Zara's Fast Fashion Strategy and Global Success

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ZARA'S CASE STUDY -the Strategy of the Fast Fashion Pioneer The Strategy of
the Fast Fashion Pioneer
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ZARA’S CASE STUDY - the Strategy of the Fast Fashion Pioneer
ZARA’S CASE STUDY

The Strategy of the Fast Fashion Pioneer
Project Submitted to the

MANIPAL ACADEMY OF HIGHER EDUCATION – DUBAI CAMPUS
In the Partial Fulfillment of the Requirement for the Degree of

POST GRADUATE DIPLOMA IN LOGISTICS & SUPPLY CHAIN
By
MONU JANGIR
REG. NO:
190205030
Under the Guidance and Supervision of
PROF. SWAMYNATHAN RAMAKRISHAN
SCHOOL OF BUSINESS
MANIPAL ACADEMY OF HIGHER EDUCATION– DUBAI CAMPUS
ACADEMIC CITY, DUBAI, U.A.E.
JAN 2020
MR. SWAMYNATHAN RAMAKRISHAN

School of Business
Manipal University – Dubai Campus
Academic City, Dubai, U.A.E.
Date: 2ND JAN 2021
CERTIFICATE
This is to certify that the project work entitled, “STUDY OF GLOBAL SUPPLY
CHAIN MANAGEMENT OF ZARA CLOTHING BRAND AND ITS
OPERATIONAL SUCCESS WITH MARKETING AND BUSINESS
STRATEGIES” submitted to School of Business, Manipal Academy of Higher
Education – Dubai Campus for the award of the degree of Post Graduate Diploma, is a
record of the original work done by MONU JANGIR during the period of his study in the
School of Business, MANIPAL ACADEMY OF HIGHER EDUCATION-DUBAI
CAMPUS, UAE, under my supervision and guidance, and the project work has not
previously formed the basis for the award of any degree, diploma, fellowship, associate
ship or any other similar title, to any candidate of any University.
Signature of the Guide

DECLARATION
I hereby declare that matter embodied in this project work entitle “STUDY OF
GLOBAL SUPPLY CHAIN MANAGEMENT OF ZARA CLOTHING BRANDS
AND ITS OPERATIONAL SUCCESS WITH MARKETING AND BUSINESS
STRATEGIES” is the result of the analysis of observations and interviews carried
out by me under the guidance of PROF. SWAMYNATHAN RAMAKRISHAN
School of Business, Manipal Academy of Higher Education – Dubai Campus,
UAE. This project work has not previously formed the basis for the award of any
degree, diploma, fellowship, associate ship or any other similar title, to any
candidate of any University.
MONU JANGIR
REG. NO: 190205030
ACKNOWLEDGEMENT
I have taken efforts in this project. However, it would not have been possible without the
kind support and help of many individuals and organization. I would like to extend my
sincere thanks to all of them.
I would like to thank Manipal Academy of Higher Education – Dubai Campus, for
giving me this opportunity to gain a lot of exposure. I am highly indebted to PROF.
SWAMYNATHAN RAMAKRISHAN, for his guidance and constant supervision as well
as for providing necessary information regarding the project & also for his support in
completing the project. I would like to express my gratitude towards my parents & friends
for their kind co-operation and encouragement, which helped me in completion of this
project. My thanks and appreciations also go to people who have willingly helped me out
with their abilities.
Table of contents
Chapter No Description Page No
1. Introduction 7
1.1. Introduction
1.2. Need for the Study
1.3. Mission and Objectives of the Study
2. Organization Profile 11
3. Literature Review 15
4. Research Methodology 20
4.1. Statement of the problem undertaken

4.2. Research Design
4.3. Data Sources
4.4. Sampling Design
4.5. Data Collection Instrument
5. Study 23
6. Analysis and interpretation 46
7. Findings 55
8. Recommendations 60
9. Conclusions 62
10. Reference 65
ABSTRACT
The case discusses Zara, a clothing brand and the pioneer of fast fashion. Zara was owned by Inditex, a
public listed company which also owned other popular clothing brands. Zara had a cult following of
customers who flocked to its stores expecting something new each time and Zara lived up to their
expectations every time. It brought the in-trend catwalk designs to its stores across the globe at
affordable prices and replenished its stores twice a week – a feat no rival in the Industry was able to
replicate. Zara provided such a customer proposition by being extremely agile in its manufacturing and
sourcing practices. Inditex, Zara’s parent, also kept excess capacity in its factories (to be more
responsive) and was heavily vertically integrated to maintain absolute control over its supply chain.
In the 21st century, Zara witnessed more growth outside its home country (Spain) and Europe which
had historically contributed to the major part of its top-line. The Far East, which was viewed as a low-
cost manufacturing source for Zara, also became a consumer of its Fast-Fashion so much so that China
had the largest number of Zara stores in the world by 2016. But though Zara was a truly global brand,
it didn’t act locally. In some markets like India where there weren’t as many fashion seasons as in the
Western countries, there was little customization to appeal to local customers.
Zara’s operations were heavily centralized, which was seen as a competitive advantage for all the years
of its growth. Analysts were of the view that Zara’s bottom line could be under pressure owing to its
burgeoning global presence, especially when Zara used air-freight for its global deliveries. Moreover,
every store across the world was served through its head office in Aretixo, Galicia (irrespective of the
location of manufacturing), Inditex’s Spanish base. Such centralization for a global company was
considered by many as counterintuitive. But for Zara, to act locally meant giving up its competitive
advantage
Keywords: Fast fashion retailing, flexibility, modularity, responsiveness, sourcing strategy, supply
chain, vertical integration, Inditex-Zara
CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION
Zara is a fashion label and fashion chain stores established in 1975 by the Spanish group Inditex own
by Amancio Ortega. Next to Zara, the rest of the labels the groups own are Bershka, Massimo Dutti,
Pull and Bear, Stradivarius, Oysho, Zara Home, Zara kinds and Uterqüe. During the last two decades
Zara tripled its profit and stores and nowadays is ranked the third biggest retailer world-wide (Zhang,
2008). It has 3000 in-house designers located in its headquarter in the region of A Coruña, Spain,
which design over 40 000 items per year among which only 10 000 are selected for production (Li,
2009). Opposite to its competitors, more than
50% of its production is in Europe and not in Asia or South America (Bruce and Daly, 2006).
Zara changes its clothing designs every two weeks on average, while competitors change their designs
every two or three months. It carries about 11,000 distinct items per year in thousands of stores
worldwide compared to competitors that carry 2,000 to 4,000 items per year in their stores. Zara’s
highly responsive supply chain is central to its business success. The heart of the company and its
supply chain is a huge, highly automated distribution center (DC) called “The Cube”.
The company’s core market is women 24 – 35 years old. They reach this market by locating their
stores in town centers and places with high concentrations of women in this age range. Short
production runs create scarcity of given designs and that generates a sense of urgency and reason to
buy while supplies last. As a consequence, Zara does not have lots of excess inventory, nor does it need
to do big mark-downs on its clothing items.
Zara has 12 inventory turns per year compared to 3 – 4 per year for competitors. Stores place orders
twice a week and this drives factory scheduling. Such short term focused order cycles make forecasts
very accurate, much more accurate than competitors who may order every two weeks or every month.
Clothing items are priced based on market demand, not on cost of manufacture. The short lead times
for delivery of unique fashion items combined with short production runs enable Zara to offer
customers more styles and choices, and yet still create a sense of urgency to buy because items often
sell out quickly. And that particular item or style may not be available again after it sells out. Zara sells
85 percent of its items at full price compared to the industry average of selling only 60 percent of items
at full price. Annually there is 10 percent of inventory unsold compared to industry averages of 17 – 20
percent.
In Spain customers visit Zara stores 17 times per year on average compared to 3 times per year for
competitors. Because their clothing designs change often, it is harder for people to see them clearly on
the Internet and thus they are encouraged to come into the stores instead and try on the unique fashions
that Zara offers (screenshot below shows people at a Zara store in Madrid, Spain).
According to Sull and Turconi (2008) average markdown ratio is at approximately 50 per cent, for
comparison Zara sold only 15 per cent on sale. All these facts allows Zara to expand its sales and
8
profits over 20 per cent per year. By September 2010 Inditex group owns 4907 stores in 77 countries
around the world (38 in Europe and 39 outside Europe). Zara gets the credit to be pioneer in Agile
Supply Chain and most researchers explain its success with its efficient ASC (Dutta, 2002; Tiplady,
2006; Sull and Turconi, 2008; Zhang, 2008). Zhang (2008) suggests that “whole process of the supply
chain in Zara could be divided into four parts:
 Product Organization and Design

 Purchase and Production
 Product Distribution
 Sales and Feedback
1.2 NEED FOR STUDY

Zara’s success is driven in no small measure on a very rapid time-to-market, truly “Fast-fashion”. Fast-
fashion is the process of bringing new trends to the market as quickly and cheaply as possible. And
while Zara is also an outlier in many other domains, it is really its agile Supply Chain that enabled it to
become one of the most profitable fashion brands in the world and sustain rapid growth year after year.
More significantly, Zara’s approach to establishing an agile Supply Chain is quite interesting.
1.3 Mission and Objective of the study

Inditex group has specific and explicit concepts and plans defined for future. Their mission statement
contains clearly mentioned priorities and processes that are carefully chosen for the organization. The
founder has selected a precise set of strategies to ensure a sustainable, promising, successful career.
The mission statement (under Environmental Policies) for Zara states, “Through Zara’s business
model, we aim to contribute to the sustainable development of society and that of the environment
with which we interact”.
While at its every store, the mission statement is specified as below,
"At the store
 We save energy.
 The eco-friendly shop.
 We produce less waste and recycle.
 Our commitment extends to all our staff.
 An environmentally aware team.”
9
For manufacturing and features, the mission is as below,
"With the product
 We use ecological fabrics.

