new lines to customers and designers / merchandisers have a strong visibility of customers’ needs and preferences enacted at a store level. The production scheduling is also closely coordinated so that there is no time wasted on approvals. The design team structure is very flat and focuses on careful interpretation of catwalk trends that are suitable for the mass market – the Zara customer. The design and product development teams, who are based in Spain, work closely to produce 1,000 new styles every month.

Besides being customer centric, another important reason why Zara’s employee strategy is so successful is the fact that it empowers its staff to make decisions based on data. Zara has no chief designer. All its designers are given unparalleled independence in approving products and campaigns, based on daily data feeds indicating which styles are popular.

Due to the unwavering focus on the customer, the entire business model is designed in such a way that the pattern of needs for the finished goods dictate the terms of the production process to follow, instead of having the raw materials determine the nature of the production process – something that is very rare in multinational companies of similar scale.

In sum, the entire brand culture is extremely customer-centric, which has been and continues to be a significant contributor to Zara’s success.

The Zara brand communication strategy

Zara has used almost a zero advertising and endorsement policy throughout its entire existence, preferring to invest a percentage of its revenues in opening new stores instead. It spends a meager 0.3 per cent of sales on advertising compared to an average of 3.5 per cent by competitors. The brand’s founder Amancio has never spoken to the media nor has in any way advertised Zara. This is indeed the mark of a truly successful brand where customers appreciate and desire the brand, which is over and above product level benefits but strongly driven by the brand experience.

Instead of advertising, Zara uses its store location and store displays as key elements of its marketing strategy. By choosing to be in the most prominent locations in a city, Zara ensures very high customer traffic for its stores. Its window displays, which showcase the most outstanding pieces in the collection, are also a powerful communication tool designed by a specialized team. A lot of time and effort is spent designing the window displays to be artistic and attention grabbing. According to Zara’s philosophy of fast fashion, the window displays are constantly changed. This strategy goes down to how the employees dress as well – all Zara employees are required to wear Zara clothes while working in the stores, but these “uniforms” vary across different Zara stores to reflect socio-economic differences in the regions they were located. This effectively communicates Zara’s focus on the mass market, yet another detail that reflects its close attention on the customer.

To tap into the emerging e-commerce trend, Zara launched its online boutique in September 2010. The website was initially available in Spain, the UK, Portugal, Italy, Germany and France, and was extended to Austria, Ireland, the Netherlands, Belgium and Luxembourg. Over the next 3 years, the online store became available in the United States, Russia, Canada, Mexico, Romania, and South Korea. In 2017, Zara’s online store launched in Singapore, Malaysia, Thailand, Vietnam and India. More recently in March 2018, the brand launched online in Australia and New Zealand. Today, its online store is available in 66 countries. As of 2019, online sales grew to constitute 14% of Zara’s total global sales.

As a fast fashion retailer, Zara is definitely aware of the power of e-commerce and has built up a successful online presence and high-quality customer experience.

Zara’s future brand and business challenges

Charting a new digital strategy in the COVID-19 crisis: With its primarily offline shopping experience, Zara has been hard hit by global store closures amid the COVID-19 crisis in 2020, with sales falling 44% year-on-year in Q1 2020 and the company reporting a net loss of USD 482 million. Inditex has announced that it will be closing between 1,000 to 1,200 stores worldwide, focusing on smaller ones in Asia and Europe. While online sales have been encouraging – Zara’s online sales for Q1 2020 grew 50% – it is not enough to mitigate the damage.

Amancio Ortega plans to spend USD 1.1 billion scaling up its digital strategy and online capabilities by 2022 and a further USD 2 billion in stores to improve integration between online and offline for faster deliveries and real-time tracking of products. Its goal is for online sales to constitute at least 25% of total sales. To achieve this goal, Zara will need to think of new ways to engage its customers digitally, not just through its online store, but through online communities and social media.

