Zara Case Study

3.1 HISTORY and BACKGROUND

ZARA is the flagship chain store for the Spanish Inditex Group owned by Amancio Ortega, who also brands such as Massimo Dutti and Bershka. It was first open in 1975 in La Coruna, Galicia, Spain. Originally a lingerie store, then the product range expanded to incorporate women’s fashion, menswear and children’s clothes (5).

The international adventure began in 1988, opened its first foreign store in Oporto, Portugal. The market growth remained mysterious and it kept growing the stores in different countries and its cities. Started from the United States (1989), Paris (1990), Mexico, Belgium and Sweden (1994), Malta (1995) and Cyprus (1996). The stores remained company owned, however, it started to make another expansion through franchise when they enter the Asia such as Japan (1997). By the year of 2004, Zara has 1058 stores located in 68 countries around the world, and the 792 international stores generated 54 percent of group sales. Today, Inditex is the world’s fastest growing retailer and Zara described as the most innovative and devastating retailer in the world, by LVMH fashion director Daniel Piette (6).

3.2 BRANDING MANAGEMENT

Zara’s success is as much a result of its history and location, as of its counter-intuitive business strategies. Zara is riding two of the winning retail trends-being in fashion and low prices-and making a very effective combination out of it. Design and product development is a highly people-intensive process.Information and communications technology is at the heart of Zara’s business.Four critical information-related areas that give Zara its speed include:

• Close watch on trends & buying behavior

• Quick decisions

• Inventory Control

• Distribution

3.2.1 Zara’s Marketing Strategy

Zara’s marketing strategy focuses on product variety, speed-to-market and store location. Zara does not advertise in the traditional sense. Zara puts 10,000 different items on the store in a single year. If Zara customer wants to know what Zara has, he or she must go to the store. The stock changes often, with most items staying on the shelf foe only a month, so the customer often finds something new and appealing. This also helps explain why the company does not advertise. Zara’s strategy of producing low volumes per style and changing products quickly in its stores enables it to cut down on the discounts as well.

3.2.2 Concept: �The Democratization of fashion’

Zara’s target market is the ever-changing tastes of the trendy young shoppers. It wanted the consumers to experience the fresh and exciting Zara shop. Promote novelty, but also to avoid saturating the market with fashionable designs.

Zara will copy a successful competitor model and get it on its shelves within 7 days and all at low to middle range prices. However, only about 12 to 16 collections are launched every year because Zara’s objective is not that consumers buy a lot but that they buy often and will find something new every time they enter the store (7).

The 1998 Annual Report defined the principles of Inditex as: �creativity, painstaking design, innovation, fast response to the market, special attention paid to the interior design of the shops and flexible management.’ (8)

The company has developed and implemented systems and process that allow customer demand for up-to-date, design-based fashions to be brought to the market with lead times dramatically shorter than the industry norm (9).

3.2.3 Stores, Location and Decoration

With a good management, Zara can manage 90% of its stores to be company-owned and only 10% were franchises or joint ventures. To create the brand image, Zara decorated the shop so that customers entering the store in anywhere can found themselves in the same environment as the other Zara retail stores, which designed predominantly white, modern and spacious store, well-lit and walled with mirror (10).

Zara is always located in a very prestigious and spacious location, city center shopping streets with heavily trafficked, high-end retail areas (11). Its prime locations in regal buildings are chosen for splendid visibility. Because of the �no marketing’ strategy, Zara relied on its shop windows to communicate its brand image. Displays were changed regularly to remain visible and alert customers of their newest (12).

The store, however, is given priority in its interior and exterior design. Large flagship stores often build