Introduction Zara (Spanish: [ˈθaɾa]) is a Spanish clothing andaccessories retailer based in Arteixo, Galicia, andfounded in 1975 by Amancio Ortega and Rosalía Mera. It is the flagship chain store of the Inditex group;Inditex Corporation. Inditex is a the worlds largestfashion group to which other fashion brand namesbelong such as as Zara Kids, Pull & Bear, MassimoDutti, Bershka, Stradivarius, Oysho, ZaraHome, Lefties and Uterqüe.
ZARA changes their designs 2 weeks per time ,where Marks andSpencer changes two months a time. Products of ZARA is very popular with young females (age of 24 -25) Their product portfolio is comprises with men ,women andkids(ZARA KIDS)clothes, shoes, cosmetics,and complements. Company preferred to invest a percentage of revenue in openingnew stores rather than huge marketing campaigns. There are 1671 stores around the world.ZARA is a "fashionimitator"company. ZARA turns around more than 2000 designs per annually , andits revenue for 2012 is over 7 billion pounds.
Infrastructure Their factory is located in a city called La coruna,Spain.It is the city which has the cheapest labor in thecountry,but when compared to south Asian countriesthe cost of labor is expensive in Spain. It offers flexibility and agility to push new design tothe final selling point fast.
Human Resource Management ZARA recruits school leavers or freshundergraduates.so most of the time job at ZARAs istheir first job. ZARAs always liked fresh, energetic young individualsbecause they are free from family commitments andthey can focus more on their job.
Technological Development ZARA has agents . These agents are sent to night clubs ,high class socialevents to pick up latest designs so within 6 hours usingtechnology they sent the sketches to the factory withslight differences in the design.
Operations Factory in spain is equipped with flexiblemanufacturing systems. (FMS)for fast turn around indesigns and productions. cost of labour is not cheap and focused on productivityand efficiency. they do have 12 days lead time.
Marketing and Sales Target customers are young females who are 24 yearsand 25 years. ZARA dont advertise much on media.but once, theyput up a large poster on a high wall in a tall building.everyone surprised why did they put up a poster likethat .reason was next to that building there was auniversity located in a tall building as same as theother.so when the young girls go to each floor theposter is visible.
Facilities they reach their target market by locating their storesin prime town-centre locations. By reducing the manufactured quantity of eachstyle, Zara creates artificial scarcity and lowers the riskof having stock it cannot sell. Scarcity in fashion increases desirability, which meansshoppers need to buy quickly as the item may not beavailable next week. Zara only discounts 18% of its stock in sales, which ishalf the industry average.
Inventory Stores place orders twice per week and the supply offinished goods is matched to store demand. Production is then increased or decreased in theflexible production facilities. Demand based production means there is very littleinventory in Zara’s supply chain, which results inmuch lower working capital requirements.
Procurement /Inbound logistics ZARA buys its raw materials from Italy, Spain, andGreece.Reason is final product can be push to the finalselling point quickly.suppliers have agreed to supplymaterial within 5 days to ZARAs facility in spain.dueto this most of the inbound logistics are roadhaulage.(mainly trucks)
Pricing As production is carried out in Spain where averagewages are higher than low cost Asian countries sofactory wage costs will be higher thancompetitors, which will affect margins.
Delivery Deliveries typically arrive one to two days afterordering with most deliveries arriving by truck fromthe Spanish factories. Clothes are then put straightonto the sales floor and are available to purchase. Own railway infrastructure
Strengths It produces about 11,000 distinct items annuallycompared with 2,000 to 4,000 items for its keycompetitors. The company can design a new product and havefinished goods in its stores in four to five weeks; it canmodify existing items in as little as two weeks. Shortening the product life cycle means greatersuccess in meeting consumer preferences.
Contd …. An average high-street store in Spain expectscustomers to visit three times a year. That goes up to 17times for Zara. 50% of the products Zara sells are manufactured inSpain, 26% in the rest of Europe, and 24% in Asianand African countries and the rest of the world.