 Organic cotton.
 We manufacture PVC – free footwear.”
For distribution channel (the transportation of finished goods from the point of production to point of
sale), it is termed as environmentally friendly,
“in transportation, we use biodiesel fuel.
The main objectives are –
 TO STUDY SUPPLY CHAIN OPERATIONS OF ZARA
 TO DO A COMPARITIVE STUDY OF ZARA AND KFC SUPPLY CHAIN
 TO UNDERSTAND THE IMPACT OF ZARA SUPPLY CHAIN ON CUSTOMER

SATISFACTION
 TO UNDERSTAND MARKETING STRATEGIES OF ZARA
10
CHAPTER 2
ORGANIZATION PROFILE
11
Zara is a Spanish fast fashion (clothing and accessories) retailer based in Aretixo,
Galicia(Spain). The company was founded in 1975 by Amancio Ortega and Rosalía Mera. It is
the main brand of the Inditex group, the world's largest apparel retailer. Th e fashion group also
owns brands such as Massimo Dutti, Pull Bear, Bershka, Stradivarius, Oysho, Zara Home and
Uterqüe. Zara as of 2017 manages up to 20 clothing collections a year. Amancio Ortega opened the
first Zara store in 1975 in downtown A Coruña, Galicia, Spain.
Ortega initially named the store Zorba after the classic film Zorba the Greek, but after
learning there was a bar with the same name two blocks away, they rearranged the letters
folded for the sign to "Zara". It is believed the extra "a" came from an additional set of letters that
had been made for the company. The first store featured low-priced lookalike products of popular,
higher-end clothing fashions.
Ortega opened additional stores throughout Spain. During the 1980s, Ortega changed the
design, manufacturing, and distribution process to re du ce l ea d ti me s a n d re a ct t o n ew
tr en ds i n a q ui ck e r w a y, wh ic h he c al le d "i ns ta nt fashions". The improvements included
the use of information technologies and using groups of designers instead of individuals. In 1988, the
company started its international expansion through Porto, Portugal.
In 1989, it entered the United States, and then France in 1990. During the 1990s, Zara
expanded to Mexico (1992), Greece, Belgium and Sweden (1993). In the early 2000s, Zara opened its
first stores in Japan and Singapore (2002), Russia and Malaysia (2003), China, Morocco, Estonia,
Hungary and Romania (2004), the Philippines, Costa Rica and Indonesia (2005), South Korea(2008),
India (2010) and South Africa and Australia (2011). There are over 6,500 Zara stores located across
88 countries.
Zara usually selects the best located and most expensive real -estate locations in the world to
open its flagship stores. On September 2010, Zara launched its online boutique. The website began in
Spain, the UK, Portugal, Italy, Germany and France. In November that same year, Zara Online
extended the service to five more countries: Austria, Ireland, the Netherlands, Belgium and
Luxembourg. Online stores began operating in the United States in 2011, Russia and Canada in
2013 and Mexico, Romania and South Korea in 2014 and the latest was India in 4 October 2017.
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PRODUCTS
Zara stores have men's and women's clothing, as well as children's clothing (Zara Kids).Zara's products
is supplied based on consumer trends. It’s 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 centrein 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.
Today, Inditex is the world’s largest fashion group with more than 174,000 employees operating more
than 7,400 stores in 202 markets worldwide including 49 online markets. The revenues of Inditex were
USD 23.4 billion in 2019.
MANUFACTURING AND DISTRIBUTION
Reportedly, Zara needs just one week to develop a new product and get it to stores, compared to the
six-month industry average, and makes roughly 40,000 designs of which around 12,000 new designs
are carefully selected and produced each year. Zara has a policy of zero advertising; the company
preferred to invest a percentage of revenues in opening new stores instead.
Zara set up its own factory in La Coruña (a city known for its textile industry) in 1980 and upgraded to
reverse milk-run-type production and distribution facilities in 1990. This approach, designed by Toyota
Motor Corp., was called the just-in-time (JIT) system. 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, 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 cancelled 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-
13
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.
Zara began aggressively expanding into global markets, which included Portugal, New York (USA),
Paris (France), Mexico, Greece, Belgium, Sweden, Malta, Cyprus, Norway and Israel. Today, there is
hardly a developed country without a Zara store. Zara now has 2,264 stores strategically located in
leading cities across 96 countries. It is no surprise that Zara, which started off as a small store in Spain,
is now the world’s largest fast fashion retailer and is the flagship brand of Inditex. Its founder,
Amancio Ortega, is the sixth richest man in the world according to Forbes magazine.
NON-TOXIC CLOTHING
In 2011, Greenpeace started a dialog 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 that use toxic substances in their manufacturing processes. Nine days
after the report was published, Zara committed to eradicating 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.
EXPLOITATION AND CHILD LABOUR
In 2016, BBC News stated they found evidence of child labor and exploitation in factories in Turkey.
Zara replied that there were some issues in June 2016 in one single factory and - instead of solving
these 'issues' immediately, they have given a period of six months to solve them.
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CHAPTER 3
LITERATURE REVIEW
15
3.1 Literature review :-
Zara is one of the world’s most successful fashion retail brands – if not the most successful one. With
its dramatic introduction of the concept of “fast fashion” retail since it was founded in 1975 in Spain,
Zara aspires to create responsible passion for fashion amongst a broad spectrum of consumers, spread
across different cultures and age groups. There are many factors that have contributed to the success of
Zara but one of its key strengths, which has played a strong role in it becoming a global fashion
powerhouse as it is today, is its ability to put customers first. Zara is obsessed with its customers, and
they have defined the company and the brand’s culture right from the very beginning.
The Zara brand offers men and women’s clothing, children’s clothing (Zara Kids), shoes and
accessories. The sub-brand Zara TRF offers trendier and sometimes edgier items to younger women
and teenagers.
Facts
Zara was founded by Amancio Ortega and Rosalía Mera in 1975 as a family business in downtown
Galicia in the northern part of Spain. Its first store featured low-priced lookalike products of popular,
higher-end clothing and fashion. Amancio Ortega named Zara as such because his preferred name
Zorba was already taken. In the next 8 years, Zara’s approach towards fashion and its business model
gradually generated traction with the Spanish consumer. This led to the opening of 9 new stores in the
biggest cities of Spain.
In 1985, Inditex was incorporated as a holding company, which laid the foundations for a distribution
system capable of reacting to shifting market trends extremely quickly. Ortega created a new design,
manufacturing, and distribution process that could reduce lead times and react to new trends in a
quicker way, which he called “instant fashion”. This was driven by heavy investments in information
technology and utilizing groups instead of individual designers for the critical “design” element.
In the next decade, Zara began aggressively expanding into global markets, which included Portugal,
New York (USA), Paris (France), Mexico, Greece, Belgium, Sweden, Malta, Cyprus, Norway and
Israel. Today, there is hardly a developed country without a Zara store. Zara now has 2,264 stores
strategically located in leading cities across 96 countries. It is no surprise that Zara, which started off as
a small store in Spain, is now the world’s largest fast fashion retailer and is the flagship brand of
Inditex. Its founder, Amancio Ortega, is the sixth richest man in the world according to Forbes
magazine.
Today, Inditex is the world’s largest fashion group with more than 174,000 employees operating more
than 7,400 stores in 202 markets worldwide including 49 online markets. The revenues of Inditex were
USD 23.4 billion in 2019. The other fashion brands in the Inditex portfolio are:
 Zara Home: Home goods and decoration objects founded in 2003. Operating in 183 markets,
70 of them with stores.
16
 Pull & Bear: Casual laid-back clothing and accessories for the young founded in 1991.
Operates in 185 markets, 75 of them with stores.
 Massimo Dutti: High end clothing and accessories for cosmopolitan men and women acquired
in 1995. Operates 186 markets, 74 of them with stores.
 Bershka: Blends urban styles and modern fashion for young women and men founded in 1998.
Operates in 185 markets, 74 of them with stores.
 Stradivarius: Casual and feminine clothes for young women acquired in 1999. Operates 180
markets, 67 of them with stores.
 Oysho: Lingerie, casual outerwear, lounge wear and original accessories founded in 2001.
Operating in 176 markets, 58 of them with stores.
 Uterqüe: High-quality fashion accessories at attractive prices founded in 2008. Operating in

