DEPARTMENT OF EDUCATION AND TRAINING UNIVERSITY OF

ECONOMICS- THE UNIVERSITY OF DA NANG

E UNIVERSITY OF DA NANG

BASIC MARKETING PROJECT STUDY REPORT

Topic:
ZARA- THE LARGEST RETAIL COMPANY AND THE SECRETS
OF ITS SUCCESS

Lecturer : Mai Quỳnh Anh

Students : Lê Vũ Xuân Oanh
Đặng Thị Thu Thảo
Lê Đình Phương Nam
Đinh Thị Anh Thi
Vũ Nguyễn Thanh Ngân
Hà Thị Mỹ Huyền
Trần Nguyễn Thảo Vi
Đặng Mai Xuân

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 Đà Nẵng, 09/2019

CONTENTS
EXECUTIVE SUMMARY

CHAPTER I: INTRODUCTION

 History
 Mission
 Vision

CHAPTER II: MARKETING MANAGEMENT ORIENTATIONS

 Social marketing concept

 Product concept
 Marketing concept
 Selling concept
 Production cencept

CHAPTER III: DIFFERENTIATION

 Market division
 Differentiation

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MAKE TODAY AS BEAUTIFUL AS YOU CAN. LET
NO ONE TAKE AWAY YOUR HAPPINESS. SMILE
AND LAUGH AT THE NEGATIVITY , YOU’RE
GOOD.

ZARA

3
 EXECUTIVE SUMMARY

ZARA is one of the largest international fashion companies

belonging to Inditex, one of the world’s largest distribution
groups. This report aims to provide not only company’s
background, mission, vision but also marketing strategies that
make difference with other competitors.

Its vertically integrated business structure allows the brand to

control most of the steps on the supply chain: it designs,
produces, and distributes itself and most ZARA stores are
company-owned, which enables a quick response to
consumers’ changing demands and a greater flexibility.
ZARA’s aim according to Amancio Ortega is “to democratise
fashion by offering the latest fashion in medium quality at
affordable prices”.

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 CHAPTER I: INTRODUCTION

HISTORY
ZARA is the largest company in the Inditex group, the world's largest apparel
retailer and founded in 1975 by Amancio Ortega and Rosalía Mera. The first
ZARA store opened in La Coruña, Spain, with the intention of “selling
fashionable clothing at low prices”. The ability to produce and deliver new
garments to stores in less than three weeks gives ZARA its capacity to
effectively respond to consumer demand within the fashion season. An
inspiration to even the most traditional retailers, ZARA has continuously
shaped the industry; setting new ways “to do business” and proving to be an
exception to the rule. ZARA slowly expanded its operations from one town to
the rest of Spain and then to Portugal. By the 1990s the stores had expanded to
the markets in the United States, France and most of Europe. Number of
ZARA stores globally was 2,251 in 2017.

Rosalía Mera Amancio Ortega

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MISSION

. Bringing attractive and responsible fashion, and improve the quality of

customer service, are ZARA's priorities.
. Specializing in “fast fashion” and products include clothing, accessories,
shoes, swimwear, beauty, and perfumes.
. Over the years, ZARA has remained faithful to its core values, expressed
simply in the same four key words that define all stores: beauty, clarity,
functionality and sustainability.
. Nurturing a highly intimate relationship with its customers, ZARA’s
designers respond instinctively to their changing needs, reacting to the latest
trends and constant feedback received across its Woman, Man and Kids
collections, to deliver new ideas in the right place and at the right moment.

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VISION
The ZARA’s vision has been also the long-term development orientation that has
made it rise to become the "INSTANT" fashion brand leading the world fashion
industry for over 4 decades. ZARA has made a name for itself as the "tycoon" in the
distribution fashion industry through a paradox business strategy where they do
everything to be dedicated to their own customers. ZARA doesn’t create a level of
price by cutting boards, exclusive designs or using rare materials like other luxury
fashion brands are doing, what makes their leve; not only on products but also is on
the way they meet customer needs: FAST,CHEAP AND TIMELINE. Their level is
not in their products but in the way they brand their “children”. Why come to
ZARA? The answer naturally makes customers SATISFIED : "Because we meet
your needs" - Is there a more worthy answer for customers to choose ZARA?
The ZARA's KEY is to bring products directly to consumers without going through
intermediaries distributors, thereby reducing costs, providing customers with the
best products with the cheapest prices. Since then ZARA has done everything itself.
They completely close the production process, minimizing intermediate costs. It
sounds simple, but the best part about this strategy is that the closed cycle allows
ZARA products to be designed and made and put on shelves within just 2 weeks.
The average time in this industry is up to 6 months.