Mobile commerce: Zara woke up late to the potential of mobile commerce and needs to catch up fast with competitors. Different forms of market analysis strongly point towards a scenario wherein spends on mobile commerce will overtake desktop based ecommerce by 2021. On an average, most brands currently get about 15-20% of their website traffic via mobile devices and this is growing rapidly. With the deluge of investments planned in the mobile commerce space and Zara’s competitors already having an advantage on the mobile front, Zara needs to quickly make mobile shopping not only an effortless experience but also a delightful one.

Price is not an advantage anymore: Offering the latest fashion lines at affordable prices continues to be a strategic advantage for Zara, but cannot continue to be the only one. Across the world, and closer to home in Europe, competitors are cutting prices and refining their business models to cut the competitive advantage that Zara has. Swedish fast fashion retailer H&M, which is placed #30 just behind Zara on Interbrand’s list, launched an online store in Spain in 2014 to take own Zara in its home turf. Again in its home market, it now faces increasing competition from brands like Mango, which cut prices and started focusing on fashion segments in which Zara enjoyed popularity. In addition to H&M and Mango, other competitors like Gap and Topshop are all fighting for a share of the fast fashion retail market pie. Also with the rise of e- and m-commerce, the number of indirect competitors has mushroomed. We now have online fashion aggregators that bring in multiple brands under one single online platform and cut through borders and price segments. Some examples of such aggregators who are doing well include Lyst, Farfetch, Spring and Yoox Net-a-Porter.

For Zara to effectively compete and maintain its strategic advantage, the focus needs to shift away from price but towards quality. Even today the Zara brand enjoys high levels of appeal, which is evident by the serpentine queues outside its stores when it launches in new markets. There is a need for Zara to start investing in building a strong brand positioning and aggressively communicate it. Additionally, Zara needs to adopt, imbibe and leverage social media and digital platforms in its advertising and communication strategies deeper going forward.

Need for marketing strategy to evolve: As discussed above, Zara does not engage in advertising and instead uses its store locations as a marketing strategy. However, brand communication is crucial in attracting new customers to the brand to support its growth. Without advertisements, Zara relies heavily on word of mouth or social media. This causes the perception of potential customers towards Zara to be heavily shaped by family and friends, which may not be accurate. In addition, Zara’s social media platforms such as Facebook and YouTube exists merely as a feed for updates rather than a platform that consumers can interact with. Its videos on YouTube are also seeing very low viewership in comparison with its follower count, which is not ideal as videos are a powerful medium for brands in the fashion industry. This is a gap that Zara needs to plug immediately as the reach and impact of social media marketing gets stronger. As Zara’s target customer segments start using more social and digital platforms for communication and for sharing their lives, it is important for Zara to have a strong presence on such platforms.

Family business planning and succession: With various technological and business disruptions in the past decade, leadership in the 21st century will be influenced by constant change, geopolitical volatility, and economic and political uncertainty. For Zara’s first 36 years in business, the brand has been controlled by its founder Amancio Ortega, who is currently 85 years old. In 2011, Ortega passed the chairman title on to Pablo Isla, Zara’s Deputy CEO since 2005.

Succession is currently taking place at Inditex and generational transfer will empower the next generation in one of the wealthiest business families in the world. Pablo Isla, chairman of Inditex since 2011, steps down in April 2022, and 37-year-old Marta Ortega will take over as chair in the company that her father Amancio Ortega started with his ex-wife Rosalia in 1975 in Galicia, Spain. Marta Ortega is the youngest of Amancio Ortega’s three children.

Marta Ortega will become a non-executive chair, and will head the Inditex group, the portfolio of companies including supervision of strategic operations. She has been with Inditex for over 15 years, starting out working in a Zara store at King’s Road in London, and as an assistant at the portfolio brand Bershka. In recent years, Marta Ortega has been involved in strategy, brand building and fashion proposals for the Inditex portfolio of brands.

Marta Ortega will not be involved in daily management of the financial performance to shield her and the family from too much public exposure. Amancio Ortega has always been known for appearing less in public and avoiding any media exposure. His photo did not appear in the Inditex annual report until 2000. Marta Ortega seems to be more open to media interviews and public appearance, and granted her first interview with Wall Street Journal in August 2021.

