ZARA:APPAREL

MANUFACTURING AND RETAIL

BY TEAM B
Elise Fortin, Aida Permorady, Chloé Lebictel, Sneha Peddi

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INTRODUCTION
 Founded in 1975 in La Coruna (Spain) by
the Ortega family.

 Owned by Inditex group (leading

European textile and second globally).

 2200 retails outlets in 56 countries.

 A major international fashion companies.

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COMPETITIVE STRATEGY
 Latest trends with affordable prices strategy is
used to attract its customers.

 Constant renewal of products : at least twice a

week.

 Zara try to be closer to customer preference than

its competitors.

 Zara relies heavily on store employees for market

information.”Word of mouth marketing”

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SUPPLY CHAIN
 The entire supply chain is controlled by the company
(design, production, logistics and sales)  the entire
value chain is controlled in order to control costs.

 Zara introduces new designs twice a week and

changes 75% of its merchandise display every 3 to 4
weeks.

 Low cost manufacturing in Asia.

 Zara to be responsive and flexible it has to monitor

all the supply chain

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STRATEGIC ADVANTAGES
 Zara’s in-house production purposely creates a rapid product
turnover since its “runs are limited and inventories are strictly
controlled”.

Zara’s unique quick response system, composed of human

resources as well as information technology, allows Zara to
respond to the demand of its consumer better than the
competition.
Sell its products at full price and half the markdowns in its
stores when compared to its competitors.

 Zara also has an advantage over its competitors due to its low
advertising costs. Zara’s advertising investment is 0.35% as
compared to traditional retailers who expends 3 – 4% .

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STRATEGIC DRAWBACKS
 Zara’s speedy and recurrent introduction of new
products incurs increased costs as well. They
have higher research and development costs.

 They also have elevated costs due to the

constant changeover of production techniques
to create their different apparel lines.

Employees must be trained in order to use the

new manufacturing techniques, which again
leads to increased costs.

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Manufacture
 To have international presence and even to be
responsive.

 To respond to uncertain and predictable

demand.

 The new distribution center :completely

different location.
Certain demand Uncertain
demand
Efficient Responsive
Pricing Lower margins Higher margins
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Replenishment
Replenishment advantages:
 To closely match demand
 Good innovation => To reduce the

competition
 Customers are attracted so they come often to

see the new collection

Replenishment System:
 Efficient
 Good management of stocks

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Information infrastructure
 They need an heavy information structure to
get in real-time:
- the latest sales data from all its stores
- the forecasts (stocks, sales…)

 To drive replenishment and production

decisions