⇨ So the VISION of the brand that ZARA aims at has never failed or outdated the
core of its product is not obsolete - in line with the requirements of a fashion item
and meets meet 2/3 of customers worldwide (on price).

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 CHAPTER II:

MARKETING MANAGEMENT ORIENTATION

Societal Marketing Concept

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SOCIAL WELFARE
ZARA work on initiatives aimed at developing the community through
social integration programmes for vulnerable groups.
 Through the Salta program, ZARA promote workplace integration within
our own stores, factories, and logistics centers for individuals at risk of
social exclusion and with
difficult access to the labor
market. Since it started in
2008, more than 1,100
people have been hired
and more than 50% of
those individual continue
working with us.
 ZARA also promote the
development of projects
being implemented by
different organisations
around the world.
 ZARA support Cáritas in projects promoting employment and
entrepreneurship in Spain and community development programmes for
people in need in Bangladesh and Cambodia.
 ZARA collaborate with Every Mother Counts to help mothers from all
over the world gain access to basic maternal healthcare.
 Since 2015 we have been working with Water.org, an organisation that
offers microfinancing for the installation of sanitation and drinking-water
systems in Bangladesh and Cambodia. The organisation also fosters
research into new ways of accessing drinking water and sanitation in these
developing communities via New Venture Fund.

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EDUCATION

ZARA have launched various programmes aimed at promoting education as

the driving force for social change in a number of countries.

 In 2001, ZARA began collaborating with the NGO Entreculturas in 11

countries in Africa, Asia, and the Americas with technical and professional
education programs for
vulnerable individuals, primarily
focusing on young children.
Since ZARA started the
collaboration, more than 1
million people have benefited
from this project.

 As for China, ZARA also

collaborate with the China
Youth Development Foundation by
training teachers and building or
renovating schools in rural
areas.

HUMANITARIAN AID

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 ZARA’s humanitarian aid programmes are focused on offering support in
emergencies such as natural disasters or armed conflicts.

 Since 2011, ZARA have been collaborating on a regular basis with the
Emergency Unit at Médecins Sans Frontières to ensure that they have the
necessary resources to respond to
humanitarian crises. ZARA
complement this long-term
collaboration with other
emergency response efforts
around the globe.

 ZARA participated in aid projects to protect the lives, health and well-
being of those affected by the armed conflicts in Syria, Yemen and Nigeria,
the refugee crisis in the Mediterranean, and the earthquakes in Italy and
Ecuador.
 What's more, ZARA support those affected by the earthquake in Mexico
by collaborating with the Mexican Red Cross and Entreculturas on
emergency programs that have managed to assist 18,400 people affected
by the earthquake.

ENVIRONMENT

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  ZARA promises 100% sustainable & recycled fashion by 2025
Yes, you read that headline right! Fast-fashion giant Zara, under the company
Inditex, has promised that by 2025 a whopping 100 per cent of their cotton,
linen and polyester materials will be organic, sustainable and recycled.

 ZARA getting rid of plastic

bags by 2020
If you haven’t noticed yet, your
local Zara and Zara Home, no longer
give their customers plastic bags
anyway. Everyone’s rocking blue
Zara paper bags, and have been for a
while now.

Product concept

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 ZARA stores have men's and women's clothing, as well as children's
clothing (ZARA Kids). 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.
 Rather than producing more quantities per style, ZARA produces more
styles, roughly 12,000 a year. Even if a style sells out very quickly, there
are new styles waiting to take up the space.
 ZARA has
a team of
designers who are
constantly
changing and
editing designs
 The
company can have
a new design
created and
distributed in just
1-2 weeks.

Marketing
concept
The target market is composed of men and women, 18-40 years of age,
with mid-range incomes. The target customer is very fashion forward and
trend conscious, residing in an urban area. They are either shopping for
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themselves or for their children. ZARA's customers are definitely
sensitive towards having the most up to date and fashionable clothing and
accessories but at an affordable price.

ZARA Marketing: 4P’s

Product:
ZARA is fast fashion brand – a maker of
apparel that has earned a lot of growth
and reputation in a short period. It
identifies the latest trends in fashion and
brings them quick to its stores
at reasonable prices. However, the
products can be different from market to
market which is because ZARA does its
research before releasing any product in the specific markets world over. It sells
products that suit the local culture and people’s taste. It is best known for its latest
styles and trending designs.