Óscar García Maceiras will be appointed CEO of Inditex in April 2022 and will run the daily business. He joined Inditex in March 2021 and is currently general secretary of Inditex and secretary of the board.

The sharing of executive powers between the chair and the CEO to enhance corporate governance has historically been less common in the corporate world in Spain but is often seen in Europe and elsewhere. Inditex will therefore return to dual leadership in April 2022 with Marta Ortega as chair and García Maceiras as CEO, the very same structure that ran for six years with Amancio Ortega as chairman and Pablo Isla as CEO until 2011.

Despite working at Inditex for over 15 years, Marta Ortega Pérez does not hold an office. Her father, Amancio Ortega, never had an office either and always preferred to work in an open space in the fashion design department to be close to teams around him.

To effectively manage the above changes, Zara’s next generation leadership needs to step up to the succession planning challenge by being resilient in staying true to the brand promise to consistently produce “freshly baked clothes” for its fashion-forward consumers, and by balancing both short-term (profitability) and long-term goals (growing the business and reaching more consumers).

More importantly, despite Zara’s global reach and consequent product standardization, it needs to constantly find new ways to serve local fashion needs and preferences of its consumers across the globe. This will be a challenge for the brand’s leadership in the next decade.

Conclusion: Take Zara’s cue and listen to your customers

The Zara brand was born with a keen eye on its customer – its ability to understand, predict and deliver on its customers’ preferences for trendy fashion at affordable prices. In addition to its effective supply chain, the brand’s ability to have its customers co-create designs is unique and provides it with a competitive advantage. Most fashion trends often start unexpectedly, originate from uncommon places and grow out of nowhere. With reference to the pink scarf trend mentioned above, it could have been that Hollywood actress Scarlett Johansson had worn a pink scarf to a charity gala the evening before in Los Angeles, or golf star Michelle Wie had showcased a pink scarf at a celebrity tournament in Asia. The fact that Zara was able to quickly jump on to this trend and provide hundreds of customers with the pink scarves they desperately wanted to buy.

In a world swamped with Big Data, and yet more collected at an even more rapid pace than before, brands still need to be careful and observant. Big Data does not provide answers to all business challenges, and it may be too hyped to be considered as the Holy Grail.

One of the secrets behind Zara’s global success is the culture and the respect for the fact that no one is a better, authentic trendsetter than the customer himself or herself – and this philosophy needs to be continually reflected in all its business strategies going forward.

So, why not consult your customers for a start? Zara always does.

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Zara needs no introduction as it dominates the fashion world and is one of the most prominent international fashion brands. With more than 2000 stores in the upscale market, Zara caters to approximately 93 markets in the world’s urban communities. With these many stores, Zara manages to hit 18 billion Euros of surplus annually.

The renowned fashion brand has successfully maintained its central goal of delivering quick, elegant, and reasonable designs in the fashion industry. Zara’s approach of configuration dealing is firmly associated with the clients. This case study is all about Zara and how it became the phoenix of the fast-fashion world.

“Fashion is nothing but an emulation of any given example and meets the demand of social adaptation. The more the article becomes subject to rapid fashion changes, the more will be the demand for cheaper products of the same kind.”

- Georg Simmel, on ‘Fashion’ in 1904.

Zara’s History: Excerpts of a Long Tale

The first Zara store was launched by Amancio Ortega in 1975 in Central Street, Galicia, Spain. The first store stocked low-price look-alike designs of popular and rich-quality dress styles.

The store soon became a hit, and Ortega opened more Zara stores all around Spain. It was the 80s (1980) when Ortega had a change of plan. He began assembling and distributing cycles to decline the lead times and react to new patterns in a snappy and concise manner, what they popularly called ‘Moment Fashions.’

