Group 5

Ashish Shakya
Ayushraj Chouhan
Manas Dohar
Nafisa Chandanwala
Neha Bang
Simarpreet Singh
 5c Analysis – ZARA
Company Customers Competitors Collaborators Context

 ZARA is one of the  Three customer  The Gap  Toyota - just-in-time  ZARA followed the
subsidiary of Inditex segments – women,  H&M systems in factories process of adopting
– a global speciality men and youth,  Benetton  Franchised stores to trends and
retailer and was from infants to age  Local retailers  Joint ventures – differences across
established in 1975 45 Otto Versand in markets for apparel
 Headquartered in Germany, Bigi – designs.
Arteixo, Spain, Zara Japan, Percassi in  Pricing by ZARA was
had 507 stores 30 Italy market based
countries with  Installed just-in-time
revenues of £ 2.7 systems in its
billion in 2001 factories
 Value Proposition

The value proposition of Zara offers higher quality designs which are
fashionable and provides affordable clothing by continuously
presenting styles that are trendy depending on the average wealth
capabilities and the necessities of the different countries.
 Pentagon Model
Place

Communication Product

Value People
 Pentagon Model

Place Product People Value Communication

 Size:-The average  Range:- 11,000  Knowledge:-  Price:- Pricing was  Positional:- Pricing
size of Zara stores distinct items were Europeans averaged market based strategy for Zara
had increased from produced and buying apparel nine outside Spain implied
910 sq. m to 1376 100,000 SKUs were times a year. Japan  Quality:- Zara a different positioning
sq. m given in colour, was the trendiest tracked customer for Zara overseas
 Location:-highly fabric and sizes. and US was preferences for  Promotional:-
visible locations,  Assortment:- New significantly less new designs. Advertisement and
premium shopping designs arrived at trendy Failure rates on other promotional
streets stores in each twice-  Climate:- Italians new products efforts were generally
 Design:- Store weekly shipment spent more than were only 1%. avoided worldwide
window displays and creating a sense of £1000 per capita except during sales
interior scarcity among versus £600 per periods.(0.3% of the
presentations customers capita for Spaniards revenues)
on apparels
 Triangle Model

Systems

Logistics Suppliers

Systems
 Zara made investments in
manufacturing, logistics and IT
 Establishment of a just-in time
manufacturing system
 A 130,000 square meter
warehouse was also established
 Zara’s factories which were
responsible for internal
manufacture were heavily
automated, specialized by garment
type and focused on the capital
intensive parts of the production
process
Triangle Model
Logistics
 Products were shipped directly
from the central distribution
centre to stores twice a week
 75% of Zara’s merchandise was
shipped by trucks by a third party
delivery service to stores
 The remaining 25% was shipped
mainly by air via KLM and DHL
 Products were typically delivered
within 24-36 hours to stores
located in Europe and within 24-48
hours to stores outside Europe
Suppliers
 Zara sourced fabric, other inputs
and finished products from
external suppliers
 40% of finished garments were
manufactured internally and other
two-thirds of the items were
sourced from Europe and North
Africa and one-third from Asia.
 About 20 suppliers accounted for
70% of all external purchases.
 Key Issues

What should be the growth strategy for Zara moving forward?

Should it expand in other countries or not?

How should Zara maintain and expand its brand in the Long-
run?
 Recommendation - 1

• Zara should expand into different markets – Italy, Switzerland, Finland and Asia
• Allow processes to explore new areas – open new distribution center to meet
extra demand
• Cheap outsourcing for acquiring materials but with utmost care to quality
• Explore newer customer segments and implement designs for them
 Recommendation - 2

• Geographically expanding and opening newer stores in various continents across the
world
• Create Long-term and evergreen style for customers – Stay in trend for 1 year for
potential customers
• Spend on marketing efforts significantly for creating the brand
• Further improve QR system and move into digital space for meeting customer demand