Place:
ZARA has spread to several nations with its more than 7000
stores (Fortune, 2016). Its 7000th store opened in Hawaii in
2015. Apart from its stores, it also sells online. However,
online sales have not been expanded to all markets and are
limited to specific ones. In India, people cannot shop from its
website but still can check the latest designs and trends on its
official website. Now, ZARA is looking to grow its online
sales further.

Tài khoản instagram của ZARA

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Price:

The pricing strategy of ZARA is

focused at the average shopper that
wants the latest in fashion at
affordable prices. ZARA is a fast
fashion brand selling affordable
clothing. Its apparel is priced to
cater to the price sensitive
consumers who want latest fashion
but not at high prices. The
affordable pricing strategy has helped it address the needs of a very large
consumer segment. Latest fashion at affordable price is highly popular among
the millenials. This type of pricing strategy has also helped at two other
points. It has helped create a unique brand image and grow market share
faster.

Promotion:

The marketing expenses of ZARA are much lower than

the average fashion retailers. It does not market itself as
aggressively as others. However, that does not mean
ZARA has not focused at marketing at all. It still
markets its brand and products. A lot of marketing
takes place through word of mouth. Because of the
large choice of styles and affordable prices, the brand
loyalty is high. ZARA has kept its consumers happy. A lot of marketing
takes place through its thousands of stores worldwide. The customers
visiting the stores which are mainly located at prime locations can select
from thousands of styles. The pricing and distribution strategy of ZARA
are actually an important part of its promotion strategy. They have
helped it achieve the image of an affordable and stylish brand. This has
helped build popularity. However, when it comes to promotion, the brand
has used the other channels like social media skilfully and effectively. So,

15
people who believe that ZARA does not market itself or promote its
brand may actually be
wrong.
Selling concept
The brand is not just quick to
analyse trends and adapt to
them it has also broken the
norms of seasonal fashion.
Rather than following the
industry norm of two
collections, it brings out
several collections every
season. Collections change
faster at ZARA and
something you see now may
not be there two weeks later. The brand has opened more than 2100 stores worldwide and
expanded aggressively over the past several years. It is also featured on the Forbes list of
world’s most valuable brands at the 53rd position. Its sales are growing very fast and
from around 13 billion dollars in 2014, the sales figures have jumped to around $16
billion in 2016. Most unique thing about ZARA is that it takes just two weeks for it to
develop new styles and to get them to the shelves for sales.

While the other fashion

brands are struggling to
bring customers to their
stores, fast fashion brand
ZARA has seen an
explosion in the number of
footfalls its stores. It is
because it has been
successful at encouraging
its customers to visit its stores more frequently. Most stores update their fashion
collections once a season; ZARA’s designs get updated twice a week. The basic strategy
is to stock less and update the designs more often to sell more. The freshness of design
and delightful styles and looks keep the customers coming back and asking for more.
Every time they visit the ZARA stores, there is always something new. ZARA has
innovated by updating the fashion cycle and customers do not have to wait very long for
new fashion trends and designs. While its pricing strategy is also a source of competitive
advantage, the main benefit comes from the ability to bring new designs to the stores
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faster. The middle class customers have a great option for luxury fashion in ZARA
because its styles and designs are just as good as the luxury brands.
Production concept
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; the company
preferred to invest a percentage of revenues in opening new stores instead.
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,
particularly in Galicia and northern 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 pursued. ZARA
monitors customers' fashion changes. 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.

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 CHAPTER III: DIFFERENTIATION

MARKET DIVISION

ZARA chose a global business strategy. The secret of ZARA's success is "fast
fashion". ZARA products have beautiful design, variety, quality, fast market
access and especially reasonable prices. A product of ZARA men's shirts on
average costs about 1.000.000 VND.

ZARA is always up to
date with the latest
and simplest fashion
trends, turning
expensive costumes
on the catwalk into a
mass outfit for the
masses. So whether
you love the dusty
look of GAP, the
elegance of Prada or
the sophistication of
Gucci, any customer
can find a suitable
product at ZARA stores. ZARA has many times been involved in design
copyright lawsuits, but the world's leading retailer still overcomes and proves
that this successful formula is the correct strategy.