158 markets, 17 of them with stores.
 Apart from fashion brands, Amancio Ortega has also set up a global real estate investment fund,
Pontegadea Inversions, which manages corporate offices across 9 countries including United
States (Seattle), Britain (London), France (Paris), Canada, Italy, South Korea. These corporate
properties house large companies including Facebook, Amazon and Apple, and prestigious
luxury and retail brands.
The Zara brand communication strategy :-

Zara has used almost a zero advertising and endorsement policy throughout its entire existence,
preferring to invest a percentage of its revenues in opening new stores instead. It spends a meager 0.3
per cent of sales on advertising compared to an average of 3.5 per cent by competitors. The brand’s
founder Amancio has never spoken to the media nor has in any way advertised Zara. This is indeed the
mark of a truly successful brand where customers appreciate and desire the brand, which is over and
above product level benefits but strongly driven by the brand experience.
Instead of advertising, Zara uses its store location and store displays as key elements of its marketing strategy. By
choosing to be in the most prominent locations in a city, Zara ensures very high customer traffic for its stores. Its window
displays, which showcase the most outstanding pieces in the collection, are also a powerful communication tool designed
by a specialized team. A lot of time and effort is spent designing the window displays to be artistic and attention grabbing.
According to Zara’s philosophy of fast fashion, the window displays are constantly changed. This strategy goes down to
how the employees dress as well – all Zara employees are required to wear Zara clothes while working in the stores,
but these “uniforms” vary across different Zara stores to reflect socio-economic differences in the
regions they were located. This effectively communicates Zara’s focus on the mass market, yet another
17
detail that reflects its close attention on the customer.
To tap into the emerging e-commerce trend, Zara launched its online boutique in September 2010. The
website was initially available in Spain, the UK, Portugal, Italy, Germany and France, and was
extended to Austria, Ireland, the Netherlands, Belgium and Luxembourg. Over the next 3 years, the
online store became available in the United States, Russia, Canada, Mexico, Romania, and South
Korea. In 2017, Zara’s online store launched in Singapore, Malaysia, Thailand, Vietnam and India.
More recently in March 2018, the brand launched online in Australia and New Zealand. Today, its
online store is available in 66 countries. As of 2019, online sales grew to constitute 14% of Zara’s total
global sales.
As a fast fashion retailer, Zara is definitely aware of the power of e-commerce and has built up a
successful online presence and high-quality customer experience.
Zara as brand offers a wide range of choices: the collections for women, men and children. The brand
also launched a line of cosmetics, perfumes and household products.
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.
The business aspect-
1. Zara as of 2017 manages up to 20 clothing collections a year.
2. Zara is a part of the € 4 billion Inditex group and 100% owned company, based in Barcelona. Over
80% of the group’s sales are contributed by Zara’s 600 stores. Women’s, men’s and children’s wear,
over 724 stores in 56 countries.
3. Zara as of 2017 manages up to 20 clothing collections a year.
4. Zara currently has 1,751 stores worldwide. They incur annual revenue of over $9 Billion dollars
(2009).
5. Its parent company is owned 60% INDITEX by the Ortega family and Inditex has carried out in
2005 to 6.741 billion turnovers. Zara has about 2000 thousands branches around the world. Zara is a
distributor of apparels.
6. On the face of it, none of it really makes sense. For starters the company doesn’t advertise and still
manufactures most of its products in Europe. But when you look at the heart of Ortega’s business you
start to see what a true retail visionary he is. Right from the outset Zara’s business model has been built
with flexibility and speed at its heart. Instrumental to the company’s success is the connection between
the stores, the in-house designers, and its factories. This has always been a key factor, coupled with the
company’s deft logistical management.
18
7 .It’s these vital ingredients that enable him to interpret trends and get them from the catwalk to the
high street within weeks. Before Zara came along it took five to six months. And once we’d had a taste
of what is now commonly referred to as ‘fast fashion’ we just couldn’t get enough of it.
8. 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.
19
CHAPTER 4
RESEARCH METHODOLOGY
20
4.1 Statement of problem undertaken
The basic motive of preparing this report is to study the consumer preference towards Zara and to
know about the Buying Behavior of consumers for Zara.
There Are Various Activities In Supply Chain. But The Major Concern Is To Understand The Impact
Of Zara Supply Chain On Customer Satisfaction.
4.2 Research Design
Research design can be exploratory or conclusive. If you want merely explore the research problem
and you do not want to produce final and conclusive evidences to the research problem, your research
design would be exploratory. Conclusive research design, on the contrary, aims to provide final and
conclusive answers to the research question. Conclusive research be further divided into two sub-
categories.
Furthermore, there are two basic approaches that can be used to investigate the data, which are
quantitative and qualitative approach. Qualitative research is defined as broader term for analytical
methodologies described as naturalistic, anthropological or observation based research.
The researcher designs the questionnaire with close-ended questions on a point scale as it encourages
respondents’ readiness to complete the survey. Moreover, this type of questionnaire consumes less
time, cost and energy.
4.3 Data Sources

Data can be collected from two sources namely – Primary and Secondary sources
Primary source - Primary data is collected for a specific purpose, i.e. they are critically analyzed to find
answers to research question(s).
Primary data collection methods can be divided into two categories: qualitative and quantitative. The
main differences between qualitative and quantitative research methods:
The most popular qualitative methods of data collection and analysis in business studies
are interviews, focus groups, observation, case studies, games and role playing etc.
Popular quantitative methods of data collection and analysis, on the other hand, include correlation
analysis, regression analysis, mean, mode and median and others.
Primary sources can be firsthand accounts of actual events written by an eyewitness or original literary
21
Or artistic works. They may be letters, official records, interviews, survey results, or unanalyzed
statistical data.
Secondary source - Secondary data, refers to a type of data that has been previously published in
journals, magazines, newspapers, books, online portals and other sources.
Secondary data is the data acquired from optional sources like magazines, books, documents, journals,
reports and the web.
4.4 Sampling design:
 Total Population: - This study is conducted on Zara based on the why the preference among fast
fashion retailer is Zara.
 Sampling Units:- The survey sample is based on the occupation.
 Sample Size:-. One of the first things Zara should is the fact that sampling for this research can
be based on probability sampling. Almost every element in the population is already known and
one of the most important factors is that Zara can target specifically to customers.
4.5 Data collection instrument:
On the basis of questionnaire:
Types of questionnaire:
I have chosen structured questionnaires because they consist of closed or prompted questions
(predefined answers) that require the designer to be aware of or to anticipate all possible answers. They
may be carried out over the telephone, face-to-face or by self-completion.
Types of questions:
 In my market research, I have used different types of questions:
 Classification questions: these questions are used to classify the information once it has been
collected. I have used them only for gender and age, because I consider that they are sufficient
for the objectives of my research.


 Open questions: I have used this type of questions because the respondent have the freedom to
express an answer in any way they like.

 Scaled questions: the respondents are asked to give a numerical score that is often out of a
number (usually researches use 5-point scale)

