HBR Case Study - Fashion retailer ZARA has achieved spectacular growth via a distinctive design-on-demand operating model. This case describes this model and outlines a number of challenges facing the company, with a particular emphasis on its international expansion. Includes color exhibits.

2. COMPANY PROFILE
• Amancio Ortega opened the first Zara store in 1975 in central A
Coruña Galicia, Spain
• Zara is one of the most well known brands in the world and is
also one of the largest international fashion companies.
• Headquartered in Spain.
• There are more than 2600 stores across 73 countries in the
world
• 2 weeks to develop products
• 10,000 new designs every year (which is an industry record).

3. DESIGNING & PROCESS
Day 1: A designer in Spain
sketches a new piece of clothing
with input from store managers
on the latest trends.
Day 2-5: A pattern makers
creates a prototype.
Day 6—21: Fabric I cut,8000 new
pieces are sewn together at a nearby
by factory, and are made ready for
shipment
Day 25: New items arrive in
Manhattan and are put
display before opening
Day 21-24: Apparel is driven to
a distribution centre .

4. SUPPLY CHAIN SYSTEM
ZARA buy fabrics only in 4
different colours, design and
cuts its in house
Supplier are all closed to
ZARA , So that it can order
on the need basic
Clothes are ironed in advance
and packed on hangers, with
price tag
Customer
Retailer Outlet
Road, Train and Air flight
used to transport product
to other countries

5. 1. Cost leadership
2. Efficient Distribution
3. Information Technology
4. Keeping Low Inventory
5. Fast delivery of new products
and trends
1. Centralized distribution
system
2. Doesn’t spend much money
on advertisement
3. Has only 1 manufacturing
centre in the world
1. Global Market penetration
2. Online Market
3. Distribution centre in the US
4. long-term and evergreen
styles in the market
1. Local competitors
2. Global competitors
3. Based out of Spain but has
larger penetration in Europe
is affecting the revenue
SWOT BUSINESS ANALYSIS

6. Present Scenario
As per the report of
Statista.com in 2018
Zara is the market
leader in retail fashion
with a turnover of
almost 2000 million
Euros

7. Local Story
1. Last year (2017-18), Zara had posted a profit of ₹82.59 crore with revenues of ₹1221.67 crores.
2. Zara posted a 13.4% drop in net profit for the year ended 31 March, 2019 at ₹71.49 crore
1. Zara uses ‘Trent Ltd’ as its distribution partner in India
2. Trent is a 51-49 Partnership between Inditex SA & Tata
3. Tata had an indirect conflict of interest with its lifestyle retail chain – ‘westside’
4. As a result the rapid growth in number of stores opened in India dropped by almost 40% as
compared to its global rival H&M. (40 stores as of now, planned to scale up to 50 by 2020)
5. Other Retailers like GAP, Forever 21, H&M are already in, additionally Japanese retailer Uniqlo is
set to enter India later in this year, making it more challenging for Zara to retain its market share
So What Changed ?

8. RECOMMENDATIONS
E-Commerce
Have Strategic Tie-ups with
multi-brand stores like
Amazon, Verge, Olive etc
Increase the investment on
the advertisement – Online
and Offline.
Global market Expansion
Should look for further expansion in
market zones like – MEA, APAC
New Design Exploration
Design Trademark – Custom
Styling based on Fashion week &
Red Carpet events
Operations
Focus on Multiple manufacturing
and distribution Network for faster
response

9. THANK YOU