Therefore, ZARA's main customer base is the MIDDLE CLASS, who are
fashion lovers but have tight pockets all over the world. In addition,
politicians and top stars also own many products from this brand.

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THE DIFFERENTIATION
OF THE FAMOUS BRAND – ZARA
The difference of ZARA products is the design of new
styles and fewer and fewer similar design products in
inventory.

- Coming to ZARA, customers also have more

options to suit their taste.Instead of producing
lots of goods for the same model, ZARA
focused on creating many designs and reducing
the number. Thanks to that, even if this model
is out of stock quickly, there are still other
models waiting to be released.

- For each design, ZARA created small quantities. In this way, ZARA creates
differentiated product lines at low cost. Creating low quantities saves inventory
costs.

- Instead of trying to squeeze in with competitors and fill stores with tons of new
stuff to keep up with trends, ZARA has created his own rule, and it seems to be
working when ZARA is still a in the few bright spots in traditional fashion retail.
ZARA's parent company, Inditex, announced its current revenue of nearly VND
20.25 billion (June 30, 2019) and sales continued to increase in the latest quarter.
By bringing in a steady but low volume of products compared to other brands,
ZARA not only maintains a new regular level but also creates "cognitive scarcity",
thereby creating a demand for new. Batch of it.

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ZARA smart discount policy
- Different from other fashion brands, which often discount prices at the end of the
season in order to attract fashion addicts to shop but also an extremely effective
inventory management strategy. “Reducing the price to sell inventory sounds
feasible but it risks the brand reputation. In contrast to competitors such as H&M
in reducing inventories, the price reduction of goods is applied extremely smart at
ZARA. Specifically, the discount will apply backwards with the time of launching
new products.
- "When ZARA deeply discounts, it does not launch many new products, and when
it launches new products, ZARA will not discount
deeply. This has sent a message from ZARA to
fashion followers. that "The discount period is
limited" and if you do not act immediately, the
opportunity will come in. When ZARA discounts for a limited time with a unified
strategy, the company maintains price integrity, through That attracts new
customers with higher return value.
- At the time before the start of a new sale season (usually January, February, July,
August, and December), ZARA will try to sell as many full-priced items as
possible. Stores will pile up stuff from the old season, it's hard to find new ones.
But only a few days later, these items will be sold at a much lower price. In other
words, it's not advisable to buy items on shelves long before the sale season.
- This can be considered a psychological trick to deceive customers. They think: "I
will buy this shirt now because there are only two left", Even this strategy is
considered the most effective of this brand thanks to the good management of
brands. For items to become more attractive and to get customers off the shelves
quickly.

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ZARA does not invest too much money in advertising
marketing like other brands but mainly in building
many stores
- An interesting point in ZARA is that the company does not invest heavily in
advertisement, PR, but only use pockets on building construction lots of stores.
- ZARA selects the most beautiful places in the main cities, displays the most
beautiful rows through the window while the inside is elaborately presented.
ZARA is not afraid to spend money to buy premises standing next to luxury brands
to become "luxury goods but soft prices". With the same product as the expensive
fashion brands, buyers can choose ZARA right next to it at a much cheaper price.
Masoud Golsorkhi, editor of Tank, London magazine on culture and fashion and
consultant for fashion brands, said: “Prada wants to stand next to Gucci, Gucci
wants to stand next to Prada. The strategy of luxury brands is trying to outstrip
brands like ZARA. And ZARA's strategy is to be as close to them as possible. ”
- Therefore, to find a location to open a ZARA store is not a simple task, it is a
process that requires a lot of factors, knowledge and experience related to the
location, image, window design. and furniture. Inditex has a team of designers and
architects to handle this.
- Some stores are opened in typical buildings of the city such as Palazzo Bocconi in
Rome, Cine Capitolio in Elche, Spain, Monastery of San Antonio El Real in
Salamanca, Spain. Thanks to that, the brand image is enhanced, that is enough to
advertise.
- ZARA's way of advertising is also a part of
making a difference. Instead of spending
money on ads and signs, the brand relies on
word-of-mouth marketing - and that's the
most powerful way to market.