22
CHAPTER 5
STUDY OF SUPPLY CHAIN OF

ZARA
23
STUDY OF SUPPLY CHAIN OF ZARA:-
5.1 - SUPPLIERS OF RAW MATERILS:
Zara buys large quantities of only a few types of fabric (just four or five types, but they can change
from year to year), and does the garment design and related cutting and dyeing in-house. This way
fabric manufacturer can make quick deliveries of bulk quantities of fabric directly to the Zara DC – the
Cube. The company purchases raw fabric from suppliers in Italy, Spain, Portugal and Greece. And
those suppliers deliver within 5 days of orders being placed. Inbound logistics from suppliers are
mostly by truck.
ZARA GLOBEL DISTRIBUTION CENTER “THE CUBE”:
The Cube is 464,500 square meters (5 million square feet), and highly automated with underground
monorail links to 11 Zara-owned clothing factories within a 16 km (10 mile) radius of the Cube. All
raw materials pass through the Cube on their way to the clothing factories, and all finished goods also
pass through on their way out to the stores. The diagram below illustrates Zara’s supply chain model.
Zara’s factories can quickly increase and decrease production rates, so there are fewer inventories in
the supply chain and less need to finance that inventory with working capital. They do only 50 – 60
percent of their manufacturing in advance versus the 80 – 90 percent done by competitors. Zara does
not need to place big bets on yearly fashion trends. They can make many smaller bets on short term
trends that are easier to call correctly.
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5.2 - Just-in-Time Production Chain :-
Known for staying ahead of the trends, Zara changes its apparel designs every two weeks on average;
most of its competitors do so every 10–14 weeks. To maintain this lightning pace, Zara utilizes Just-in-
Time (JIT) production methods to keep turnaround times as tight as possible.
JIT production, also known as JIT manufacturing, is a lean strategy centered on eliminating waste from
business processes to allow for a highly efficient, streamlined system. This, in turn, enables companies
to meet customer demand immediately.
To achieve this, Zara does much of its production in-house, with many of its facilities located near the
company’s Galicia, Spain, headquarters. It also maintains about 85% of capacity for any necessary in-
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season adjustments — allowing for greater flexibility and agility in how and when new items are
launched.
For companies looking to increase their speed to market, Zara’s unique production strategies can offer
valuable lessons. Though most smaller businesses cannot achieve the same efficiency, there are a few
key areas on which they can focus:
 Investing in in-house production processes can allow for greater flexibility and better oversight,
reducing the risk of errors, delays, and inefficiencies.
 Automating in-house production can make a huge difference in getting products manufactured
and out the door as quickly as possible while increasing accuracy.
 Producing products in limited or smaller quantities lends an air of exclusivity and urgency to the
shopping experience, helping to push customers to purchase.
5.3 - Vertical Integration:-
Zara has also tapped into vertical integration to keep its supply chain running smoothly. By acquiring
businesses at different stages of the chain, Zara is able to maintain better control of the value chain,
which means it can react quickly to shifting consumer demands.
Relying minimally on outsourcing, Zara controls everything from design to display to shipping,
allowing it to gather valuable data at every stage. This data can then be analyzed to identify
inefficiencies, pinpoint areas of success, and create accurate forecasting.
Aside from greater control, vertical integration also helps the global clothing retailer reduce risk,
provide greater transparency to customers, and lower the cost of distribution. And because Zara is able
to maintain control and oversight throughout the entire supply chain, better communication and
collaboration between different partners can be achieved as well.
Drawing from the Zara model, businesses may want to consider their options for purchasing suppliers,
merging with partners, or even investing in the sales end of the process.
These strategies are particularly useful for companies that feel their suppliers are exerting too much
power over them. Vertical integration also provides better flexibility to weather difficult market
conditions. However, there is greater risk involved in maintaining control over all or most of the supply
chain, and the upfront organizational costs can be steep.
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5.4 - Lean Inventory Management:-
You'll be hard pressed to find any excess inventory or dead-stock in a Zara warehouse. Throughout the
supply chain, lean is the word, all the way from raw materials to the finished garments on the shelves.
Inventory optimization models are put in place to help the company to determine the quantity that
should be delivered to every single one of its retail stores via shipments that go out twice every week.
The stock delivered is strictly limited, ensuring that each store only receives just want they need. This
goes towards the brand image of being exclusive while avoiding the build up of unpopular stock.
This quick in-season turnaround, from production facilities located close to Zara’s distribution
headquarters in Spain, allows Zara to ship more often and in smaller batches. If the design Zara hastily
creates in an attempt to chase the latest trend does not sell well, little harm is done.
The batch is small, so there’s not a ton of unsold inventory to get rid of. And because the failed
experiment is over quickly, there’s still time to try a different style, and then a different one after that.
Centralized order fulfillment:-
The secret to Zara’s success has been centralization. They can make decisions in a very coordinated
manner.”
— Felipe Caro, associate professor at the University of California at Los Angeles’s Anderson School
of Management and a business adviser to the company.
Zara sticks to a deep, predictable and fast rhythm, based around rapid deliveries to stores.
Each Zara outlet sends in two orders per week on specific days. Trucks leave at specific times and
shipments arrive in stores at specific times. Garments are already labeled and priced upon arriving at
their destination, meaning they’re immediately ready to be sold.
As a result of this clearly defined rhythm, every staff member involved in the supply chain – from
design to procurement, production, distribution, and retail – knows the timeline and how their activities
impact other functions. That certainly also extends to Zara customers, who know when to visit stores
for fresh new garments.
Zara’s reliance on centralized order fulfillment is what enables the company to maintain incredibly
efficient workflows – from initial design right through to delivery to stores and customers. The
company’s approach is just another example of why streamlined operations and supply chain
management are critical to profitability and achieving scale.
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Fig.5.1 Supply chain network
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Fig.5.2 Zara Supply chain network
5.5 - Transportation:-
Because ZARA is more inclined to use high technologies for transporting and distributing products, the
matter of transportation is indispensable for carrying out two-week shipments to stores. The fabrics and
other materials are also quickly distributed because the supplying centers are located near the
headquarters.
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5.6 - A Lean and Agile Supply Chain:-
Stores take deliveries twice per week, and they can get ordered inventory often within two days after
placing their orders. Items are shipped and arrive at stores already on hangers and with tags and prices
on them. So items come off delivery trucks and go directly onto the sales floor. This makes it possible
for store managers to order and receive the products customers want when they want them, week by
week.
Zara stores respond practically in real-time as styles and customer preferences evolve. It is a great
business model for success in the high-change and hard to predict fashion industry. It means about half
of the clothing the company sells, which includes most of its high margin and unique fashion items
(but not its lower margin basic items), is manufactured based on highly accurate, short-term (2 – 6
week) demand forecasts. Because this business model tracks so closely to real customer demand from
one month to the next, it frees the company to a large degree from getting caught in cyclical market ups
and downs that ensnare its competitors (those cycles are driven by boom-to-bust gyrations generated
by the bullwhip effect). Turbulence in the global economy since 2008 has hurt sales at many competing
fashion retailers, but Zara has seen steady, profitable growth during this time.
A fast-moving and finely tuned supply chain like Zara’s requires constant attention to keep it running
smoothly. Supply chain planners and managers are always watching customer demand and making
adjustments to manufacturing and supply chain operations. The screenshot below shows the result of
one simulation using the supply chain model outlined above. Continuous adjustments need to be made
to production rates, vehicles, and delivery routes and schedules to keep this supply chain working well.
Buying technology similar to that used by Zara is easy. But for the technology to be used effectively,
competitors must learn about the mental models and the operating procedures used by Zara. Good
mental models enable people to understand the potentials and see the opportunities that a real-time
supply chain offers. Effective operating procedures enable people to act on what they see and capitalize
on the competitive advantages their technology gives them.
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Fig.5.3 Transportations route of zara
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5.7 Zara's Business Operations and Strategy: How and Why They Worked:
An Analysis of the Business Operations of Inditex Retailers :
Inditex (Zara) was once the world’s largest clothing manufacturer. Beginning in 1974 as Amancio
Ortega Gaona’s very humble clothing shop, Inditex has grown steadily for years. In 2019, Inditex
manufactured more than 840 million garments annually via 6,300 stores in 85 different countries.
Although in 2020, because of the COVID-19 epidemic, it closed 16% of its stores, for a while it was
adding 500 outlets per year.
Mission
“Through its business model Zara aims to contribute to the sustainable development of society and that
of the environment with which we interact”. Interestingly, Zara’s (Inditex's) mission statement here
makes no mention of clothing – either directly or indirectly. Instead, it introduces three salient
components of Zara: the business model, the environment, and society at large. The former appeals to
Zara’s unique strategy. The latter two elements highlight Zara’s appeal to environmental sustainability
(as evidenced by various initiatives in their product design and distribution) and a sustainable society.
Sustainable Society
Having been conceived in relatively volatile Northern Spain, perhaps the "sustainable society" bit
included in the mission statement intimates a desire for tranquility, integration, and general welfare.
While it cannot be said whether or not Zara is successful in creating a greater general welfare in the
societies it touches, it can be said definitively that it influences a great number of societies. From China
to the U.S. to Europe to Brazil, Zara reaches vastly different cultures.
Given the success of Zara in these markets, and knowing that each transaction is engaged in
voluntarily, it can be said that Zara has at the very least provided a product at a price many find
agreeable. Whether or not this creates an increase in general welfare is hard to say.
Environmentally Friendly
Zara’s commitment to environmental sustainability is readily identifiable. According to Zara’s official

