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Seda Çelebi, 15.04.2015
ZARA AT A GLANCE
«Possibly the most innovative and
devastating retailer in the world." -
Daniel Piette, by Louis Vuitton
F...
MISSION & VISION STATEMENTS
VISION MISSION
ZARA is committed to
satisfying the desires of its
customers.
As a result we pr...
HIGHLIGHTS & FIGURES
Fast Fashion > 2 to 4 weeks to develop a new product and get it to stores
(industry average is 6 mont...
HISTORY
1963 -
Inditex goes
into business
as a
dressmaker
1975 - Zara
opens its first
store in the
center of La
Coruña,
Sp...
BUSINESS MODEL
Conventional Business
Model
Zara’s Business Model
Supply Chain Reliant on outsourcing
production.
Highly re...
PRODUCT LIFE CYCLE
Generally, a typical Product Life Cycle Curve looks like as above where Sales
decreases as the product ...
KEY FACTORS OF SUCCESS
Lower Quantities
• ZARA produces and presents very limited
volumes of new items in certain key stor...
KEY FACTORS OF SUCCESS
More Styles
Instead of more quantities, Zara produces more styles,
roughly 12,000 a year. Thus, eve...
UNIQUE STRATEGIES
Link customer demand to manufacturing, link manufacturing to distribution
Rapid response to market deman...
PRODUCT STRATEGIES
Design and merchandising are interconnected
with back end production process
Design Teams:
• Work on pr...
MARKETING STRATEGIES
4P consideration  Product, Price, Promotion
and Placement.
Each Country has different marketing appr...
IMAGE DIFFERENTIATION
Offer high quality goods to a low price
Clothes are not mass-produced and products that do not
sell ...
SWOT ANALYSIS
STRENGTHS
• Ability to recreate fashion
• Owned 1947 stores and Active use of stores
• Cost leadership strat...
OPPORTUNITIES
• Growth of fashion market
• Diverse cultural area
• Constant use of social media marketing strategy
• Onlin...
INTERNATIONALIZATION
Push factors Inhibitors Facilitators Pull factors
Saturation
Low growth
opportunities
Changes in cons...
MARKET ENTRY MODEL
OIL STAIN STRATEGY
While Zara owns a majority of its stores in
Spain, the international expansion has
a...
Joint Ventures
This is a co-operative strategy in which the manufacturing facilities and know-how of the
local company are...
COMPETITORS ANALYSIS
ZARA H&M
Vertical Integration Production Outsourced
Short Lead Times Long Lead Times
Engage many desi...
CONCLUSION
Unconventional approach to supply chain strategies has been Zara’s key competitive
advantage
Responsive supply ...
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Zara_Presentation YENİ