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 FACTORS HELPING ZARA TO COMPETE OTHER BRANDS
• Fast and powerful design team
- ZARA's design team regularly visits universities, clubs and other places to observe
what influential young people
are wearing. At the headquarters,
the design team uses a flat
screen connected by webcam to
offices in Shanghai, Tokyo and
New York (the leading cities in
fashion trends), acting as
executives. tendency. The 'Trends' team never goes to fashion shows but will
follow bloggers and listen to brand customers.
- However, less than anyone expected, the task of ZARA's main design team is not
to create a new trend, but to recreate what is
available, and to improve to create a new
product.
- Design teams are usually divided into 3
groups. Group 1 presents preliminary designs
based on a 6-month cycle, based on baseline
data from the market. The next group
variations designs according to current trends. The last group uses existing
collections to create new products. Every month, ZARA's design team of over 200
people must produce at least 1,000 available models.

• Fast fashion brand image

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 - ZARA always
creates conditions for
its employees to be
creative and not
afraid to make
mistakes. With short
time and small
quantity, ZARA's
new models always
get immediate
feedback from the
market with minimal
inventory. From
there, the more new
designs that come
out, the more chance
ZARA will succeed.

- This "fast fashion" philosophy is reflected throughout ZARA's supply chain, from
purchasing, manufacturing, to warehousing, distribution and retail.

• Fast product process

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 - With the business motto based on JIT distribution system (Just in Time - always
catching up with the trend), ZARA accelerates product turnover by up to 300%
compared to rivals such as H&M, Gap.
- ZARA always ensures that the Group's owned factory maintains the ability to
produce more than 85% of market demand, which helps ZARA control the
quantity, speed and model of the product that will be launched.
- Moreover, in order to be flexible before the new fashion trend, ZARA's factories
only operate at 100% capacity at 4.5 days per week, fully able to work overtime
when needed.
- ZARA's production facilities are located in Europe instead of Asia like other
fashion brands. Amancio Ortega - ZARA's boss believes that, although labor costs
are greater, products to stores will be faster, meaning huge profits. Every 2 weeks,
ZARA stores have new products to sell
- With 14 high-end automation plants in Spain and a robotic system working closely
every second, dyed rulers are always ready to create component fabrics.
- In addition, ZARA has invested in a laser barcode system to classify and arrange
hundreds of thousands of pieces of fabric with an error rate of less than 0.5% to
keep pace. Pre-dyed fabric is pre-ordered and can be adjusted flexibly according to
the trend.
- ZARA products are distributed according to a closed process. With more than
11,000 designs, suppliers in the supply chain will transport materials to La Coruna
- the small city of Spain - where the headquarters are located
- Products such as clothes and shoes are all produced here, then distributed to shops
across Europe. However, at the current market growth rate, the company has
expanded its production in Asian countries, typically China.
• New products are launched regularly with a lot of
trendy designs
- Instead of producing more quantities for each model, ZARA makes more models,
about 12,000 models a year. Even if one style sells out very quickly, there are still
24
 new styles waiting to take place. This means more options and a higher chance of
reaching consumers.
- ZARA only allows its designs to hang in the store for 3 to 4 weeks. This habit
encourages consumers to continue to visit stores because if they are only one week
late, all clothes in a specific style or trend will disappear and replaced with a new
trend.
• Low cost with consistent quality and satisfaction for
consumers
- ZARA can repel high-end fashion brands by offering similar products, but made
with cheaper materials (such as leatherette or synthetic wool) and of course the
product will be cheap. Many times more with the quality.
- Understand the psychology and listen to customer feedback ZARA's relentless
focus on its customers is at the core of its success. There is an interesting story
about how ZARA co-created its product by leveraging customer input. In 2015, a
woman named Miko walked into a ZARA store in Tokyo and asked the store
assistant for a pink scarf, but the store didn't have any pink scarves. The same thing
happened almost simultaneously for Michelle in Toronto, Elaine in San Francisco,
and Giselle in Frankfurt, all of which walked into the ZARA store and requested
pink scarves. They all left the shops without any scarves - an experience that many
ZARA fans have encountered globally in different ZARA stores in the next few
days.7 days later, more than 2,000 ZARA stores around the world have started
selling pink scarves. 500,000 pink scarves were sent - exactly. They sold out in 3
days. How did the lightning fast pink scarves happen?
- Customer insights are the holy grail of modern business and the more you know
about your customers, the better they can innovate and compete. The biggest
challenge is to get the right details, at the right time and ready for a platform to
address.Most clothing brands operate from a top-down approach. That is, the

