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Zara Case Study

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by

Stephanie Spreda

on 25 April 2013

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Transcript of Zara Case Study

Itinerary History and background Why Might Zara Fail? Zara's Operating Economics
•The structure of the company may not be able to handle future growth

•“What worked with 1,000 stores may not work for 2,000 stores"
Additional Distribution Center Zara International 500 Stores in 30 Countries

Market Entry
Company-Managed Stores
Franchises
Joint Venture

"Oil Stain" Michael Pavelko
Stephanie Spreda
Danielle Sears
Brian Fitzgibbons
Michael Stadnyk History & Background Inditex Zara's competitive advantage How Zara might fail and resolutions Zara's international imprint Zara's impact today Inditex Zara Massimo Dutti Bershka Pull and Bear Stradivarius Oysho 1975

Amancio Ortega Gaona

Based in Galacia, Spain

6 Chains

1,284 stores worldwide

Key competitors
H&M, The Gap, Benetton Zara International Competitive Advantage? La coruna, Spain in 1975

500 store in 30 countries

Sucessful product positioning

Short cycle time
4 to 5 weeks
2 weeks "medium quality
fashion clothing at affordable prices" YES!

Flexibility

Quick Response

Regional Styles Short Cycle Time through Quick Response

Small runs, sales data for re-buy orders based on feedback

Coordination between retailing and manufacturing

Plan styles and issue re-buy orders based on evidence of customer demand, rather than forecasts

Idea to appearance in store in 15 days; for a design tweak – 10 days. Competitors have new designs once or twice a season Zara's Business Model Customer average 17 visits per year vs. 3 for competitors

6 seasons rather than 4. Twice a week store shipments

Industry average markdown ratio is 50%. Zara sells 85% at full price

Failure rates for Zara product line is 1%; industry average is 10%

Industry spends 3.5% of revenue in advertising and promotion. Zara’s spend is 0.3% Buyer-driven retailer Amancio Ortega has jumped to the 3rd richest man in the world, according to Forbes, with a net worth of $57 Billion.

Zara continues to have lead times of 2-3 weeks and are believed to launch almost 11,000 new designs each year.

Zara is considered “possibly the most innovative and devastating retailer in the world.”

Inside their headquarters in Arteixo, Spain, they have a model mall where Zara and Zara Home have meticulously researched display trial runs so that the most promising eye-catching displays can be replicated all over the world. Zara Today Net Annual Sales: €8.938 Billion ($11.615 Billion)
Increased by 10% since 2010
Contributed 64.8% of Inditex Group’s total sales

Zara opened 113 more stores in 2011, bringing the total stores to 1,830.

Zara entered 5 new markets:
Taipei, Taiwan
Sydney and Melbourne, Australia
Johannesburg, South Africa
Peru
Azerbaijan

This brings the total markets to 82 at the end of 2011. 2011 Financial Report At the end of 2010, Zara’s first online sales platform was introduced to the United States and Japan; presented directly to the customer.

At the end of 2011, Zara.com was operating in 18 countries with over 1 million views daily.

Zara.com has become one of the brand’s most popular storefronts.

In 2013, Zara will achieve online sales of over €600 Millon ($779.76 Million), almost double that of 2012. Online Sales Platform Gracias! Sustainable Advantages Fast
Fashion Prime
Locations Store Fronts Associates !
Full transcript