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Zara_Presentation YENİ

  1. 1. Seda Çelebi, 15.04.2015
  2. 2. ZARA AT A GLANCE «Possibly the most innovative and devastating retailer in the world." - Daniel Piette, by Louis Vuitton Fashion Director Zara is a Spanish clothing and accessories retailer based in Arteixo, Galicia, and founded in 1975 by Amancio Ortega and Rosalía Mera. It is the flagship chain store of the Inditex group, the world's largest apparel retailer. The fashion group also owns brands such as Massimo Dutti, Pull and Bear, Uterqüe, Stradivarius, Oysho and Bershka.
  3. 3. MISSION & VISION STATEMENTS VISION MISSION ZARA is committed to satisfying the desires of its customers. As a result we promise to continuously innovate our business and to provide new designs made from quality materials that are affordable Through its business model, Zara aims to contribute to the sustainable development of society and that of the environment with which we interact
  4. 4. HIGHLIGHTS & FIGURES Fast Fashion > 2 to 4 weeks to develop a new product and get it to stores (industry average is 6 months) Launches around 12,000 new designs each year Democratization of fashion – Customers have direct input into what shop sells %50 manufacturing in Spain, %26 rest of Europe, %24 in Asia – Africa Up to 50 percent of its clothes are designed and manufactured in the middle of the season 2,000+ stores world wide, with a reported 10.804 billion € revenue in 2013
  5. 5. HISTORY 1963 - Inditex goes into business as a dressmaker 1975 - Zara opens its first store in the center of La Coruña, Spain 1989 – First Zara store in New York 1990 - Inditex arrives to France 1997 - Geographic footprint reaches Norway and Israel 2003 - First Zara Home stores, Group's seventh brand. Store openings in Slovenia, Slovakia, Russia and Malaysia 2007 - Launch of zarahome.co m. Four new markets: Croatia, Colombia, Guatemala and Oman. 2013 – Going live in new markets such as Canada and Russia.
  6. 6. BUSINESS MODEL Conventional Business Model Zara’s Business Model Supply Chain Reliant on outsourcing production. Highly responsive, vertically integrated supply chain Time to market High due to outsourcing. Industry avg. is 6 months. Lead times and time for new product launches are less. 2-4 weeks. Marketing Ads primarily for publicizing the assortment Ads only for yearly sales & to announce new stores. Design Teams Design conceptualized by small elite team common for all segments Dedicated teams for different segments. Product Life Span Average new items per year 2000-4000 Classic collections Short life span but more product launches. Avg. 11K yearly Sales Forecast It is done. Not done due to flexible factories IT Spending 2% of revenue as IT applications are outsourced to vendors. 0.5% of revenue due to in-house applications developed
  7. 7. PRODUCT LIFE CYCLE Generally, a typical Product Life Cycle Curve looks like as above where Sales decreases as the product moves over the time line. But as Zara is in a high fashion industry and its product offering are the latest trends and designs with a life of maximum 5-6 weeks so its Product Life Cycle Curve becomes like the one given in following diagram.
  8. 8. KEY FACTORS OF SUCCESS Lower Quantities • ZARA produces and presents very limited volumes of new items in certain key stores. They are produced in a larger scale only if consumer reactions were unambiguously positive. Thus, failure rates on new products were very low compares to competitors • The added benefit of lower quantities is that if a style does not work well, there is not much to be disposed during the season-end sale. The result of this is that Zara discounts only about 18 percent of its production, roughly half the levels of competitors.
  9. 9. KEY FACTORS OF SUCCESS More Styles Instead of more quantities, Zara produces more styles, roughly 12,000 a year. Thus, even if a style sells out very quickly, there are new styles already waiting to take up the space. Zara can offer more choices in more current fashions than many of its competitors. It delivers merchandise to its stores twice a week, and the stores look fresh every 3-4 days.
  10. 10. UNIQUE STRATEGIES Link customer demand to manufacturing, link manufacturing to distribution Rapid response to market demands will yield profitable results Product variety - Introduces 12,000 new items in comparison to 2000-4000 of its competitors Vertically integrated supply chain is dedicated to customer responsiveness Differentiation strategy, where it focuses on young, fashion-conscious city dweller • Consumer Driven Production Process Consumer • Investment into high-tech equipment and extra capacity Investment • Commitment to continuous feedback and improvement Improvement
  11. 11. PRODUCT STRATEGIES Design and merchandising are interconnected with back end production process Design Teams: • Work on products for current season by creating constant variation • Continue in-season development • Select the fabrics and product mix for the following season and year • Have great reliance on high-frequency information with store managers
  12. 12. MARKETING STRATEGIES 4P consideration  Product, Price, Promotion and Placement. Each Country has different marketing approach: • Product  local preferences, design, trends • Price  different pricing strategy for each country. For example: Italy and Paris has no problem for price but quality-oriented, but German has sensitive price. • Promotion  different promotion strategy for each country • Placement  efficient distribution, location of stores
  13. 13. IMAGE DIFFERENTIATION Offer high quality goods to a low price Clothes are not mass-produced and products that do not sell well are taken away from store The collection is changed every second week The image of Zara is to be available for women everywhere, regardless to their income
  14. 14. SWOT ANALYSIS STRENGTHS • Ability to recreate fashion • Owned 1947 stores and Active use of stores • Cost leadership strategy • Differentiated in high price fast fashion industry • Dedicated supply chain process • Vertical systematization of production process • Efficient distribution and High turnover. WEAKNESS • Centralized distribution system • Doesn't spend much money on advertising • Lack of online stores in many countries • Repeated sales of out-of-stocks • Low quality
  15. 15. OPPORTUNITIES • Growth of fashion market • Diverse cultural area • Constant use of social media marketing strategy • Online marketing strategy • Global market penetration • Distribution center in US • Expanding into potential new market e.g. China, Australia THREATS • Emerging new comers • Local and Global competitors • Cheaper alternatives may be available in economic downturn • Zara based in Spain and has a great no of stores in Europe will dent in revenues
  16. 16. INTERNATIONALIZATION Push factors Inhibitors Facilitators Pull factors Saturation Low growth opportunities Changes in consumer behavior Administrative barriers Geographic distance Low economic development Different seasonality Cultural distance Lack of experience Risk perception International status Learning process Spreading cost and risk Spain joined the EU Economies of scale Globalization Abolition of economic barriers Growth chances Cultural affinities Information technologies
  17. 17. MARKET ENTRY MODEL OIL STAIN STRATEGY While Zara owns a majority of its stores in Spain, the international expansion has adopted three different entry modes: Own subsidiaries This direct investment strategy is the most expensive mode of entry and involves high levels of control and risk in case the firm exits the market. Zara has adopted this strategy for most European and South American countries that were perceived to have high growth potential and low business risk ,
  18. 18. Joint Ventures This is a co-operative strategy in which the manufacturing facilities and know-how of the local company are combined with the expertise of the foreign firm in the market, especially in large, competitive markets where it is difficult to acquire property to set up retail outlets or where there are other kinds of obstacles that require co-operation with a local company (Camuñas, 2003). In 1999 Zara entered into a joint venture with the German firm Otto Versand and benefited from the latter’s experience in the distribution sector and knowledge of one of the largest markets in Europe. Franchising This strategy is chosen for high-risk countries which are culturally distant or have small markets with low sales forecast like Saudi Arabia, Kuwait, Andorra or Malaysia. Zara’s franchisees follow the same business model as their own subsidiaries regarding the product, store location, interior design, logistic and human resources.
  19. 19. COMPETITORS ANALYSIS ZARA H&M Vertical Integration Production Outsourced Short Lead Times Long Lead Times Engage many designers 60% fewer designers Originate design in a few weeks One distribution center Distribution center in each country Better surver over inventory Low costs High costs Expand very fast Expand very slow Stores as a “face to world” No focus on store makeups H&M and Zara have very different strategies when it comes to the weighting of their offering. The bulk of H&M’s offering is womenswear and this focus is communicated in their advertising. Menswear at H&M takes a backseat. These weightings suggest that Zara and H&M are competing for and pitching at different consumer types. The Zara customer could be more mature, and shop across the breadth of the retailer’s offering for his or her partner and children, while the predominant H&M consumer is shopping for womenswear. Strategically, Zara are splitting their focus across all three channels.
  20. 20. CONCLUSION Unconventional approach to supply chain strategies has been Zara’s key competitive advantage Responsive supply and logistics, vertical integration, communication, & fast inventory turnover are some of Zara’s most unique and effective strategies Having a centralized distribution and JIT Production schedule creates a more efficient process High investment into technology enables Zara to operate the way they do.

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