The same year, Ortega and his company took their first step toward international expansion. Their international entries were made through Porto, Portugal, in the 1990s and Mexico in 1992. This international expansion was the turning point for both Ortega and Zara. Ortega continued to grow with new brands like Bershka, Pull & Bear, and Oysho and acquired groups such as Stradivarius and Massimo Dutti. These brands have been the key contributors to the success of the parent group - Inditex. Zara still boasts of being the primary growth driver.

Zara - The Undisputed Fashion Brand: Customer-Driven Value Chain

For Product Line-Up:

Unlike the other chains of Inditex, Zara focuses on manufacturing and delivering fashion-sensitive products. Following the changing customer preferences, its latest designs stay in production continuously.

When several competitors were focused on creating only a few thousand store-keeping units (SKUs), Zara ensured producing hundreds of thousands of stock-keeping units in only a year. However, these SKUs varied largely depending on the fabric, size, and color.

Zara and its products are not dependent on the design experts. Rather, its designers cautiously observe the latest trends and try blending and implementing them for the market. The designer groups keep on creating variations in a specific season, leading to expansion to successful designs.

For Fast Supply Chain:

Zara ensures a flexible supply chain, which enables it to deliver new ranges to store outlets two times a week from its central distribution center, which is a 400,000 sq m facility situated in Arteixo, Spain. This is a type of business system called ‘ vertical integration ’ that Zara adapted to eliminate the need for local warehouses. Here, Zara’s marketing strategy was reducing the ‘ bullwhip effect .’

Zara: Retailing Strategy

Instead of just enhancing manufacturing efficiency, Zara paid close attention to its retail strategy. It adopted the retailing strategy that would help it follow the fashion trends as quickly as possible, even if it involves some unmet demands.

Also, this helped Zara to create a FOMO for its products. However, the two significant components of Zara’s retailing strategy rely on its upstream operations: Stores and Merchandising.

Zara’s Anti-Marketing Approach

Zara successfully retained a profit of 13%, whereas its significant competitors like H&M have only 6% of profitability. Apart from the efficient supply chain management, it was possible due to the no-advertising or limited marketing policy that Zara follows.

This is what makes Zara one of a kind in the fashion industry. The brand spends only 0.3% of its budget on promotion and advertising. The typical trend in the fashion industry is to spend about 3.5% on marketing and promotion. The brand doesn’t believe in marketing as it saves them a lot of money and helps them with exclusivity.

Through this article, you’ll get valuable insights into the journey of Zara - one of the biggest international apparel brands. You’ll learn all about its history, retailing strategy, value chain, and more. Zara is the ideal case study for those who want to start their own apparel brand. Success is a ladder, and you have to take every step patiently and efficiently. However, if you’re planning to build something as colossal as Zara, you must source your clothing appropriately from the right manufacturer. For instance, top fashion brands trust the Fashinza platform to connect with clothing fabric manufacturers for their needs. Connect with Fashinza today!

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After China, Zara expands live shopping experiment to Europe and US

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A customer looks at clothes at Zara store in Barcelona

Zara to launch live shopping in UK, Europe, and US
Live show will be hosted on Zara's own app and website
Zara's China livestreams boosted sales, data shows
Parent company Inditex reports Q1 results on Wednesday

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London-based reporter covering the European retail sector through a global lens. Focusing on companies including Adidas, H&M, Ikea, and Inditex and analysing corporate strategy, consumer trends, and regulatory changes, Helen also covers major supermarket groups like Ahold Delhaize, Carrefour, and Casino. She has a special interest in sustainability and how investors push for change in companies. Previously based in Johannesburg where she covered the mining industry.

Corina is a Madrid-based business reporter focusing on coverage of retail, infrastructure and tourism including some of Spain's biggest companies like Inditex and Ferrovial. She was previously a senior correspondent in Venezuela, where she reported the Chavez and later Maduro government's efforts to retain power and the effects on the economy.

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Zara Case Study: How Zara Lead The Fast Fashion Market?

Supti Nandi

Updated on: April 8, 2024

You asked, and we listened! Get ready to dive into the fascinating world of Zara with our highly requested Zara Case Study.

