2. PRODUCT CATALOGUE
Zara stores have men's clothing and
women's clothing, each of these
subdivided in Lower Garment, Upper
Garment, Shoes, Cosmetics and
Complements, as well as children's
clothing (Zara Kids).
50% of the products Zara sells are
manufactured in Spain, 26% in the rest
of Europe, and 24% in Asian and
African countries and the rest of the
world.
Zara can offer considerably more
products than similar companies. It
produces about 11,000 distinct items
annually compared with 2,000 to 4,000
3. WHAT MAKES ZARA STAND OUT
The worlds largest apparel retailer based out of
Spain
It is the flagship chainstore of the Inditex group
There are a total of 1770 Zara stores in 41
countries and 166 Kiddy's Class stores
The producer of most variety of clothing range and
even in the shortest production cycle
4. ACHIEVABLE SUPPLY CHAIN FEATS OF ZARA
Shortening the product life cycle to four to five weeks.
Zara also promised to make information about its suppliers
discharging of toxins publicly available.
Zara relies on sophisticated information technology to
monitor customers' fickle fashion changes.
Zara’s most unusual strategy is its policy of zero
advertising.
Zara is a vertically integrated retailer.
6. DESGIN AND PLANNING
Design starts one year in advance of the season
In-house design team of 200 designers at Zara
HQ
Experimenting new designs with a commercial
orientation
Hand sketches -> CAD drawings + Feedback
from store managers
To successfully react to consumer demands,
design decisions are delayed as long as
possible
Approximately 40,000 new designs annually,
from which 10,000 are selected for production
7. PRODUCTION SOURCING
In-house
22 factories in Spain
Mid season, stylish apparels
Flexible production
Quick response to changing demands
External Sourcing
Europe and Asia
Beginning of season, basic apparel
Cost or quality advantage
Strong relationship with contractors
and suppliers
8. PRODUCTION PROCESS
Fabric
• Raw, uncoloured fabric
• External and Internal (Comditel at Barcelona)
Cutting
• Layout prepared by skilled workers
• Using the layout, automated machines cut the fabric
• Cut fabrics are marked and bundled
Sewing
• Sub-contracted to 400 smaller firms in close proximity
• Cheap labour advantage
• Twice a week delivery
9. DISTRIBUTION
Centralized Distribution Center at Arteixo –
500000 square meter
211 km of tracks from factories to the
distribution center
Shipments made twice a week
No inventory held
10. RETAILING
Final Allocations made centrally also
considering Store Managers’ request
Fresh assortments – Fashion Forward
Merchandise
Average Customer shopped 17 times a year
as compared to the industry standard of 3-4
15-20% End of Season Clearance Sale
0.3 % of Sales spent on Advertising
11. THE STORES
1) Zara stores were uniform including as to lighting
fixtures and window display, as well as the
arrangements of targeted floor space of 1200 square
meters.
2) The model store located at Zara head quarters
(Arteixo, Spain) was kept up-to-date in terms of
current product selection.
3) Store locations were upscale in prime high street
areas.
4) The uncluttered arrangement of goods in uncrowded
spaces coordinated by color made the experience of
shopping more like that in high end luxury stores and
quite different from that offered by “value” marketers.
13. PRICING STRATEGY
Zara contrasted its pricing strategy to many others in its
business which set price equal to cost plus a target
margin.
During its long expansion through 2001 zara printed
price tags for multiple jurisdictions showing on the single
tag all of its different prices by country. This simplified the
tagging procedure and also permitted goods to be
moved from store to store with out retagging. And also
permitted goods to be transhipped between one country
to another with out retagging.
However at the beginning of 2002, zara switched to a
system of local price marketing in the stores using a
device that read the bar code and printed the appropriate
local price.
14. GROWTH STRATEGY
Zara's growth had been outward from its base in Spain,
with the locations for new stores chosen selectively to
stake out sequentially new territories that could be
supported within the Zara model.
Most of the stores were company owned although in
some markets Zara had opened a small number of
stores through franchises and in some markets Zara had
opened stores through alliances.
Zara did not establish local distribution centers and
warehouses when it entered a market or engaged in
store opening promotions.
16. CURRENT ISSUES FACED BY ZARA
Alleged slave like condition of its workers in Aug,2011
Shop staff abuse in March,2012
Toxicity issues as highlighted by Greenpeace in Nov,2012