[GROUP 3] 24.01.

30 ZARA CASE STUDY

COMPARATIVE ADVANTAGE OF ZARA:

- Zara’s core competence is the ability to recognize and assimilate the

continuous changes in fashion, rapidly designing new models that
respond to customer needs and wants.
- Vertical integration: Zara controls most of the steps on the supply
chain: Zara designs, produces, and distributes itself.
- Speed to Market: Zara needs just two weeks to develop a new product
and get it to stores, compared with a two-month industry average.
- Quick and precise adaptation to customer’s desires: Zara focuses its
attention on current fashion trends, which is what customers want,
rather than predicting season’s trends via fashion shows & influential
channels, as traditionally done by the fashion industry.
- A great logistic system: Zara’s logistics system is based on software
designed by the company’s teams. The time between receiving an
order at the distribution centers (in Spain only) to the delivery of the
goods in the store is on average 24 hours for European stores and a
maximum of 48 hours for American or Asian stores.
- Wide variety of choice: Zara can launch about 30,000 model items
annually compared with 10,000 items for its key competitors =>
shorten the product life cycle => greater success in meeting consumer
preferences. A wide portfolio (multi-brand portfolio) has allowed the
brand to target different segments more effectively.
- Product-base Factories: Zara manufactures its most fashionable
items (50% of its total products) in Spain & Portugal where labor is
cheaper than in most of Western Europe. Clothes with a longer shelf
life (24% of its total products) are outsourced to low-cost suppliers in
Asian and African countries and the rest of the world.
- Customer engagement: Zara’s managers get feedback directly from
the customers at the point of sale in the stores about new clothing lines
they are interested in

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[GROUP 3] 24.01.30 ZARA CASE STUDY

3 VALUE CHAINS OF ZARA:

1. Product Value Chain:

● Inbound Logistics: Zara sources raw materials strategically, balancing

cost and quality. Vertical integration in fabric production gives them
control and flexibility.
● Operations: Design and production are tightly coupled. A large
in-house design team tracks trends and quickly translates them into
new items. Vertical integration allows for rapid prototyping and
production adjustments. Training and internal promotion for their
professionals and training for the staff.
● Outbound Logistics: An efficient distribution network with centralized
hubs and short lead times ensures quick delivery of new products to
stores.
● Marketing and Sales: Minimal advertising, focus on understanding the
current fashion trend, in-store experience and product appeal. Limited
product availability creates a sense of scarcity and urgency. Flexible
retail strategy for each country regarding its socio-cultural factors:
Hierarchy modes, franchising, joint ventures
● After-Sales Service: Streamlined returns and exchange process
contributes to customer satisfaction.

2. Service Value Chain:

● Customer Relationship Management: Store staff trained to provide

personalized service and gather customer feedback for product
development.
● Order Fulfillment: Efficient in-store and online ordering systems ensure
a smooth purchase experience.
● Delivery and Installation: Not applicable for Zara's core business, but
online orders have efficient delivery options.
● Field Service: Not applicable for Zara's core business.
● After-Sales Service: Efficient returns and exchange process
contributes to customer satisfaction.

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[GROUP 3] 24.01.30 ZARA CASE STUDY

3. Information Value Chain:

● Procurement Intelligence: Extensive trend research and analysis by the

design team and store staff informs product development.
● Product Development and Design: Data-driven design process
incorporates customer feedback and trend analysis. Zara's business
cycle starts with customers' judgments on the new designs, as well as
information collected by staff members who travel to fashion cities,
observing people on the streets, browsing publications and visiting
venues frequented by their potential customers.
● Production Planning and Control: Real-time sales data drives
production decisions, adjusting quantities and styles based on
demand.
● Marketing and Sales Communication: Limited marketing relies on
effective in-store communication and product presentation.
● Customer Support: Efficient customer service channels for inquiries
and feedback.