Introduction

Zara is a Spanish apparel retailer based in Arteixo in Galicia. The

company specializes in fast fashion, and products include clothing,
accessories, shoes, swimwear, beauty, and perfumes. It is the largest
company in the Inditex group, the world's largest apparel retailer. Zara
as of 2017 manages up to 20 clothing collections a year.
Zara stores have men's and women's clothing, as well as children's
clothing (Zara Kids). Zara's products are supplied based on consumer
trends. Its highly responsive supply chain ships new products to stores
twice a week. After products are designed, they take ten to fifteen days
to reach the stores. All of the clothing is processed through the
distribution center in Spain. New items are inspected, sorted, tagged,
and loaded into trucks. In most cases, the clothing is delivered within 48
hours. Zara produces over 450 million items per year.
 History
• Amancio Ortega opened the first Zara store in 1975 in Galicia, Spain.
Ortega initially named the store Zorba after the classic film Zorba the
Greek, but after learning there was a bar with the same name two
blocks away, they rearranged the letters molded for the sign to "Zara".
It is believed the extra "a" came from an additional set of letters that
had been made for the company. The first store featured low-priced
lookalike products of popular, higher-end clothing fashions. Ortega
opened additional stores throughout Spain. During the 1980s, Ortega
changed the design, manufacturing, and distribution process to reduce
lead times and react to new trends in a quicker way, which he called
"instant fashions". The improvements included the use of information
technologies and using groups of designers instead of individuals.
• In 1988, the company started its international expansion through Porto,
Portugal. In 1989, it entered the United States, and then France in 1990.
During the 1990s, Zara expanded to Mexico (1992), Greece, Belgium and
Sweden (1993). In the early 2000s, Zara opened its first stores in Japan and
Singapore (2002), Russia and Malaysia (2003), China, Morocco, Estonia,
Hungary and Romania (2004), the Philippines,Costa Rica and Indonesia
(2005), South Korea (2008), India (2010), TAIWAN and South Africa and
Australia (2011).

• On September 2010, Zara launched its online boutique. The website began
in Spain, the UK, Portugal, Italy, Germany and France. In November that
same year, Zara Online extended the service to five more countries:
Austria, Ireland, the Netherlands, Belgium and Luxembourg. Online stores
began operating in the United States in 2011, Russia and Canada in 2013,
and Mexico, Romania, and South Korea in 2014. India in 4 October 2017.
 Competitive Advantage
• Strong parent company: Inditex, the parent company of the brand
Zara have a strong portfolio of 8 brands which is helping the company
in nurturing each brand with its experience and strong financial base.

• Turnaround time (TAT): In comparison to the other players in the

market Zara makes it new product available to its stores in just two
weeks of launch whereas the average TAT of the industry is 3-6
months.
• Stronghold in the parent nation: Zara gets 60% of its sales (2015 data)
from the European nation out of which 18 % comes from Spain.

• Advertising & store locations: The most important aspect of the

profitability in the retail apparel industry is the location of the stores
and its advertising while in case of Zara all of its stores are
strategically located in the major cities globally and advertising
expenses of Zara is very low as compared to the peer companies in
the industry.
 BCG Matrix
• Zara primarily deals in products lines such as clothes & accessories for Women’s, Men’s and
Kids. Among the 3 line of business of Zara,
• Women segment is a star on the BCG Matrix.

• Men’s segment is also star due to high demand of the products yet tough competition in
the market.

• Kids section is question mark because there are many brands for kids which are much more
famous.

• Kids section is a line of business which is a question mark in the BCG matrix of Zara. Men
and women’s segment is driving the growth for Zara.
 Distribution Strategy
• Right from design to distribution to sales of its products through their
2100+ stores around the world, Zara operates all the business and
make the newly designed products available in their stores within the
span of 2 weeks.

• Apart from the Zara exclusive stores, many multi-brand retail chains
sell Zara’s clothing and accessories items which are helping the
company in penetrating in the leading cities of the nations globally.
• The supply chain of Zara is one of the biggest competitive advantage
to the brand because where other retail stores take 21 days to even 2
months to get new designs in the store, Zara gets it done within 2
weeks. Plus, the stores have these new designs only for a destined
period of time or till stocks last, hence movement of material is very
important for a brand like Zara.
 Competitive Analysis
• The fashion clothing retail industry is highly competitive with various
brands such as H & M, Mango, Gucci and many other national and
international brands fighting with each other in the same segment.
However, the designs made by Zara are based on the consumer &
market feedback which they continuously work upon to be more of
the consumer-oriented brand.
 Product
• Zara is known as the Coca Cola of fashion. Such is the craze of this brand
among the fashion enthusiasts. One of the major strength of the company
is that it is able to respond very quickly to the changing needs of the
customers.

• The company does not outsource its manufacturing process, making it

fully in control of the products it produces. Its unique selling preposition
is to create the latest trends. In most cases, new styles are normally
available on the sales stores within two weeks, four weeks maximum. If a
product is not selling in the stores, it is immediately pulled from the
stores.
• However, when it comes to India, it has a few problems to sort out,
prominent among those being the lack of seasonal variations in their
range. Secondly, it needs to tackle and cope up with the cultural
needs of the local people which is a big challenge and Zara is working
to reach out local people by coming up with designs that integrate
modernism with local traditions.
 Pricing
• Because the concept of Zara is to provide its products at a reasonable
price to its customers, it follows that customers find its prices quite
affordable. However, we have to know that we are referring to the
cream customers who would compare Zara with Hugo Boss or others.
Some Zara stores might be very premium whereas others will be very
much affordable. But mostly Zara has a premium pricing strategy. The
pricing is made possible by optimizing development and training
costs.
 Promotions

• Zara has a unique marketing policy of “Zero investment in marketing”.

Instead, the company uses the money it would have used to advertise
in opening new stores. The striking thing about Zara is that it has
found differences that matter to the consumers and used that to
differentiate itself from the rest of the competition. In other words, its
key marketing strategy is based on exclusivity, experience,
differentiation and affordability.
• In essence, the company relies heavily on the word of mouth
advertising more than anything else does. The products target
population in age group 18-40 that live in the cities. This is because;
this group is the most fashion conscious, more than any other group.
Specifically, the market segment comprises of women (65%), men
(25%) and children (15%) all of them being fashion conscious,
educated and fall in the middle class category.

• Their commitment is clearly visible in the attention they pay to each

and every detail of their showrooms. The elegance with which the
windows are laid out and the way the shop attendants are groomed,
everything is worked out according to a plan that is very precise.
Every store manager has free access to talk to their counterparts at
Spain regarding the marketing and improvement strategies.
 Place
• Zara is very unique and one of the things that make it a stand out
brand is the fact that it is a vertically integrated retailer. What this
means is that it designs, manufactures and distributes the products
itself. This approach seems to be working for it because it has
managed to establish itself as one of the leading Spanish fashion
stores globally. Zara is present in over 30 different countries including
India and its expansion is ongoing. Therefore, you will soon be seeing
more Zara stores in more countries.
• In fact, 90% of Zara stores are owned by the company and the rest are
joint ventures of franchises. This means that customers experience
the same environment when entering one of the Zara stores be it
they are in London, New York, Paris, Rio de Janeiro, New Delhi etc.:
the stores are spacious, well-lit, modern and predominantly whiter
and walled with mirrors.

• Most people say Zara’s real strength lies in its culture, something that
can never be replaced for anything. One of the things it does is that it
hires young designers and trains them to make quick decisions. In
other words, while good decisions are encouraged, bad decisions are
not severely punished.