25
 design implemented based on what they anticipate will become popular in the
coming season
- In other words, it is a speculative way that may or may not work well. Decisions
are made by company leaders, they are brought to consumers who decide which
products they want themselves. ZARA, on the other hand, approaches it
differently. They constantly survey consumers' opinions. Survey groups go to the
streets and go to shopping centers in cities to find out what people are wearing.
Store managers record customer preferences and report back to headquarters.
- This bottom-up approach means that designs are created based on shopper
feedback and tailored to regional preferences. Their strategy makes the company
world-famous and directly delivers what people want.
- One of ZARA's key to success is training its brands and empowering store
employees and managers to be particularly sensitive to the needs and desires of
their customers and how customers express their needs. that. They pay close
attention and note customer reviews, ideas about new cuts, fabrics or lines, and
observe deeply the new styles the customers are wearing that are transformed into
a unique ZARA style. Meanwhile, traditional daily sales reports are unlikely to
provide a dynamic visual update of the market. The ZARA Empire was built on
two basic rules: "give customers what they want" and "give it to them faster than
anyone else".
- Due to ZARA's competitive customer research capabilities, its products throughout
its stores reflect the global physical and climatic needs and needs of
customers. chemistry. It offers smaller sizes in Japan, women's clothing especially in
Arab countries and clothing with different seasons in South America. These
differences in product delivery across countries are created by the constant interaction
between ZARA's local store managers
and their creative teams.
-Having a team to monitor customer
feedback 24/24. A few years ago, ZARA
26
launched a data processing center that connects all retail stores to respond promptly to
problems that arise, including customer feedback. The center is open 24 hours a day.
Meaning you just need to be.

• Strong supply chain logistics system

- ZARA's supply chain is one of the biggest competitive advantages for the brand
because when other retail stores take 21 days or 2 months to get a new design in
the store, ZARA will complete it. Within 2 weeks. In addition, stores have these
new designs only for a set period of time or until inventory, so the movement of the
material is important for a brand like ZARA.
- Inventory products account for less than 10% of ZARA's inventory, compared to
an average of 17-20%.
- ZARA makes sure each of its retail locations always receives the right amount of
products. This helps reinforce the image of "limited quantity" and reduces
inventory.
- In fact, ZARA's supply chain handles more than 450 million products a year, with
a new cycle of adding new products around the world twice a week! Each ZARA

27
 store sends 2 new orders every week. , and in response, these orders will be
delivered at specific times. According to a recent report, ZARA's distribution chain
can deliver products to each store in Europe in 24 hours and in 40 hours with Asian
and American stores. With pre-listed product prices, stores can instantly display
and sell to customers.
- With a fast delivery frequency and small inventory, every ZARA employee (from
design to purchasing, manufacturing and retailing) knows the schedule and adjusts
his work accordingly. And for ZARA customers, this motivates them to visit the
store constantly to keep up with the latest trends in the market.

ZARA at Vietnam

For a population of nearly 100 million, of which the majority is at young age and with a
steady growth of income per capita, Vietnam is considered potential market for fashion
retailers.

A Zara store inside Vincom Center, Ho Chi

Minh City.
A Zara store in Hanoi.

During three years in Vietnam, Zara has reported revenues of nearly VND3.1 trillion
(US$129 million) with an average annual gross profit margin of about 40%
28
According to Zara Vietnam financial reports, its revenues from just two stores in Hanoi
and Ho Chi Minh City topped VND1.7 trillion (US$73.2 million) in 2018, much higher
than those of domestic luxury fashion retailers such as Tam Son Fashion or Mai Son
International Retail.

Statistics from 2018 showed the revenues

generated from Vietnam of all brands of
Inditex Group (Zara, Massimo Dutti, Pull
& Bear and Stradivarius) were about
VND1.97 billion (US$84.8 million),
doubled that of 2017 and increased four-
fold compared to the figure in Thailand.
In fact, the revenue from Zara (Inditex’
spearhead) made up 90% of total turnover
of five brands operating in Vietnam.

The rapid growth of Zara revealed the shopping trend Vietnamese recently.
A Nielsen survey in 2018 showed that Vietnam ranked third in the world in the number of
people fond of luxury goods, just after China and India.
Despite amazingly growing revenue, the profit before taxes (PBT) of Zara in Vietnam
still remains low at just several million US dollars as the brands spent huge expense on
selling activities to lure more consumers.
In 2018, Zara Vietnam’s PBT was VND98 billion (US$4.2 million), equaled to about 6%
of the revenue mainly due to high selling expense, which accounted for 70% of the gross
profit over the past two years.

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