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Zara's Value Creation Strategy

Zara is a large, profitable fashion retail chain founded in 1975 in Spain. It sources about 40% of garments internally and the rest from Europe, North Africa, and Asia. Zara uses customer feedback and sales data to quickly design, produce, and distribute new fashion items to its stores in small batches. It focuses on short-lived trends and aims to replenish popular items. Zara has a network of factories and workshops in Europe and sources the remaining manufacturing from Asia and South America. It spends little on advertising and relies on frequent store rotations and locations to drive sales. Zara's rapid production model allows it to be highly responsive to the latest fashion trends.

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450 views12 pages

Zara's Value Creation Strategy

Zara is a large, profitable fashion retail chain founded in 1975 in Spain. It sources about 40% of garments internally and the rest from Europe, North Africa, and Asia. Zara uses customer feedback and sales data to quickly design, produce, and distribute new fashion items to its stores in small batches. It focuses on short-lived trends and aims to replenish popular items. Zara has a network of factories and workshops in Europe and sources the remaining manufacturing from Asia and South America. It spends little on advertising and relies on frequent store rotations and locations to drive sales. Zara's rapid production model allows it to be highly responsive to the latest fashion trends.

Uploaded by

SRanjan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

ZARA STRATEGY FOR

VALUE CREATION
Group: 2
ABOUT ZARA
• Founded in 1975 by Amancio
Ortega and Roselia Mera.
• It is the flagship chain store of
INDITIX group
• Consumer oriented focus
• Zara is by far the largest and
most profitable chain
business
• Workforce consists of young
people.
SOURCING AND
MANUFACTURING

• About 40% of finished garments were


manufactured internally and of the
remainder , approximately two third of
the items were sourced from Europe
and north Africa and one third from
Asia.
• The most favourable items tended to
be the riskiest and therefore were the
ones that produced in small lots
internally or under contract by
suppliers who were located close by
and reordered if they sold well .
DESIGN
The teams used information systems
to track customer preferences and
sales.

Zara’s store managers lead the


intelligence gathering effort.

Digital assistants are used to gather


customer input, staff regularly chat up
with customers to gain feedback on
what they would like to see more.

These data helps to plan styles and


issue re-buy orders based on the
feedback
PRODUCTION
They are more focused on short lived fashion
trends.

Inditex outsources about a third of remaining


manufacturing to china, Bangladesh, Vietnam
and Brazil and 15% to factories in Portugal,
Morocco and Turkey .

Inditex outsources about a third of remaining


manufacturing to china, Bangladesh, Vietnam
and Brazil and 15% to factories in Portugal,
Morocco and Turkey .
PRODUCTION
Zara has organized a network of 500
workshops in Galica, the home state of
La caruna.
Zara sources finished garments from
suppliers.
Employee nearly 20,000 people,
distributed, distributed across 23
factories in Africa ad Asia.
Zara makes its products fashion
sensitive in its 20 factories clustered
in La Coruna.
4 P’S OF
MARKETING
Price: Zara aggressively prices its products
and adjust prices for international market.

Place: Zara choose high profile location.

Product: good quality and high fashion


products.

Promotion: Zara’s founder Armancio


Ortega regarded advertisement as
pointless distraction.

Zara spent only 0.3% on advertisement


where as 3-4% by other fashion retail.
Operation at Zara
Travelling teams of Zara and interior coordinators visit each
store every three weeks, ensuring that window display and
interior presentation convey the targeted message.

Designer wander the mock store, testing possible design


themes, scheme and product presentation.

Store managers and staff suggest merchandize to order or


discontinue.
CHALLENGES AND CHANGES
Zara charges different price in different
country.

How long it can continue global operation from


its centralized based in Spain.

REASON: No other company can design, make,


ship and sell fashion as Zara dose.

Zara leaves very less time to figure out how to


configure and coordinates better.
ZARA believes that finding stores manager capable of effective running
its retail properties is the primary constraint on its global expansion.
What skills do you think Zara seeks in its ideal candidates? Why would
they be difficult to find?

Answer:
Manager’s sense of customers and their ability to
coordinate worldwide activities.

Sense of exclusiveness, attractiveness..

Good customer relation manager’


Key features
Weekly shipment ( Z- day).

Zara changes display after every three or four week


ie., 17 times a year.

Focuses very much in the storefront.

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