Zara: Fast Fashion

GROUP 4
RIDDHIMA SINGH (CEO)
GAURAV KENUE
KARTIKAY SHARMA
SHASHI KIRAN BIRNALLY
VIJAY MOHAN MENON CHANKRAMATH

Zaras competitive advantage

Supply Chain

Agile supply chain

Fast distribution network

Central distribution system

Flexible supply chain- use of gray dyed clothes

New fashion twice a week to stores

Finances

Negative operating capital

High gross margins

Vertical integration-no bullwhip effect

Just in Time manufacturing system

Zaras competitive advantage

(contd)

Suppliers

Majority of suppliers were other Inditex firms

Good, strong and long supplier relations

No formal contracts required

Designing

Designing of clothes started only after the season started-giving

sufficient time to decide on the designs

Backward integration into marketing

Very low failure rates

High frequency of customer visits due to continued change in designs

every week

Zaras competitive advantage

(contd)

Retail outlets

New designs twice every week

Sense of scarcity- not full display shelves, plenty of open space and
small quantity of each product

Increased the customer visits every year

Very low marked down sales

Buying decision of customer

Fresh stock every three to four weeks was an incentive for the
customer to buy

Customers experienced scarcity and opportunity due to changing

fashion content

The uniqueness of the fashion content sold at Zara will make the
customer more satisfied with their purchase

Segregation of womens clothes into 3 categories of prices,

fashion content and age made it easier to decide

Affordable prices and relatively good quality also helped in taking

a decision

Upstream Strategy - Design

Working Simultaneously on Products with creation of constant variation

Expanding Successful items with in-season development

QR was critical to Zaras Performance

Flat Organizational Structure with designers attending numerous fashion

Shows

Adapting trends and differences across market through entire selling season

Using Information for Analyzing trends, tracking consumer preference and

sales data via IT systems to get most revenue

Plenty of Design so as to reduce failure rate (only 1%)

Bridging Merchandising & Back of the Production Process under one

management team

Upstream Strategy Sourcing &

Manufacturing

Sourcing Fabrics from external Suppliers and Inditex Subsidiaries

Purchasing most of Fabric as grey for in-season updating

Managing all the processing of gray fabric so as to reduce finishing time for
fabric

Limited Production

Internal Manufacturing 40%

Fashionable Items Small Lots and Produced nearby for reordering

Automated factories & Labor Intensive Process i.e. Cut garments outsourced

Long term Relations with Subcontractors

External Manufacturing 60%

Basic Items Price Sensitive

Long term ties with Suppliers with minimized contractual commitments

Downstream Strategy Distribution

Centralized Distribution Center in Spain and also Satellite Center in SA

Technology integration in Distribution like Mobile tracking system

Constant Adjustments to the Distribution process (queuing & size)

Keeping Utilization Rates low

Hiring temporary Workers at the start of the selling season

Shipments via trucks (75%) and air (25%)

Fast Shipment to the stores

Downstream Strategy - Retailing

Backward Vertical Integration

Lower Price than Competitors

Reduction in Advertising and Markdown Requirements

Rapid Product Turnover in retail stores

Prime Locations for Retail Stores and emphasis on presentation

long term leases with relocation according to evolution of shopping

districts

Stores Managers direct communication with Design team

Also Store Managers hired Sales Assistants

Minimize the inventories sold at mark down prices

Automated Sales tracking System

Zaras Philosophy

Fast Fashion

Agile Supply Chain

Good teamwork and cooperation

Vertical integration links across the upstream & downstream

Shorter lead times

Faster turn around times

Low inventory

Backward integration makes it stronger

Small batches production

Customer feedbacks well respected

Customers cant afford to leave the store without buying the product