IN-DEPTH ANALYSIS

OF
ZARA
 Introduction

Zara / Zara SA was founded in 1975 by Rosalía Mera and Amancio Ortega . It
is the main brand of the Inditex group, the world's largest apparel retailer. The
fashion group also owns brands such as Massimo
Dutti, Pull&Bear, Bershka, Oysho, Zara Home, and Uterqüe. Zara as of 2017
manages up to 20 clothing collections a year. It has its headquarters in
Arteixo,Spain.
During the 1980s, Ortega changed the manufacturing, design and
distribution process to reduce lead times and react to new trends in a quicker
way, which they called "instant fashions". The improvements included the use
of information technologies and using groups of designers instead of
individuals.
Starting its international expansion in 1988 ,it established its shops in
various developed countries. On September 2010, Zara launched its online
boutique.Currently it has over 10,000 stores serving worldwide. It has its online
website as zara.com.
In 2014,Zara introduced the use of RFID technology in its stores. The
RFID chips are located in the security tags which are removed from clothing
when it is purchased and can be reused which allows the company to quickly
take inventory by detecting radio signals from the RFID tags saving time and
money. When an item is sold, the stockroom is immediately notified to replace
the item which can be detected using the RFID tag.
Zara's products are supplied based on consumer trends. Its highly
responsive supply chain ships new products to stores twice a week. After
products are designed, they take ten to fifteen days to reach the stores. All of the
clothing is processed through the distribution center in Spain. New items are
inspected, sorted, tagged, and loaded into trucks. In most cases, the clothing is
delivered within 48 hours. Zara produces over 450 million items per year.
Reportedly, Zara needs just one week to develop a new product and get it
to stores, compared to the six-month industry average, and launches around
12,000 new designs each year. Zara has a policy of zero advertising which it
then spends on opening of new stores.
Zara has its own factory in La Coruña (a city known for its textile
industry) established in 1980, and adopted the just-in-time (JIT) system in 1990.
This approach, designed by Toyota Motor Corp.. It enabled the company to
establish a business model that allows self-containment throughout the stages of
materials, manufacture, product completion and distribution to stores worldwide
within just a few days.
 Most of the products Zara sells are manufactured in proximity countries
like Spain, Portugal, Turkey and Morocco. While some competitors outsource
all production to Asia, Zara manufactures its most fashionable items—half of all
its merchandise—at a dozen company-owned factories in Spain
and Portugal and Turkey. Clothes with a longer shelf life, such as basic T-shirts,
are outsourced to low-cost suppliers, mainly in Asia.
The company can design a new product and have finished goods in its
stores in four to five weeks; it can 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 replaced
to. Zara has a range of basic designs that are carried over from year to year, but
some fashion forward designs can stay on the shelves less than four weeks,
which encourages Zara fans to make repeat visits. An average high-street store
in Spain expects customers to visit three times a year. That goes up to 17 times
for Zara.
As a result of increasing competitive pressures from the online
shopping market, Zara is shifting its focus onto online as well, and will
consequently open fewer but larger stores in the future.
In 2011, Greenpeace started a conversation with Zara to ban toxics from
the clothing production. Greenpeace published its "Toxic threads: the big
fashion stitch-up" report in November 2012 as part of its Detox Campaign
identifying companies using toxic substances in their manufacturing
processes. Nine days after the report was published, Zara committed to remove
all releases of hazardous chemicals throughout its entire supply chain and
products by 2020. Zara became the biggest retailer in the world to raise
awareness for the Detox Campaign, and switched to a fully toxic-free
production.
By 2018, the company had a revenue of 18.9 billion dollar annually.