website, all Zara stores have managed an average 20% reduction of electrical consumption in recent
times. Recycling efforts of furniture and decoration, organic manufacturing processes, and biodiesel
fuel all contribute to Zara’s environmentally friendly image. You can see in Chart 1 below, Zara’s
environmentally conscious philosophy bears out in its waste management. While the number of
garments manufactured by Zara (in blue) has increased steadily since 2008, industrial waste (in green)
has decreased or maintained very low levels.
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2 + 1 Strategic Approach to Operations
Zara’s mission includes little to give the reader a sense of what Zara is and what distinguishes Zara
from the rest. These elements might be collectively known as Zara’s overall business strategy. Two key
components make up Zara’s distinctive strategy.
Vertical Integration
Firstly, Zara is vertically integrated. It manages design, production, shipment, display, promotion,
sales, and feedback itself, relying only diminutively on outsourcing. This vertical integration approach
gives Zara a lot of control over how it operates. In turn, Zara leverages this control into precise data
acquisition and forecasting, seamless modifications, and reliable quality in its products. Being
vertically integrated also enables more fluid communications between stages of the Zara product cycle:
design, manufacturing, transportation, etc. This being a sort of subset of the control advantage, Zara
has a distinct advantage in its ability to create efficient supply chains.
Logistical Trade-Offs
The vertically integrated strategy comes at a cost, however. Competitors can book factory space in
advance abroad for less money and with greater production assurances. Zara manufactures most of its
products in Europe where it is more costly.
However, an overwhelming majority of Zara’s sales are in Europe. According to Zara’s official
website, sales by geographical region show Europe with 66%, Asia with 20%, and America with 14%
of sales. Outsourcing to Asia necessitates very costly transportation costs back to its biggest market.
Therefore, by keeping manufacturing at home, Zara circumnavigates this cost. Something many other
clothing retailers simply cannot replicate because they rely so heavily on cheap manufacturing labor
from Asia.
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Control over design and manufacturing by keeping manufacturing processes close to management
centers also makes garments both higher quality and easier to manipulate. Not only are European
workers more skilled, European capital equipment is more precise. The confluence of better capital
equipment and more adept employees results in higher quality garments. Moreover, vertical integration
and locating manufacturing close to markets enables Zara to manipulate designs and churn out new
ones very quickly, introducing Zara’s second most important strategy.
Product Replacement Cycle
Because Zara manufactures its products in Europe, it can very rapidly change designs to accommodate
dynamic demand for various styles. This relates closely to Zara’s lightning-fast product replacement,
unparalleled in the industry. Fast product replacement does two things for Zara. First, it enables Zara to
adapt to consumer demands quickly, aligning itself with demand in a meaningful way. And secondly, it
encourages customers to buy in a timely manner because the particular product or design that strikes
your fancy today may be replaced by something else tomorrow.
Product Quality
In Zara, every purchase is an impulse buy…You are buying clothes not because you love them, but
because likely to be gone in a matter of days. While this quote does highlight Zara’s low-inventory
strategy and its rocket-fast product replacement cycle, it may miss the mark on the experience Zara
creates. Perhaps impulsive buys are something common at Zara stores, and perhaps Zara wishes to
create such an environment; but customers keep coming back for more Zara products. So this statement
might wax unrealistic as sentiments usually indicate customers are happy. Many report the quality of
Zara products to be quite good compared to others that offer similar, but much more expensive
products – like Armani, Gucci, or Prada. And as we explored early, there may be some vertically
integrated evidence to back that assertion up.
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Low Inventory Strategy
Moving on, while vertical integration and product replacement highlight two of Zara’s strategic and
very unique approaches to retail fashion, there exist many other stratagems that merit mention. Perhaps
linked to the fast product replacement and turnover that makes customers think “I need to buy this
now!” is Zara’s artificially low inventory environment. The idea is that low-inventories create a sense
of urgency among customers. They think: “I had better buy this dress because there are only two left!”
Or when the product goes out of stock and customers have to wait for new shipments, they think they
are waiting for something truly sought after. While this amounts to something like a psychological
ruse, low-inventories enable Zara to decrease the number of price reduction events.
Key Success Factors
Vertical integration seems most fundamental to Zara’s success because it enables many of Zara’s
periphery stratagems.
For example, rapid product replacement cycles relate closely to vertical integration. Without close
communication between supply chain units, rapid product replacement cycles would be impossible.
With that, rapid product replacement cycles themselves enable other stratagems.
Proprietary Software and Design Flow

Zara uses proprietary software to analyze fashion trends from each of its many hundreds of stores
around the world. This proprietary software, on top of a specially trained professional work-force to
do the same, capitalizes off of Zara’s rapid product replacement cycles by cataloguing in real-time
which products are being purchased, in what quantity, and where. This enables Zara to realize the
newest fashion trends. Interestingly too, because Zara samples more designs in more stores than
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anyone else, oftentimes it knows which designs to double down on and which to let die long before
its competitors. In this way, Zara really distinguishes itself by reversing the usually flow from
design, manufacturing, transport, and then to the customer; putting the customer first instead.
Location Strategy
In line with Zara’s high-fashion-at-a-low-price mantra, Zara’s location strategy does not lack
grandiosity. “The retail strategy for luxury brands is to try to keep as far away from the likes of Zara.
Zara’s strategy is to get as close to them as possible.
For Zara to successfully compete with luxury brands, it must first identify with customers as being a
luxury brand. Zara’s location strategy might be credited with its success in this regard. Zara’s strategy
is to project high-class fashion from all of its retail locations and to do so right next door to its luxury
brand competitors.
For example,
In Istanbul Zara “can be found one street away from Cartier, Hermes, and Chanel” ,three very
expensive brands. Zara likes to distinguish itself, too, by establishing stores in unique settings such as
the San Antonio el Real, an 18th century convent in Salamanaca; a historic cinema in Elche, Spain; and
666 Fifth Avenue in New York. The latter reportedly cost $324 million – the most expensive piece of
real estate ever sold in Manhattan.
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5.8 Zara marketing strategies:
5.8.1 Zara 4p’s marketing strategy
To get a better understanding of Zara’s marketing strategy, we need to see all the important sides of
marketing. This leads us to a traditional marketing research method, which is called the 4p’s strategy,
which includes products, place, price, and promotion. Let’s see how Zara strategizes in these four
sections.
Products
Zara is an “instant fashion” brand, which means it identifies the latest fashion trends and brings the
design to its stores quickly at reasonable prices. This is the source of the brand’s quick growth and
reputation. The brand’s products look somewhat similar to the hottest items in the market, but they
have different traits depending on specific markets. Zara does its research before releasing anything to
suit the local culture and people’s tastes.
In short, Zara products have the latest styles, trending designs, affordable prices, and local-adapted
tastes.
Place
Zara has nearly 3000 stores worldwide, but the even more incredible fact is that it is a vertically
integrated retailer. This means Zara does all of the designs, manufacturing, and distribution itself
without third-party suppliers. This brings the same environment and experience for customers
everywhere. Its store’s design is modern, luxurious, and predominantly white.
Online selling has been carefully planned and limited to specific countries as well. This creates a
throughout strategy for the company’s growth, and it seems to work because Zara has managed to
establish itself as one leading fashion retailer globally.
Price
Zara’s pricing strategy focuses on the average shopper that wants the latest fashion items at affordable
prices. So its prices have to be catered to the price-sensitive buyers as well. The pricing strategy that
Zara applied helped its products meet the needs of a very large consumer segment. But Zara doesn’t
compromise the product’s quality, so it will be lower when compared to other brands such as Hugo
Boss or Uniqlo.
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Some Zara stores have very premium pricing, whereas others have much more affordable prices, based
on the locations and targeted customers. Zara is able to maintain a good pricing strategy by optimizing
development and distribution costs. This creates a unique brand image and grows the brand’s market
share faster, especially among millennials.
Promotion
One thing to note is that Zara spends very little on promotion campaigns compared to average fashion
retailers. It just simply doesn’t market itself as aggressively as other companies. But this doesn’t mean
it has no focus on marketing. Zara mainly focuses on opening new stores and word of mouth. The key
promotion strategy of Zara is based on experience, exclusivity, affordability, and differentiation.
This strategy is visible through the attention to each detail of its showrooms. Everything is precise,
professional, and elegant. Every store manager can talk directly to its counterparts in Spain regarding
the situation. By focusing on the brand’s core qualities towards buyers, Zara can build its popularity
with an effective brand image. When it comes to promotion, Zara has also used the power of social
media channels effectively.
Zara’s marketing tactics
For Zara, it is not about how much it spends on advertising, but it is all about the customer. How Zara
can provide an experience for the customer in every place of existence is what the brand has focused
on since day one. Here are five marketing tactics that Zara has implemented to achieve that goal.
Focus on customer’s experience
Product used to be the focal point of every business, but not anymore. In the new economy, the
customer’s experience matters more than the product itself in the mind of the shopper. And Zara fully
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understands this. It tries to capitalize on the store experience by always offering reasons for the buyers
to revisit the stores. A Zara’s loyal customer can visit the store about six times per year.
Zara’s fast-fashion formula provides frictionless shopping experience in a highly crated environment
that offers limited supply and new styles that rotate continuously. Shoppers feel like if they buy items
from Zara, other people won’t have the same outfit. So not only buyers are trendy, but they are also
unique, which sounds pretty cool like being in a cool kids’ club.
Value for the price
Many fashion brands try to be innovators and the leaders of a new movement, but Zara takes a
completely different approach. It doesn’t want to be a trendsetter; it just wants to be a fashion company
that customers need. Buyers now want an item’s value to be beyond price, with more time-saving and
convenience.
Zara has a deep understanding of these values and delivers affordable high fashion items in just two
weeks. That translates into a great brand with high values for customers. Through this approach, Zara
can earn many loyal buyers that are less price-sensitive and return a higher profit margin.
Zara is not the cheapest in the fast-fashion industry, but it delivers trend-right products at appealing
prices consistently, which makes it have the best-branded value.
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SWOT analysis study
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SWOT analysis:-
The SWOT analysis of Zara differentiates all the main strengths, weaknesses, opportunities, and threats
that would help the company to increase its growth. Read out this article, to get an understanding of
where Zara stands.
The SWOT analysis of Zara specifies the strengths of the company at which it is good at and what
separates it from its competitors, its weakness that stops the brand to perform well and should work
more on it to improve. It lists its opportunities that the brand can use to increase its market share and
brand value. It also throws light on the threat that has the potential to harm the brand.
To make sure that Zara meets the long-term competitive advantage it must address the various
concerns highlighted in the SWOT analysis of Zara
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Strengths:
 Fast Fashion Brand