Recently, Zara has been trending in Instagram reels and YouTube shorts for its funky model poses. You must have seen it too! Have you wondered what made this Spanish brand so famous?

You may say that Zara works on the concept of fast fashion, which makes it win in the competitive market.

Well, that’s true but it is not the only reason. Let’s uncover the secrets behind Zara’s success through the Zara Case Study.

Let’s begin!

(A) Zara: A Brief Overview

Zara, a notable name in the fashion industry, is a Spanish retailer known for its distinctive approach to clothing and accessories. Operating on a fast fashion model, Zara excels in swiftly adapting to evolving fashion trends, setting it apart in the market. With a vertically integrated process, the brand manages everything from design to production in-house, allowing for efficient and responsive operations.

You’ll find Zara stores globally, each offering a diverse range of trendy and affordable clothing for men, women, and children. The brand’s commitment to delivering fashion-forward pieces at accessible prices caters to a broad audience, reflecting its significance in the industry.

Do you know what is fast fashion?

Fast fashion is a business model characterized by quickly producing affordable, trendy clothing items to meet rapidly changing consumer demands.

Zara works in the same way. We will look into its details in the upcoming section. Before that, let’s go through the profile of Zara-

What makes Zara stand out is its ability to balance responsiveness in manufacturing, a well-structured supply chain, and a keen understanding of consumer preferences. This combination has established Zara as a trendsetting and influential player in the fashion landscape. Its adaptability and dedication to making fashion trends accessible have solidified Zara’s place as a recognizable and influential name in the fashion industry.

(B) Zara Case Study: History & Evolution

Zara’s journey began with a dress-making factory called Inditex, established by Ortega in 1963. Over the years, Zara expanded its presence from Spain to Portugal and eventually to other European countries, the United States, and France.

Today, Zara boasts nearly 6,500 stores across 88 countries worldwide.

Let’s dive into the history of Zara in detail-

Zara is the flagship brand of the Inditex group, which is one of the world’s largest fashion retail conglomerates.

The head office of Zara is located in Arteixo, in the province of A Coruña, Galicia, Spain. Inditex also owns other popular brands like Massimo Dutti, Pull&Bear, Bershka, and Stradivarius.

(C) Brand Philosophy of Zara

Do you know why Zara stands out among its competitors? Due to its brand philosophy! Sara’s success hinges on several key principles-

Zara’s strategy is strikingly different from traditional fashion retailers. Reason? Fast fashion concept and in-house production of clothes! Go through the next section for detailed information.

(D) Zara Business Model: Effective Working Strategies

In this section, we will dive into the business model of Zara to determine its working strategies that played a huge role in its success-

Let’s dive into the details-

(D.1) Fast Fashion Model

Zara is known for its “ Fast Fashion ” approach. It releases new collections frequently, sometimes launching over 22 new product lines per year. This agility allows Zara to respond swiftly to changing trends and customer preferences.

Rapid Trend Replication: Harnessing cutting-edge information technology, Zara excels at swiftly replicating prevailing fashion trends. This enables the brand to stay ahead of the curve, delivering the latest styles to customers promptly.
Group Design Approach: Departing from the conventional individual designer model, Zara adopts a collaborative approach. Teams of designers work in synergy, fostering enhanced creativity and efficiency in product development. This collective effort ensures a diverse range of products aligned with dynamic market demands.
Cost-Effective Materials: Zara strategically utilizes affordable materials without compromising on quality. This approach allows the brand to maintain competitive pricing while delivering products that meet or exceed industry standards. The focus on cost-effective yet quality materials contributes to Zara’s accessibility and broad customer appeal.
Competitive Pricing: Zara optimizes its production costs by outsourcing to countries with cost-effective labor. This global approach not only supports competitive pricing but also facilitates the brand’s ability to swiftly adapt to market demands. The combination of efficient production and competitive pricing reinforces Zara’s position as a leader in the fast fashion landscape.

