CASE STUDY:

ZARA & UNIQLO

Zara is a Spanish fast fashion
retailer based in Arteixo in
Galicia. The company was
founded in 1975 by Amancio
Ortega and Rosalía Mera. It is
the main brand of the Inditex
group, the world's largest
apparel retailer.
Uniqlo Co. Ltd. is a Japanese
casual wear designer,
manufacturer and retailer. The
company has been a wholly
owned subsidiary of Fast
Retailing Co., Ltd. The company
operates in Japan and several
other countries.
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What differentiates Zara from traditional
retailers?

Traditional Retail Zara

▪ Production is outsourced ▪ More than half production
to low-cost countries takes place at nearby
▪ 80% orders placed 6-12 factories
months before arrival at ▪ 85% production is open
store for in-season adjustment
▪ Production of standard
offerings with consistent
demand is outsourced to
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low-cost countries
 Zara sports 62%
profit margin

Although this production arrangement

leads to significantly higher labor cost but
the lower turnaround time more than
makes up for it.
Let’s see how? 4
FROM DESIGN TO HANGER

Production Distribution Selling

• 14 highly • Orders shipped to • 80 to 90% of the

automated Europe by trucks clothes are sold at
factories to and to US & Asia full price.
minimize waste. by air. • This production
• Cut fabric is sent • Products arrive at and distribution
to small sewing stores within 48 efficiency allows
shops and later hours twice a Zara to capitalize
returned to the week. on new trends with
main factory for • This allows stores an amazing design
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further processes. to maintain low to hanger time of
inventory of each Nine days.
Zara is able to capitalize on new market trends
because of it’s short turnaround time.

Design to Hanger time :

9 days
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UNIQLO’s APPROACH

▪ Uniqlo sells similarly priced products

▪ Products are more basic in nature which are
unsusceptible to fashion whims.
▪ This allows them to outsource 70% of the
production to China

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WHAT THIS MEANS

▪ Cost is controlled by outsourcing production

to China.
▪ Production planning is done a full year or
more in advance.
▪ Relationship with suppliers are long term
and production is steady.
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COMPARISON BETWEEN ZARA AND
UNIQLO

ZARA UNIQLO
▪ Fast fashion ▪ Slow fashion.
▪ Production is open for ▪ Production planning is
in season adjustments. done a year or more in
▪ Production takes place advance.
close to home.

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QUESTIONS?

1. ZARA has begun an online presence. What changes might

be necessary to its business model to support online
sales?

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QUESTIONS?

2. Zara currently has 45 stores in the United States and over

400 in China. Uniqlo aims for 1000 stores in the United
States and 500 in China by 2015. Why the disparity?

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QUESTIONS?

3. Find information on the web about production strategies at

GAP, Mango, and H&M. Compare these to Zara and
Uniqlo. Which of the strategies most aligns with how you
shop as a customer?

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QUESTIONS?

4. Zara’s business model has been called unsustainable.

Uniqlo’s has been called boring. Do you agree? Explain.

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“ Quality is a direct
experience
independent of and
prior to intellectual
abstractions.
-
R.Pirsig
THANK YOU 14