 Strong Supply Chain Management 
 Unique Designs
 Investment in Technology
 Reasonable Price
 Customer Service and Experience
Weaknesses:
 Low Presence in few Markets

 Less Marketing
 Generalized Collection

Opportunities:
 Using AI for better Customer Experience

 Marketing
 Developing its Retail Channels
 Online Commerce


Threats:
 Strong Competitors
 Regulation
 Increase in Raw Material Cost


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Marketing mix of Zara
Marketing Mix of Zara analyses the brand/company which covers 4Ps (Product, Price, Place,
Promotion) and explains the Zara marketing strategy. As of 2020, there are several marketing strategies
like product/service innovation, marketing investment, customer experience etc. which have helped the
brand grow.
Marketing strategy helps companies achieve business goals & objectives, and marketing mix (4Ps) is
the widely used framework to define the strategies. This article elaborates the product, pricing,
advertising & distribution strategies used by Zara.
Let us start the Zara Marketing Mix & Strategy:
1. Zara Product Strategy:
The product strategy and mix in Zara marketing strategy can be explained as follows:
Zara is one of the leading luxury fashion labels in the world. Zara’s offer products for men, women and
children. It offers jeans, trousers, tops, skirts, knitwear, T-shirts, shoes, bags and accessories. All these
are the product strategy in the marketing mix of Zara. It is a one stop solution for everyone whether
you want to buy formals or causals. One can choose from different styles Zara has to offer.
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It launches at least 10,000 new designs in a year. Zara products are a hit with the high end fashionistas
as well as with the masses. The taste of the target market influences the availability of products line.
Zara also teams up with local talent to provide best fashion trends.
Zara believes in sustainable development and is committed to reduce the production of waste. It
recycles its hangers and security tags. Zara gives out their products in paper or biodegradable plastic
bags. Zara uses ecological fabrics like organic cotton in the production of some of their items. These
products have a unique and distinct label which can be identifies easily.
2. Zara Price/Pricing Strategy:
Zara provides latest fashion at much lower prices in all its international stores as compared to other
competing international brands. Zara follows low pricing strategy. It can afford to do that as it doesn’t
spend enormous amount of money on advertisements and raw material. It has an overall low cost
structure compared to its competitors.
Zara’s prices are country specific. The tagging on their products are done locally in each respective
market. Zara sets market-based pricing strategy which sets the target price consumer is willing to pay.
The budget for production according to the target price. This in turn fixes the profit margin they earn
on every item. This gives an insight on the marketing mix pricing strategy of Zara.
The brand uses various schemes as a way of sales promotion. Zara has low level of discounting around
the year and discount sales of 50% or more twice in a year, for which the consumers eagerly wait.
3. Zara Place & Distribution Strategy:
Zara has enormous reach with stores in 88 countries, with over 6500 outlets. Zara also sells through its
online store. All these cover the marketing mix place & distribution strategy of the brand. It is a
vertically integrated company.
Zara’s supply chain is what provides them a competitive advantage. It uses its unique business model
to bring new products and fashion to the market in shortest time possible. Store managers send orders
to the headquarters twice a week based on the sales data of the store and the shoppers’ preferences.
The commercial team compiles the order then sends it to the manufacturing hub. The commercial team
also coordinates with the in-house designers to find out new trends and develop new products. New
products are produced in relatively small batches which helps them give exclusivity.
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Most of the Zara stores are owned by the company and are not a franchise. This helps in keeping the
shopping experience at Zara intact and constant be it London or Paris or New Delhi. The stores are
located in posh locations and are spacious and modern in look with walled mirrors and excellent
lightings.
4. Zara Promotion & Advertising Strategy:

The promotional and advertising strategy in the Zara marketing strategy is as follows:
Zara barely spends any money on advertising. It is famous for being press shy. Even its owner never
gives any press interviews. Unlike its competitors, Zara doesn’t engage in any flashy campaigns. This
is the reason why Zara’s advertisements are not visible on television. Zara’s unique selling proposition
is its short processing time, a large variety of styles and affordable pricing. It relies on word of mouth
promotion and social media rather than expensive marketing tools. Zara’s social media reach is quite
exceptional. It has 2.5 million followers on Facebook and 15 million followers on Instagram. It is
interesting to note that Zara doesn’t put its logo on their products.
Zara prefers spending their percentage of revenue in opening new stores. The brand spends money on
expensive real estate for its stores and on its décor. Zara believes that its show windows are suffice for
advertisements and they do not need anything else to sell their products. This concludes the marketing
mix of Zara.
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CHAPTER 6
ANALYSIS AND INTERPRETATION
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The Main Competitor: H&M
H&M is a Sweden Retailer Group, established in 1947, founded initially by Erling Persson as
“Hennes” a new fashion chain for women with a new concept: sell frequently updated fashion at
affordable prices. In 1968, it acquired Mauritz Widforss and became a men’s, women’s and children’s
store called Hennes and Mauritz (known as H&M).
At the market research, about 99,2% of the respondents know the brand H&M, while 0,8% do not
know.
Nowadays has 161000 employees, 4500 stores in 66 markets, and 41 online markets.
The group has six brands: H&M (founded in 1947), Weekday (founded in 2002), Cheap Monday
(founded in 2004), Monki (founded in 2006), COS (founded in 2007) and &Other Stories (founded in
2015). H&M is the main brand of the group, has more than 4087 stores and is present in 66 markets
and 41 online markets.(H&M, 2017).
They do not own any factory, so they outsourced production from external suppliers, which about 75
percent are from Asia.
The key factors of its success are the location of the stores, the flexibility of the production and the low
prices. Since they have a longer supply chain, it was impossible for H&M to compete with Zara in
terms of always selling products according to with the latest trends. That way, they put the focus in
competing in low-prices, and their products are about 60 percent cheaper than Zara’s. (Taplin, 2014).
H&M spends a lot in advertising, and since 2004 they start to adopt a collaboration strategy with
celebrities and famous designers, creating limited editions in their collection. That has been giving the
brand a powerful image.
Celebrities like Lana del, Madonna and more recently David Beckham were present in H&M
commercials.
They already collaborated with designers like Karl Lagerfeld from the channel, Roberto Cavalli,
Jimmy Choo, Versace, Balmain and Kenzo.
H&M is considered one of the most internationalized brands, more than Zara is, about 90 percent of its
turnover comes from overseas. They followed the same expansion strategy that Zara, going first to
markets with a similar culture.
They firstly expand to Nordic Countries in 1964, starting with Norway and Denmark. After, in 1976,
they expanded to UK and Switzerland. The mix of cultures in Switzerland made it a reference point to
expand to other countries.
Just in the beginning of the 21st century, they expand to the Eastern and Southern Europe.
“When we expand, it is important to listen carefully to the local market. We need to adapt but not at the
expanse of losing what makes us who we are.” H&M
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When comparing H&M with Zara, we can verify that in the major part of the characteristics the
respondents evaluated both brands as being equal: a variety of products, products according to new
trends, clothes for all occasions, clothes for different styles, price/quality relation, store environment,
employees’ assistance and store location.
About the quality of products and store design, respondents classify H&M as being worse than Zara.
The second highest values make possible to conclude that the respondents classify, in general, H&M as
being worse than Zara.
Attachment 1: Contribution of each brand to the sales of Inditex
Net Sales (million €) Net Sales (%)

Zara 13.628 65,2
Pull and Bear 1.417 6,8
Massimo Dutti 1.498 7,2
Bershka 1.875 9
Stradivarius 1.289 6,2
Oysho 452 2,2
Zara Home 666 3,2
Uterqüe 75 0,4
Lefties ? ?
Table– Contribution of each brand to the sales of Inditex

Source: Inditex Annual Report
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Attachment 2: Zara’s characteristics according to the respondents
700
600
500
400
300
200
100
0
Very Bad Bad Not Bad Neither Good Good Very Good
Graphic– Zara’s characteristics according to the respondents.