(D.2) Product Range

Let’s briefly look at its product range too-

Clothing: From chic dresses and tailored suits to casual wear and activewear.
Accessories: Including bags, shoes, belts, and jewelry.
Beauty Products: Fragrances and cosmetics.
Perfumes: Zara has its line of fragrances.

(D.3) Vertical Integration: In-House Operations & Logistics

Zara’s way of doing business centers on something called vertical integration. Here is how it works-

Design: Zara takes charge of creating its designs, meaning it controls how its clothes look and stay on-trend. This ensures that what you find in Zara stores reflects the latest fashion trends.
Manufacturing: Zara doesn’t just design; it also makes its clothes in-house. This is a big deal because it lets Zara make changes to its products fast. If there’s a new trend or customer feedback, Zara can respond quickly, which is pretty cool.
Shipping and Distribution: Zara doesn’t stop at making the clothes; it handles everything from getting them to the store to making sure they’re sent to the right places. This full control of the supply chain ensures that the clothes you see in Zara are not only stylish but also reach the stores efficiently.

In short, the fast fashion concept, vertical integration, and supply chain efficiency helped Zara to achieve impressive milestones.

(E) Revenue Model of Zara: How does Zara make money?

Do you know Zara earned Rs.2,562.50 crore in India? That’s not all. It earned over 23 billion euros from its stores worldwide.

That’s quite amazing! Isn’t it?

But how does Zara earn such a whopping amount of money? Due to its impressive revenue model.

Let’s go through them one by one-

Let’s briefly dive into Zara’s finances for the years 2022 & 2021-

That’s how Zara is going through its purple patch in terms of revenues!

(F) Zara Marketing Strategies

Zara, the renowned Spanish fashion retailer, has crafted a distinctive marketing strategy that contributes to its global success. In this section, we will delve into the key elements of Zara’s marketing approach-

(F.1) Fast Fashion Strategy

The fast fashion model functions as a highly effective marketing strategy for Zara in several ways. First and foremost, the rapid turnover of collections, with over twenty product lines per year, creates a sense of urgency and novelty for customers. This continual introduction of fresh styles not only keeps Zara top-of-mind but also fosters a dynamic shopping experience, encouraging frequent visits to discover the latest trends.

Moreover, the quick response to changing trends and customer preferences positions Zara as a trendsetter, appealing to fashion-conscious consumers. The ability to swiftly translate runway trends into accessible and affordable pieces reinforces Zara’s image as a go-to destination for staying in vogue.

Additionally, the limited production batches contribute to an atmosphere of exclusivity, prompting customers to make timely purchases to secure unique and in-demand items. This scarcity-driven approach enhances the perceived value of Zara’s offerings.

In essence, the fast fashion model serves as a powerful marketing tool for Zara by creating a sense of immediacy, exclusivity, and trend relevance, fostering customer loyalty and consistently attracting a diverse audience seeking the latest in fashion.

(F.2) In-Store Experience

Zara places a strong emphasis on crafting an exceptional in-store experience, carefully curating showrooms to exude an atmosphere that is both exclusive and professional. The meticulous design choices contribute to an ambiance that goes beyond a mere shopping space, creating an environment where customers feel engaged and inspired.

The meticulous attention to detail is aimed at ensuring that every aspect of the in-store setting is carefully considered, from layout to lighting.

This focus on the in-store ambiance goes beyond aesthetics—it becomes a vital part of Zara’s marketing strategy. The thoughtfully designed physical stores act as powerful marketing tools in themselves, drawing in customers by providing a memorable and immersive shopping environment.

By enticing shoppers to explore the latest trends in this carefully curated setting, Zara not only enhances the overall customer experience but also reinforces its brand image as a trendsetting and sophisticated fashion destination!

(F.3) Affordability & Differentiation

Zara strategically positions itself by prioritizing affordable pricing while maintaining a commitment to quality. This dual emphasis allows the brand to resonate with a wide range of customers. By providing stylish clothing at reasonable prices, Zara ensures accessibility, making fashion-forward designs attainable for a diverse audience.

