ZARA – CVP ANALYSIS BY AAYRA

SEC B, MGT101

ZARA is a flagship chain store of the INDITEX CO. founded by

Amancio Ortego in 1975. At the time , MARTA ORTEGO PÉREZ
and ÓSCAR GARCIA MACEIRAS are president and CEO
respectively .

STRATEGIES
SHORTER LEAD TIME allows Zara to offer customers what they want at
a specific time – FAST FASHION BRAND

It REDUCES THE QUANTITY MANUFACTURED FOR A PARTICULAR STYLE

(12000 STYLES/YEAR)
This creates ARTIFICIAL SCARCITY and easily disposes off stock in case
of poor sales – LESSER THE AVAILIBILITY, MORE DESIRABLE THE OBJECT BECOMES
CUSTOMER INSIGHTS ARE HOLY GRAIL OF MODERN BUSINESS.

RADIO FREQUENCY IDENTIFICATION TECHNOLOGY (RFID)

It uses cutting edge system to track location of garments instantly and makes
demand rapidly available to customers.

It trains and empowers its store employees and make them

sensitive to customer needs and wants . They listen , watch
and be attentive.

1.TO GIVE CUSTOMERS WHAT THEY WANT AND 2. GET IT TO THEM FASTER
THAN ANYONE ELSE. 3.CUSTOMERS AND DESIGNERS ARE INEXTRICABLY
LINKED.
 SUPPLY CHAIN
Vertically integrated and allows export 24 hrs , 365 days of the year ,
shipping to stores - twice a week and take 10 – 15 days to reach the
store
It is Processed locally
ADVANTAGES – retain control over areas like dyeing and processing
Eliminates the need of warehouse
Reduce impact of demand fluctuations

Characteristics of supply chain

1.Customer insights- designers use the database
to create styles.
2.Standardisation of product information – clear
manufacturing instructions .
3.Procurement strategy – fabrics are purchased
before designs are finalized so as to obtain
savings through demand aggregation .

MANUFACTURING
It uses make and buy approach.
It produces more fashionable and riskier
designs in Spain and outsource production of
more standard designs with more demand in
Morocco , Turkey and Asia to reduce costs .
 DISTRIBUTION
This facility functions with minimal human intervention . It
sorts out and distribute more than 60,000 items of clothing an
hour .
Shortening product life cycle means more success in meeting
customer preferences .
Due to this , ZARA expects customers to visit 17 times in a
year.

SUSTAINABILITY AND LEGAL NORMS

COMMITMENT TO PEOPLE – It ensures that employees
have a shared vision of value built on sustainability
through professional development, equality and
diversity and volunteering . It makes sure that suppliers
have fundamental rights and improvement programmes
for them.
COMMITMENT TO ENVIROMENT – ZARA complies with
UNSDGs (united nations sustainable development goals)
It pledged to only sell sustainable goods i.e all cotton,
linen and polyestersold will be organic , sustainable or
recycled .

ZARA runs JOIN LIFE scheme which helps consumers to

identify clothes that are eco – friendly
INDITEX takes wide ranging measures to protect
BIODIVERSITY , reduce consumption of water , energy
and other resources , avoid waste and combat climate
change .

COMMUNICATION
 ZARA uses almost a zero advertising and endorsement
policy throughout its existence , preferring to invest a
percentage of its revenue in opening new stores instead .
 Zara’s competitors use average of 3.5 % of its sales on ads
while zara uses a meagre 0.3 %
 Consumers desire and appreciate the brand which is over
and above product level benefits but driven by brand
experience .
 ZARA USES ITS STORE LOCATION AND DISPLAY AS KEY
FEATURES OF MARKETING
 ZARA ensures high customer traffic

AS THEY SAY , FIRST IMPRESSION IS YOUR LAST

IMPRESSION IS TAKEN SERIOUSLY BY ZARA DESIGNERS IN
ORDER TO CREATE THE DISPLAY WINDOWS , THAT ARE
FREQUENTLY CHANGED .

ALSO ZARA EMPLOYEES DO AS THEY PREACH BY

FOCUSING ON THEIR PERSONAL FASHION IN ORDER TO
MAINTAIN A STATUS OF THE BRAND
ZARA is definitely aware of its power in e – commerce and has
built up a successful online presence and high quality customer
experience .

It launched its online boutique in September 2010

As of 2019 , online sales grew to constitute 14% of Zara’s total
global sale .

BUSINESS CHALLENGES
DIGITAL STRATEGY IN COVID 19
Sales dropped by 44% in Q1 2020 and INDITEX
announced that it would close 1000 to 1200 stores
focusing on smaller ones in ASIA and EUROPE

MOBILE COMMERCE
ZARA set its foot late in mobile commerce . That ,
mobile overtook desktops based ecommerce by
2021 .

Price not an advantage anymore

Zara is not the only one selling clothes at affordable
prices . It needs to focus on quality .

MARKETING STRATEGY
ZARA relies heavily on word of mouth .
Its videos on youtube experience low viewership in
comparison to its follower count which is powerful
medium .

Family business planning and succession

Products offered
 Accessories
 Shoes
 Swimwear
 Beauty and perfumes
for everyone and every age group .