Zara Essay

737 WordsMar 18, 20153 Pages
1. What makes Zara different from other specialty apparel retailers? What are the main differences in the business models of Zara and H&M? Zara is a part of the Spanish retail conglomerate named Inditex and is the leading retailer of fast-fashion. It represents one of the most successful retail stories. There are many levers which make Zara more special than other apparel retailers. (1) The main strength that Zara has is its operations, which depend on relationship between manufacturing and retailing. Communication circle is one of the most important parts in Zara’s process. The continuous business cycle began with the customer and good communication between store managers and headquarter. Store managers are able to express their advice, suggestion and even critique through retailers’ experiences with customers. Design team constantly follows what the customers want and this allows Zara to be in the forefront of latest fashion trends. For that reason there is not outsourcing of the manufacturing. (2) Their lead time lasts only a few weeks thanks to their rapid production capabilities and this is a key differentiator compared to other apparel retailers. Designers are highly productive and they come up with almost 24. 000 new product each year, but only one third of it is produced. Zara represents three to four times more products than traditional retailer. (3) Zara spends little money on advertising, for instance their advertising costs are equivalent to 10% of competitors’ expenditure. Zara applied a different promotion of the brand- making its stores more visible and appealing to the customers, which is crucial to the success of the business. Before they open a new store, they make an extensive market research, which is focused on prestige locations, remarkable building, layout and decors. (4) Zara is not producing a high quantity of clothes, but prefers fewer

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