The effectiveness of this marketing strategy lies in Zara’s ability to differentiate itself in the market. The brand stands out not only for its trendsetting designs but also for its adept balance of fashion-forward aesthetics and accessible costs.

This unique blend positions Zara as a go-to destination for those seeking both style and value, enhancing the brand’s appeal and solidifying its market presence. The affordability and differentiation strategy contribute to Zara’s ability to capture a broad customer base and maintain its status as a leading player in the competitive fashion landscape.

(F.4) Word of Mouth and Limited Advertising

Zara strategically leverages the power of word of mouth and customer recommendations as primary drivers of its marketing efforts. In a departure from traditional advertising-heavy approaches, Zara relies on the subtlety of customer satisfaction and positive experiences to promote its brand.

This unique strategy involves cultivating a strong and positive buzz around Zara’s collections, encouraging customers to share their experiences and recommendations. The reliance on word of mouth creates an authentic and organic promotion of the brand, fostering a sense of trust and credibility among potential customers.

The limited advertising approach doesn’t diminish Zara’s impact; rather, it aligns with the brand’s commitment to providing an outstanding in-store experience and quality products. The positive buzz generated by satisfied customers becomes a powerful force, driving foot traffic to Zara’s stores and contributing to the brand’s sustained success in the competitive fashion market.

(F.5) Social Media Marketing

Zara actively embraces social media platforms as a crucial component of its marketing strategy. The brand leverages platforms like Instagram, Facebook, and Twitter to engage directly with its audience, creating a dynamic online presence.

The strategy involves regular updates across these platforms, keeping followers informed about the latest arrivals, ongoing trends, and behind-the-scenes glimpses into Zara’s fashion world. By maintaining an active and visually appealing presence, Zara not only stays connected with its audience but also cultivates a sense of anticipation and excitement around its offerings.

In addition to direct engagement, Zara strategically collaborates with influencers. These collaborations amplify Zara’s reach, tapping into the influencers’ follower base and creating a ripple effect of brand awareness.

Through this multi-faceted approach, Zara effectively utilizes social media not just as a promotional tool but as a means to foster a dynamic and interactive relationship with its audience, contributing to the brand’s overall success in the digital landscape.

(F.6) Personalization & Community Engagement

Zara adopts a customer-centric strategy by customizing its offerings to cater to local tastes and preferences. This personalization ensures that Zara’s collections resonate with diverse communities, creating a more inclusive and relatable shopping experience.

Community engagement takes center stage in Zara’s approach. Events like fashion shows or store openings play a pivotal role in fostering a sense of belonging among customers. By actively involving the community in these events, Zara goes beyond being a retailer and becomes an integral part of the local fabric.

Crucially, Zara prioritizes customer feedback. Actively listening to what customers have to say, the brand adapts and evolves its offerings based on this valuable input. This responsiveness not only enhances the overall customer experience but also reinforces a sense of collaboration between Zara and its community.

In essence, Zara’s commitment to personalization and community engagement contributes to a brand image rooted in customer satisfaction and a genuine connection with the diverse communities it serves.

(G) Sustainability Efforts: Crucial Part of Zara Case Study

Do you know what Zara is famous for apart from fashion? Its sustainability efforts to preserve mother nature! Let’s look at the sustainability efforts of Zara-

Thus, Zara is increasingly conscious of sustainability. The brand aims to reduce its environmental impact by using eco-friendly materials and promoting recycling. Such initiatives resonate with socially aware consumers.

(H) Challenges Faced by Zara

The journey of Zara was not free of challenges. Let’s look at some of the major challenges of Zara-

Zara brilliantly addressed those challenges to produce effective results that ultimately helped them grow their business.

(I) Summing Up: Zara Case Study

Zara’s remarkable success in leading the fashion market can be attributed to its unique blend of rapid fashion cycles, vertical integration, and a customer-centric approach. By staying ahead of trends with its fast fashion model, ensuring control over the entire production process, and tailoring offerings to local tastes, Zara captures a diverse and loyal customer base.

