Zara Essay

3320 WordsAug 3, 201414 Pages
Case study I.1 Zara: the Spanish retailer goes to the top of world fashion zara (www.inditex.com) is a fashion retail chain of Inditex Group owned by the Spanish businessman, Amancio Ortega, who also owns brands such as Massimo Dutti, Pull & Bear, Oysho, Uterqüe, Stradivarius and Bershka. The Inditex group (of which zara is a part) is headquartered in la Coruña, northwest Spain, where the first zara store opened in 1975. It is claimed that zara needs just two weeks to develop a new product and get it to stores, compared with a two-month industry average. zara has resisted the industry-wide trend towards outsourcing fast fashion production to low-cost countries. Its most unusual strategy is its policy of zero advertising; the company prefers to invest a percentage of revenues in opening new stores instead. Main shareholder of Inditex, Amancio Ortega Source: Copyright © Inditex. Zara’s business model zara is a vertically integrated retailer. Unlike similar apparel retailers, zara controls most of the steps on the supply chain: it designs, produces and distributes itself. zara is a fashion imitator and focuses its attention on understanding the current fashion trend, which is what customers want, and then delivering it, rather than promoting predicted season’s trends via fashion shows and similar channels of influence, as traditionally done by the fashion industry. Of the products zara sells, 50 per cent are manufactured in Spain, 26 per cent in the rest of Europe and 24 per cent in Asian and African countries and the rest of the world. So while some competitors (e.g. Gap) outsource all production to Asia, zara makes its most fashionable items – half of all its merchandise – at a dozen company-owned factories in Spain and Portugal, particularly in Galicia and northern Portugal where labour is cheaper than most of western Europe. Clothes with a longer

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