Zara Case Study Essay Example for Free

Zara Case Study Essay First of all, Zara is the flagship brand of the Spanish retail group, Inditex SA, owned by the Spanish Amancio Ortega Gaona. Ortega started his career in the fashion design field, developing his own designs, hitting upon the base-formula of his Group: reproducing popular fashions using less expensive materials in order to sell high-demand clothing items at lower prices. From manufacturing, Ortega soon turned to retail and opened his first and most successful retail store ZARA in 1975 in A Coruna, Spain, where the Inditex Group is headquartered. Once the new Ortega’s retail format, started to be well received by the public, Zara, and the Inditex Group in general, expanded and opened new stores, first all around the Spain, and then all around the world: in 1988 Zara opened its first store abroad, in Portugal. Zara is now present in 72 countries, with more than 1500 Zara stores worldwide. Its vertically integrated structure, where design, production, distribution and retailing are integrated, makes Zara a unique and particular example of successful retail company. Zara’s direct competition may be its largest threat, due to their wide range of merchandise categories. However, with its unique and innovative strategy, Zara has a competitive advantage on traditional retailers in the apparel industry. Zara’s principal competitors are: Arcadia Group, The Gap Inc. , Hennes Mauritz (HM), Benetton Group S. p. a. , Vivarte, Gruppo Coin S. p. a. , Kiabi S. A. , La Redoute, Charles Vogele Holding AG, Mango S. A. Zara clothing has two basic product divisions: Men’s and Women’s apparel. Zara’s catalogue includes also children’s and for teen-ager’s clothing (Zara TRF) as well. Zara offers more products and it offers them more often than similar companies: about 12000 designs introduced every year, with a shelf life of about 4 weeks, compared with 2000-4000 items of its competitors. Three are the winning formulae that Zara use to reach these results: Short supply chain lead times : Zara can quickly indentify the prevalent and winning fashion trend of the moment, in order to quickly produce a response in terms of new style within 2-4 weeks. Lower quantities (in each style): reducing the quantities manufactured in each style and changing the styles every week, people do not postpone the purchase of an item, because they know that it would not be available later. More styles: instead of more quantities per style; even if a style sells out quickly, there are new styles already ready to replace the older ones. Zara merchandising strategy eschew every collaboration with big name designers and multimillion-dollar advertising campaigns: Zara focuses instead in choosing highly visible and premium locations for its stores, that are given priority in their interior and exterior design. â€Å"Today, many companies are looking to Zara as the new industry standard for how to run a retail business, which shows that Zara’s business model is becoming the wave of the future†.