The brand’s commitment to affordability, engaging in-store experiences, and strategic use of social media further solidify its market leadership. Zara’s story showcases the power of adaptability, responsiveness, and a strong connection with customers in navigating the dynamic landscape of the fashion industry!

Apart from selling clothes and accessories at higher prices, still it is among the favourite ones for many!

Contact Info: Axponent Media Pvt Ltd, 706-707 , 7th Floor Tower A , Iris Tech Park, Sector 48, Sohna Road, Gurugram, India, Pin - 122018

Evaluation of Hydrogeochemical Processes for Irrigation Use and Potential Nitrate Contamination Sources in Groundwater Using Nitrogen Stable Isotopes in Southwest, India: A Case Study

Bisht, Mamta
Shrivastava, Manoj
Lal, Khajanchi
Varghese, Cini

The current research objective is to evaluate the appropriateness of groundwater for irrigation use and identify the sources of nitrate (NO 3 − ) contamination in groundwater using stable isotopic signatures (N 15 and O 18 ). Groundwater samples (n = 50) from Southwest Delhi were analyzed pre- and post-monsoon for irrigation quality. The pH, electrical conductivity (EC), total dissolved solids (TDS), sodium adsorption ratio (SAR), sodium percentage (Na%), and other parameters were measured. EC exceeded 3000 μS/cm in 32% of pre-monsoon and 58% of post-monsoon samples. TDS categorized 32%, 52%, and 16% pre-monsoon and 68%, 28%, and 4% post-monsoon samples as non-saline, slightly saline, and moderately saline, respectively. SAR classified 72%, 20%, 6%, and 2% pre-monsoon and 62%, 12%, and 26% post-monsoon samples in low, medium, high, and very high sodium categories. Na% was unsuitable in 4% pre-monsoon and 4% post-monsoon samples. Kelly's ratio showed 6% pre-monsoon and 20% post-monsoon samples unfit for use. The magnesium ratio indicated 34% pre-monsoon and 32% post-monsoon samples exceeding the limit. On Gibbs plots, 80% pre-monsoon and 67% post-monsoon samples indicated the dominance of evaporation and mineral dissolution processes influencing the resulting chemistry of irrigation water. Piper diagram suggested the majority of the samples belonged to mixed Ca-Mg type, Na-Cl type, and Ca-Mg-SO 4 -Cl, representing temporary hard water and permanent hard water type in both seasons. Additionally, the isotopic signature serves as additional confirmation that the primary contributors of NO 3 − in the groundwater within the study area are a combination of ammonium fertilizers, soil nitrogen, and manure/septic waste in both seasons.

Nitrate pollution;
Irrigation water quality;
Wilcox diagram;
Heavy metals;
Nitrogen stable isotopes

No Sources Found

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In 2016, Inditex as a group with worldwide sales of USD24.9 billion, and Zara, as its flagship retail concept store, had recorded significant year-on-year growth in net sales at 11.5% and 13% respectively. However, despite a presence across 93 countries, Inditex's regional sales contributions were skewed. Europe, comprising only 26% of the ...
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Evaluation of Hydrogeochemical Processes for Irrigation Use and
The current research objective is to evaluate the appropriateness of groundwater for irrigation use and identify the sources of nitrate (NO 3 − ) contamination in groundwater using stable isotopic signatures (N 15 and O 18 ). Groundwater samples (n = 50) from Southwest Delhi were analyzed pre- and post-monsoon for irrigation quality.

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Zara Case Study: How Zara Lead The Fast Fashion Market?

(A) Zara: A Brief Overview

(B) Zara Case Study: History & Evolution

(C) Brand Philosophy of Zara

(D) Zara Business Model: Effective Working Strategies

(D.1) Fast Fashion Model

(D.2) Product Range

(D.3) Vertical Integration: In-House Operations & Logistics

(E) Revenue Model of Zara: How does Zara make money?