Source: Market Research
Attachment 3: Reasons why people use to shop in Zara.
350
300
250
200
150
100
50
0
Brand Loyalty Huge variety of Good Products Store location
Clothes price/quality according to new
relation trends
Very little important Little important Important Very important
Graphic– Reasons why people shop in Zara.

49
Attachment 4: Number of suppliers with purchase and factories
Figure - Number of suppliers with purchase and factories

Source: Inditex Annual Report
Attachment 5: Join Life boxes to recycle clothes.
Figure– Join Life boxes.

Source: Zara’s Official Website.
50
Attachment 6: How frequently people use to visit Zara’s store and the main
reason to shop.
Graphic - How frequently people visit Zara’s store.

Graphic– Reasons to shop in Zara.

51
Attachment 7: What people use to buy in Zara.
Casual clothes
7,0% Clothes for special occasions
8,5% Work clothes
0,4% Sport clothes
Shoes
16,0% 47,8% Bags and/or accessories
20,3%
Graphic– What people buy in Zara.

Attachment 8: Zara’s Website – Product composition and care
Figure - Zara’s Website – Product composition and care

Source: Zara’s Official Website
52
Attachment 9: Do people use Zara’s online platforms and why they use it.
Graphic– Do people use Zara’s online platforms?

Graphic– Reasons why people use Zara’s online platforms.

53
Attachment 10: H&M characteristics comparing with Zara’s.
700
600
500
400
300
200
100
0
Worse Equal Better
Graphic - H&M characteristics comparing with Zara’s.

Source: Google
54
CHAPTER 7
FINDINGS
55
Findings:
ZARA does not manufacture the complete products in its facility. Instead, it assembles elements of
product from suppliers, gives it a finish, and sells these to the end customer. This implies that Zara and
suppliers are managed by the principles of industrial sub-contract and these relationships are affected
by factors characteristic to this kind of organizations. This is an example seen in with respect to single
and especially individual source suppliers, having commanding positions in the relationship with Zara
as Zara is intensely dependent on these deliveries. The company makes an effort to setup better
relationships with such suppliers, and maintain these relationships with frame or partnering
agreements.
Theoretical Aids to Consumer-Supplier Relationships
Out of the different theories, each theory applies to the aspects of customer-supplierrelationship, and
strives to aid in optimizing the Zara’s SCM. The Transaction Cost theory helps determine what to
produce and what to have suppliers deliver. The Principal Agent theory helps understand how Zara
should streamline these relationships. The Network Based theory perspective stresses on the need for
developing long-term connections with suppliers so as to access important information.
This can be realized with respect to Kraljic’s portfolio technique, managing suppliers on the basis of
their importance for the organization. This indicates the necessity for market-inclined relationships
with certain suppliers and intimate network-based relationships with others. Zara’ supply chain
management follows vertically integrated supply chain as we discussed earlier. Therefore, Zara keeps
control over suppliers. Demands are easily met. However, Zara has number of suppliers; speed and
accuracy is prime concern of Zara to decrease lead-time. There are risk involves in supply chain like
uncertainty, insecurity, delay in delivery and shortage of raw material. Zara’s 95% suppliers are located
near to Zara’s factories.
56
The Procurement Procedure
ZARA has defined a process that explains how procurement and communication with suppliers are to
be managed. This process is a component of the main business process used in Zara. Zara use vertically
integrated supply chain, where different elements are integrated like design, production, distribution
and retailing.
7.1 DOCUMENTATION
Today’s wide-ranging requirements for product documentation are regarded as the most cardinal
elements, since both Zara staffs and suppliers find it difficult to manage. Orders given by ZARA are
every so often incomplete or issued too late contributing to difficulty for the vendors (suppliers) to
deliver them on time. Dramatic changes and corrections are made, orders are not regularly updated but
and feedback on clarifications is received late. This is not only an ZARA challenge but also the
supplier’s. From this standpoint, the need for more contracts, illustrating the requirements and
57
expectations and better contract assessment, becomes apparent. Challenges with respect to
documentation are intimately attached to the absence of competence. As mentioned earlier, people will
not be able to handle things in which they have little or no knowledge. A marginal percentage of
interviewees stressed on the need for better training of suppliers as well as ZARA personnel. For
instance, how to deal with documentation related requirements.
7.2 CO-OPERATION
Agents representing Zara and suppliers consider that intimate mutual aid and better co-operation as
improvement areas. Mutual aid in this sense is primarily related to long-term dedication and contracts
with key suppliers as well as enhanced cooperation with them prior to and during project execution.
Improved use of supplier proficiency (technical clarifications) by supplier’s participation in design
reviews is useful for Zara in seeking optimized products from supply-chain inclined perspective.
7.3 COMMUNICATION
Effective communication is primarily concerned about consistent use of single point of contact towards
suppliers and formal communication procedures. This is to ensure that people receive all important
information without fail. Today Zara appears not merely as a single organization, but as a
conglomeration of numerous organizations, each with different perceptions. This, indeed, has not just
been reported by suppliers, but also by approved Zara employees. The need for enhanced
communication within the company is also seen through the stated presence of conflicts of interest
about technical as well as commercial aspects. According to a Zara representative, extended focus on
cross-sectional efforts in the possession stage is potentially an effective approach to these challenges.
Thus, there is a necessity for explanation of role, responsibility, authority, and more usage of formal
communication procedures (Within the organization, internally, as well as with suppliers, externally).
58
7.4 PROGRESS STATEMENT

Progress reporting is mainly concerned about either delay in sending reports or not being sent by
suppliers. This is contemplated as a challenge as it turns out to be a difficult task to keep track of the
status of deliveries, especially crucial in case of delays. The consequence of this is that the staffs of
ZARA have to spend time, labor and facilities to get this information without depending on anyone.
7.5 LEAD TIME

The effect on the supply-chain Agility is initiated as an answer to the dynamic and choppy markets and
customer demand. It directly impacts the supply-chains and is one of the reasons models such as agile
supply-chain and fast-fashion emerged. The need for shrinking lead times and promoting flexibility in
fast fashion required the involvement of suppliers to achieve a higher level of customer satisfaction.
Supply Chain Operation (SCO) controls three clear aspects: maximize use of resources, minimize
inventory, reduce and lead times.
These three factors are said to directly influence pricing, customer satisfaction, and by and large
business values such as profit, turnover, and sales. Production ratio, in Zara, ought to be reserved as
small as possible, setting aside the extra capacity in the products, which are predominantly necessary in
manufacturing. It disputes that big orders, typically, will lead to inventory increase. On the other hand,
with Zara stores greater than before in number, across the world, lead times cannot be kept very short.
The two aspects of lead time, in a production environment include complexity and ambiguity. Zara is
making fashion outfits, which have low complexity, but high uncertainty.
7.6 PRESSURE ON SUPPLIER

Suppliers, under progressive pressure due to changing consumer needs reflect on the whole supply-
chain (Carmen de la Cruz Iglesias, 2013). The contemporary fashion business continues to be acutely
competitive with added pressure for fashion organizations to compete on price as well as their ability to
deliver freshness While most of the retailers are stressed with this new scenario.
59
CHAPTER 8
RECOMMENDATIONS
60
Recommendations:

