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Zara is a Spanish clothing and accessories retailer which Amancio Ortega opened its first Zara store in 1975 in a central street in downtown La Coruña, Galicia, Spain.

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Who is the customer?

Zara’s target market is young, price-conscious, and highly sensitive to the latest fashion trends. They have an advantage over traditional retailers because they do not define their target by segmenting ages and lifestyles giving them a much broader market.

They segment their product line by women’s (60%), men’s (25%) and the fast growing children’s (15%) department.

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Three Steps to success

There are three steps to beinga successful fashion company

Step one:Make clothes that people want to wear.

Step two:Sell enough clothes for more than youmade them.

Step three:Do it again, and again, and again.

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Fashionable, affordable clothes

Zara’s strategy is to offer cutting edge fashion at affordable prices by following fashion and identifying which styles are “hot”, and quickly getting the latest styles into stores. They can move from identifying a trend to having clothes ready for sale within 30 days (where as most retailers take 4-12 months). This is made possible by controlling almost the whole garment supply chain from design to retail.

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Large choice of styles

Zara produces around 12,000 styles per year (compared to the retail average of 3,000), which means that fresh fashion trends reach the stores quickly. A typical Zara’s customer visits the store 17 times a year compared to the average of 3 times per year. This high number of styles also means that the commercial teams have more chances to find a winning style.

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Scarcity

By reducing the manufactured quantity of each style, Zara creates artificial scarcity and lowers the risk of having stock it cannot sell.

Scarcity in fashion increases desirability, which means shoppers need to buy quickly as the item may not be available next week.

Lower quantities also mean there are not much to be disposed when the season ends; Zara only discounts 18% of its stock in sales, which is half the industry average.

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Prime locations

Zara spends relatively little on advertising (0.3% of revenue) compared with traditional retailers (3-5%), instead they reach their target market by locating their stores in prime town-centre locations.

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How do they deliver it?

Most retailers outsource production to low cost Asian countries. In contrast Zara is vertically integrated with the majority of production carried out in owned or closely controlled facilities in Spain. This gives a lot more flexibility and speed however it means higher costs.

Stores place orders twice per week and the supply of finished goods is matched to store demand. Production is then increased or decreased in the flexible production facilities. Demand based production means there is very little inventory in Zara’s supply chain, which results in much lower working capital requirements.

Deliveries typically arrive one to two days after ordering with most deliveries arriving by truck from the Spanish factories. Clothes are then put straight onto the sales floor and are available to purchase.

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Zara Project Strategic Plan

Vision of Business

- High Quality - High Fashion- Superb Service

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Value Proposition

We will provide convenienceExcellent customer service Online shoppingHome delivery

Zara Project Strategic Plan

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Target Markets

Middle to upper class25-40 age rangeSimilar to that of Nordstrom or Banana Republic

Zara Project Strategic Plan

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Potential locations

Bellevue ( somewhere near Bellevue Square).Downtown Seattle.

Zara Project Strategic Plan

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Size of Stores

Depends on Location Downtown Seattle = Bigger Bellevue Square = size of any normal boutique in that area

Zara Project Strategic Plan

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Marketing Approach

Billboards* Downtown Seattle * Bellevue Area

Catalogs/ Magazines* Vogue, Glamour, Cosmopolitan, etc.

Television and Radio

Zara Project Strategic Plan

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Ownership

Sole Proprietorship

* A non-incorporated business entirely owned by one person.

Zara Project Strategic Plan

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Financial Arrangements

Combination of:* Bank Loans* Investors

Zara Project Strategic Plan

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Suppliers

Zara Company – to maintain brand name.

Other suppliers could be taken on later.

Zara Project Strategic Plan

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Management Organization

Flat hierarchy organization

Fewer levels of management (3-4 levels at most).

Centralized chain of command.

Zara Project Strategic Plan

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Business Growth

Start out moderate in size then gradually expanding.

As store grows, multiple openings of Zara stores all over the west coast.

The next logical location would be Portland then moving south into California.

Zara Project Strategic Plan

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Designing and producing

Designing and producing brand new fashion with consideration of costumer's taste

Pioneering in imitating others and offering cheaper price

Reducing the period of 6 months of presentation to 2-3 weeks

Having lots of shops throughout the world

Production based on market's demand

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Selling low price products in luxurious shops

Short risk of rejection by the costumers

Compensating high costs of production by flexibility and avoiding extra production (no excess inventory lying around)

Respecting the costumers in their own particular way

Designing and producing

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Designing and producing

Changing customers' taste and making them impulsive buyers

Variability of productions (clothes, accessories, home accessories, etc.)

Not relying on advertising, yet, investing heavily on the Beauty, historical appeal and high location of its shops.

The campus includes Inditex's headquarters.

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Disadvantages of Fast Fashion

It is unsustainable. It has short product life cycle.

It is unsustainable. It has short product life cycle.The focus largely lies on imitation of original products which misleads the customer. Those who are aware of this replication or who have lack of fashion consciousness wouldn't suffer, but those interested in purchasing original brands are deceived by these fast fashion trends.

The retailers make closest copies of the original which involves reputation risk and using lowest cost labor amounts to labor exploitation making it an ethical issue.

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Disadvantages of Fast Fashion

There is also scarcity experienced of qualified personnel in manufacturing garments.

There is a tough competition due to low-cost producers. These retailers use more style, take less time in producing the garment and have rapid delivery.

Another negative aspect of fast fashion is, it stands against costume designing. Both are closely related to each other but costume designing has got hardly any recognition as compared to (fast) fashion designing.

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Spain: 335 stores (159 with Zara Kids)France: 115 stores (4 with Zara Kids)Italy: 87 stores (12 with Zara Kids)China: 77 storesJapan: 68 storesUnited Kingdom: 65 stores Germany: 64 storesPortugal: 61 stores (21 with Zara Kids)Mexico: 51 storesRussia: 51 storesGreece: 48 stores (6 with Zara Kids)United States: 48 storesPoland: 33 storesBrazil: 31 storesSouth Korea:30 storesTurkey: 29 storesBelgium: 27 storesSaudi Arabia: 24 storesCanada: 19 storesIsrael: 19 storesNetherlands: 18 stores

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Zara Positioning

"Zara is possibly the most innovative retailer in the world."

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Mehdi Karimi

NasrinPoorghafur

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