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International Strategy- Zara
Transcript of International Strategy- Zara
Fundamental concept: to maintain design, production, and distribution processes that will enable Zara to respond quickly to shifts in consumer demands.
Areas of product development
Strategic partnerships and cost of production
Advertising and marketing
Information technology infrastructure.
Commitment to rapid response in customer trends in fashion, producing clothing often and with short life spans (10 wears).
Goals and values~
Three goals for operations:
1) Develop a system that requires short lead times
2) Decrease quantities produced to decrease inventory risk
3) Increase the number of available styles and/or choice
Value proposition: to combine moderate prices with the ability to offer new clothing styles faster than its competitors.
Zara Online in Russia
design by Dóri Sirály for Prezi
Main company under the Inditex Corporation.
Started operations in Spain in 1975
1988- Decision to venture into the international market.
Over 1.770 stores in 74 different countries with over 10,000 new design launches each year.
“I think the core thing with the fast fashion guys has been their inability to localize product by specific region. The way I think about H&M, Zara, Forever 21 is that they make a broad bet on fashion, allowing them to receive good costs,” he says. What’s more, “these companies have been very focused on growing square footage, devoting capital to selling the store experience instead of the Web.”
Basic strategic framework
Structure & systems~
Few hierarchy levels
Tight control over production processes keeping design and manufacturing in-house or with some strategic partnerships located nearby Headquarters.
The industry and environment
Young, price-conscious, and highly sensitive to the latest fashion trends. Do not define their target by segmenting ages and lifestyles.
Segmentation product line:
142 085 005 Actual Population
65 715 336 Male Population (46.3%)
76 369 669 Female Population (53.7%)
1 196 328 Birth
One of the main emergency markets worldwide.
GDP (Purchasing Power Parity) US$ 2.511 trillion.
PPP (Per Capita) US$ $17,700
200 million credit cards during 2011.
Country 2000 2002 2005 2007 2008 2009
Russia 9.200.000 6.000.000 23.700.000 30.000.000 45.250.000 40.853.000
+ 7 million Russians buy goods on the Internet
13 million are involved in the e-commerce.
The online purchasing culture changes depending the age and their home.
Young people buy clothes.
Adults prefer electrodomestics.
In 2011 the 88% of the population preferred to buy from home.
For 2014 predicting a 56% of growth and
for 2015 a 29%.
Industry: Fast fashion Industry
Market: Fast fashion retailer
Reason for ONLINE SHOPS
The online order:
Save in inventory process
Increase its presence in the markets where it's already established, since it is not aiming to enter in new countries. Zara is trying to implement online stores in those places where it registers important sales, specially in the emerging economies, that haven't been affected by the actual crisis.
E-Commerce Life Cycle
The growth stage.
Zara decided to open the Online Store in Russia on August 28th 2013, taking advantage of the opportunity to launch the Winter-Fall collection, joining the network of 24 markets where Zara has online selling activity.
"Through Zara’s business model, we aim to contribute to the sustainable development of society and that of the environment with which we interacts."
Zara in Russia
Zara first entered the Russian Federation in 2003 when it opened a shop in Moscow.
Now there are over 60 shops in more than 30 Russian cities.
Choosing Russia instead.
Why don't e-commerce elsewhere?
In the beginning it had to do with sourcing and logistics. The clothes offered up by these retailers are presumably manufactured and sold within weeks, which they claimed meant there wasn’t enough time to sell them online.
They pack up the order and then send it.
If it’s a home delivery, Zara will send it directly and the customer will pay for the specific cost.
Zara has advantage because the people know their product and they dominate their sizes.
The online return and exchange policy is identical to the store system, with shoppers given 30 days to change their minds.
Queries will be handled by customer service operators or via e-mail or chat messaging.
Zara is vertically integrated with the majority of production carried out in owned or closely controlled facilities in Spain.
More flexibility and speed
1-Stores place orders twice per week.
2-Demand based production means there is very little inventory in Zara’s supply chain.
3-Deliveries typically arrive one to two days after ordering.
4-Clothes are put straight onto the sales floor and are available to purchase.
5-Prices are market adapted.
Zara's online Strength
Framework for competitor analysis
Mango is competing since September 2010 with its online store.
Online sales during 2011 soared to a total of €36.2m, representing an increase of 72% on the previous year.
Adaptation of the timing of shipments. In Russia the winter collection has to start in August.
Resources and Capabilities
The online campaigns have been a highlight with the online store being popular among buyers.
The unique product line by Mango helps it differentiate from its competitors.
Sending it collections to the places where they want to fit with customers preferences and taste.
All the apparel is designed and sourced from Spain which can cause serious concern when it comes to pricing as compared to its European counterparts
Continue expanding online in 2012
Double turnover through both its own website, www.mango.com, and by selling through partner websites.
"Russia is a priority for Mango and we will continue to invest in new openings during 2012”.
"The Russian woman is fond of fashion. And besides, they like to dress Mango. And this is all for us to have a very strong success in Russia."
"In Russia, our clothes are not expensive and they have a very feminine line, as the country's women. Her favorite outfit is the dress."
1. Short review of the company
2. Basic strategic framework
3. Latest International Movement
4. PESTEL Analysis
5. Framework for competition analysis