A possible solution that helps cut down the huge amount of required documentation is focus on
standardization of products. More standardized products indicate more standardized processes,
facilitating reuse of documentation. Products and processes have to be approved every time there is a
change.
Many actions are recommended to enhance communication some of them include increased training in
business processes, systems, and products, emphasizing on multidisciplinary and department specific
aspects. The main goal of such training is to better the understanding of the well-known processes, in
general, and to ensure that working and communication prototypes are aligned. Furthermore, educating
on value-chain is targeted at offering insights on the dynamics of the value chain.
Timely and continuous interaction between the customer and supplier can enhance SCM. Also, if
customers treat their suppliers well, they can be sure of a long-term association. These truths must be
established by Zara and adopted in its day-to-day processes. Zara’s designers collect essential data on
sales, inventory from all the stores every day, and use this to determine the situation.
The raw input is collected through quantitative and qualitative methods. Zara’s store managers should
assess sales and renewal reports on an hourly basis. Alternatively ,the store managers should order
materials instead of waiting for the information sent from the H. Q. The raw data should be discussed
with suppliers, design team, fast modeling team, market experts, and purchasers. Feedback will
enhance coordination among different component of SCM and reduce communication gap.
61
CHAPTER 9
CONCLUSION
62
Conclusion:
In conclusion, Zara breaks the rules of the fashion industry. Zara is successful in fast fashion industry
because they use the right business model, meet the individuation requirement of customers,
produce more styles but limited quantity, use young designers, collected data by ADS, tightly
control the sales condition by POS, in-house manufacture process, and clear logistic system.
Instead of traditional new product process, Zara uses a vertical-oriented system that can faster the
speed and lower the cost. It is a win-win method as customers can catch the fresh fashion items and
business can obtain more profit. Inspired from Zara's successful story, companies can break the
traditional product process, therefore, improve their business performance.
Over the last decades Zara introduced agile supply chain (ASC) in the fast fashion industry and
positioned itself third in the world retailers ranking. This came as a result of close communication
between customers and its designers and the ability to ship the desired items in a week catching the
sales moment.
All these prove that ASC is an aspect enhancing competition among organizations. Another lesson is
that efficient production organization with a good balance between in house and outsourcing task leads
to minimum lead times and increase in market share for Zara. The supply chain is not on an isolated
agile process of Zara, but indeed the whole organization is agile and working very efficient.
By using quick response Zara aims to reduce both excess stock holding in the supply chain and risk
associated with forecasting as product specifications are not finalized until closer to delivery (Bruce
and Daly, 2006).
What could be concluded from Zara's success from the perspective of speed is that several benefits
such as improved customer satisfaction, increased market opportunity, decreased overall risks, and
reduced total costs can be simultaneously achieved through being fast (Li, 2009).
The Zara brand was born with a keen eye on its customer – its ability to understand, predict and deliver
on its customers’ preferences for trendy fashion at affordable prices. In addition to its effective supply
63
chain, the brand’s ability to have its customers co-create designs is unique and provides it with a
competitive advantage. Most fashion trends often start unexpectedly, originate from uncommon places
and grow out of nowhere. With reference to the pink scarf trend mentioned above, it could have been
that Hollywood actress Scarlett Johansson had worn a pink scarf to a charity gala the evening before in
Los Angeles, or golf star Michelle We had showcased a pink scarf at a celebrity tournament in Asia.
The fact that Zara was able to quickly jump on to this trend and provide hundreds of customers with
the pink scarves they desperately wanted to buy.
In a world swamped with Big Data, and yet more collected at an even more rapid pace than before,
brands still need to be careful and observant. Big Data does not provide answers to all business
challenges, and it may be too hyped to be considered as the Holy Grail.
One of the secrets behind Zara’s global success is the culture and the respect for the fact that no one is
a better, authentic trendsetter than the customer himself or herself – and this philosophy needs to be
continually reflected in all its business strategies going forward.
64
CHAPTER 10
REFERENCES
65
References:-
I. https://martinroll.com/resources/articles/strategy/the-secret-of-zaras-success-a-culture-of-customer-co-
creation/
II. Balmer, J.M.T. and Gray, E.R. (2003), “Corporate brands: what are they? What of them?” European
Journal of Marketing, Vol. 37 No. 7/8, pp.972-97.
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https://www.3isite.com/articles/Deconstructing_Zara_handout_version.pdf.
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Communications: An International Journal, Vol. 7 No. 2, pp.92-9.
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Journal of Logistics Management, Vol. 17 No. 1, 2006, pp. 75-94, Emerald Group Publishing
VI. Folpe, J. (2000), “Zara has a Made-to-Order Plan for Success”, Fortune, Sept.4
VII. Gluyas, R. (2004), The Australian, 15 November
VIII. How Zara Fashions its Supply Chain, Strategic Direction, VO 21, NO. 10 2005, pp. 28-31, Emerald
Group PublishingLimited
IX. Kennedy, S.H. (1977), “Nurturing corporate images – total communication or ego trip”, European
Journal of Marketing, Vol. 11, pp.120-64.
X. Murphy, (2008), “Expansion Boosts Inditex Net”, Womenâ€Ÿs Wear Daily, April 1
XI. D., and Turconi, S.(2008)“Fast Fashion Lessons”, Business Strategy Review, Summer
XII. linkedin.com/news
XIII. van Rekom, J. (1997), “Deriving an operational measure of corporate identity”, European Journal of
Marketing, Vol. 31 No. 5/6, pp.410-22.
XIV. Waller, A. (1998), “The globalization of business: the role of supply chain management”, Management
Focus, No. 11.
66
a. Press, Tamarac, Florida. Website

http://www.llumina.com/store/cccm.htm or www.Llumina.com. Toll free phone: (866)
229-9244 or Reg. (954) 726-0902.
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media, and creative consumers: Implications for international marketing strategy. Business
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XVI. Christopher, M. (2000). The agile supply chain: competing in volatile markets. Industrial
marketing management, 29(1), 37-44.
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1. What is the 4ps marketing for the Zara case study?
Ans: The four marketing mix strategies of Zara are:
 Product: Zara offers a vast amount of clothing, accessories, and other trendiest style items for men,
women, and children.
 Price: Despite being one of the high-end brands, Zara uses fantastic pricing schemes to attract
customers of competitive brands and provides products at a low price.
 Place: Zara has enormous distribution channels that follow a unique business model to bring the latest
products to the market in the shortest time.
 People: Zara targets young customers who want trendy clothes at an affordable price.
2. How well does Zara perform compared to its competitors?
Ans: While most of the competitors stay stagnant with a fashion line, Zara chooses to operate a seasonal
basis and pushes the trendiest designs as quickly as possible. The company manufactures in low quantity and
supplies them scarcely to meet the high demand. Unlike the competitors, the brand can make a variety of
choices in the latest styles, which in turn increases the success ratio. They rely on customer preferences and
feedback for the production of the new line.
3. What are the sources of Zara's competitive advantage?
Ans: Zara has 200 designers who turn the latest fashion into products. Some of the sources of Zara's
competitive advantage are:
 Intense research and development capabilities

 The firm holding of the intellectual properties
 Exclusive logistics and global distribution rights
 Ownership of capital equipment
 Superior product or customer support
 Low cost production for high volume sales and turnover
 Economic factors
 Superior database management and data processing capabilities
 Strong marketing strategy
 Excellent management team and operations
73
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ZARA’S CASE STUDY

Project Submitted to the

In the Partial Fulfillment of the Requirement for the Degree of

Under the Guidance and Supervision of

PROF. SWAMYNATHAN RAMAKRISHAN

MR. SWAMYNATHAN RAMAKRISHAN

Date: 2ND JAN 2021

Signature of the Guide

Chapter No Description Page No

4.1. Statement of the problem undertaken

6. Analysis and interpretation 46

 Product Organization and Design

1.2 NEED FOR STUDY

1.3 Mission and Objective of the study

"At the store

For manufacturing and features, the mission is as below,

"With the product

 We use ecological fabrics.

The main objectives are –

 TO STUDY SUPPLY CHAIN OPERATIONS OF ZARA

 TO DO A COMPARITIVE STUDY OF ZARA AND KFC SUPPLY CHAIN

 TO UNDERSTAND THE IMPACT OF ZARA SUPPLY CHAIN ON CUSTOMER

 TO UNDERSTAND MARKETING STRATEGIES OF ZARA

MANUFACTURING AND DISTRIBUTION

EXPLOITATION AND CHILD LABOUR

3.1 Literature review :-

 Uterqüe: High-quality fashion accessories at attractive prices founded in 2008. Operating in

The Zara brand communication strategy :-

detail that reflects its close attention on the customer.

The business aspect-

1. Zara as of 2017 manages up to 20 clothing collections a year.

3. Zara as of 2017 manages up to 20 clothing collections a year.

4.1 Statement of problem undertaken

4.2 Research Design

4.3 Data Sources

4.4 Sampling design:

 Sampling Units:- The survey sample is based on the occupation.

STUDY OF SUPPLY CHAIN OF

STUDY OF SUPPLY CHAIN OF ZARA:-

5.1 - SUPPLIERS OF RAW MATERILS:

ZARA GLOBEL DISTRIBUTION CENTER “THE CUBE”:

5.2 - Just-in-Time Production Chain :-

5.3 - Vertical Integration:-

5.4 - Lean Inventory Management:-

Centralized order fulfillment:-

Fig.5.1 Supply chain network

Fig.5.2 Zara Supply chain network

5.6 - A Lean and Agile Supply Chain:-

Fig.5.3 Transportations route of zara

An Analysis of the Business Operations of Inditex Retailers :

Zara’s commitment to environmental sustainability is readily identifiable. According to Zara’s official

2 + 1 Strategic Approach to Operations

Product Replacement Cycle

Low Inventory Strategy

Key Success Factors

Proprietary Software and Design Flow

5.8 Zara marketing strategies:

5.8.1 Zara 4p’s marketing strategy

Zara’s marketing tactics