Due to active participation and effective control they achieved 128% of the goal within that period. Just in Time System: Zara According to Lopez, C. and Fan, Y. (2009), Zara was a pioneer in bringing ‘Fast Fashion’ into the realm of the apparel industry. Due to wide customer demand and huge competition, major fashion brands like GAP, Abercrombie & Fitch, H&M to name a few moved their manufacturing to East Asian countries. These competitors followed a concept of well-defined season and market trends according to different fashion houses.
ZARA is a Spanish clothing and accessories retailer based company founded by Amancio Ortega and Rosalia Mera in the year 1975 in Arteixo Galicia. It was first named as ‘Zorba’, but within a few days, they renamed it as ‘ZARA’. Zara is the biggest brand of the Inditex with over 2000 stores in more than 88 countries. The Inditex group also include other famous brands such as Massimo, Pull&Bear, Untreque, Oysho, Beshka and Dutti but ZARA earns almost 75% of its total revenue. By 1976, Zara had 4 fully functional factories and 2 retail stores.
It provides a considerable degree of job security while it has to do something to improve their wages. Supplier: Last in priority. Suppliers are at the bottom of Walmart’s priority ladder. Being the biggest retailer in the world, Walmart uses the business leverage to influence suppliers. Walmart asks suppliers to offer their products at very low prices and most suppliers comply.
ZARA collects data that shows customers’ reaction to its new styles and sends the feedback to the headquarters, where new products are constantly being developed. That’s why shopping at ZARA is enjoyable, as there are always new apparels which match the latest fashion trend and also suit your preference, at affordable prices. Fast fashion is not only changing the way fashion business work but also driving consumers’ shopping choices. People cannot help but desire to shop again at fast fashion stores for the newest fashionable clothes, even though their wardrobes are already out of space. What’s more, fast fashion retailers’ collaboration with luxury designers, for example H&M’s collaboration with Karl Lagerfeld, Roberto Cavalli, Stella McCartney, and Alexander Wang, can not only increase revenue and margins but also make high-fashion more accessible to the new markets of younger demographic.
Logistics and Distribution Strategy Zara has two week orders per week from its stores around the world on specific days and hours, so with shipments from logistic center in La Coruna. All products are labeled and priced and spend by buses and air-planes. This is one of the biggest advantages of Zara from other competitors, because usually it takes about 5-6 months to get new collection, but Zara has new collection twice per one week. Follow the leader Imitating a leading competitor’s strategy may be a good idea, unfortunately it ignores a firm’s strengths and weaknesses, but not in our case. There is only one competitor for Inditex and it is H&M.
The company had 837 stores at the end of August 2016 located in Japan and is presently considered a major global brand with over 1000 stores around the world. ("Our story | UNIQLO", 2018) INTERNATIONAL PRESENCE Uniqlo has been equally fortunate in its business Internationally since opening its first store outside Japan in 2001. Currently they have 958 stores around the world, the maximum being 560 in China, Hong Kong and Taiwan combined, 173 in South Korea, 144 in Southeast Asia and Oceania, 36 in Europe and 45 in the U.S. New store openings have been especially rapid in Greater China and Southeast Asia. Uniqlo established Fast Retailing (Jiangsu) Apparel Co., Ltd. in China after separating from its parent company for its global operations. In 2002, Uniqlo opened four abroad outlets in London, England alongside their first Chinese outlet in Shanghai.
This attribute or service that makes a company or firm superior to other competing industries is called competitive advantage. The reason why Zara is better and more favorable to customers than other companies is because of its competitive advantage. One of Zara’s competitive advantages is its ability to quickly introduce new products to the market. Zara releases new designs almost every week, which is a huge deal because this means that it is always up to date with fashion trends and it also means that their customer can really rely on them when it comes to satisfying their own fashion needs. Zara basically can quickly transform an ordinary sketch to a product in the store in the matter of two weeks.
Just in time and limited time products keep their line fresh and in demand. Customers visit the stores often as to not miss out these new and unique designs. Zara has limited marketing which helps keep the money in the business. While the industry average marketing spend for retail is 3.5% Zara only spends about 0.3% of sales on advertising and doesn’t have much marketing to speak of (Payton, n.d). Zara’s shipping system is designed to get its fashions out into its stores as soon as possible.
Inditex went public in May 2001 and it was valued close to €13 billion by May 2002. It operated around 1,284 stores worldwide by 2001 and 54% of the revenue came from the stores outside Spain. It employs around26,000 employees worldwide which includes around 11,000 employees outside Spain. Zara’s methodology Business system Zara, by 1990 had expanded throughout Spain and started to establish itself internationally. It invested heavily in IT and logistics, which would later come as major help for the brand.
Some questions that are posed at this stage are; what are my competitors doing? What are the obstacles that the business is facing? Could any weaknesses threaten the business? In today’s society the beauty and fashion sector is becoming increasingly successful with new SME’s emerging, offering a wide range of products and services. With this in mind it does mean that there is a significant increase in competition for those setting up/ maintaining or working in this industry.