By PATRICIA KOWSMANN
Updated Dec. 6, 2016 11:03 a.m. ET
Talking about efficiency!
Zara is a Spanish clothing and accessories retailer based in Arteixo, 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. The fashion group also owns brands such as Massimo Dutti, Pull and Bear, Bershka, Stradivarius, Oysho, Zara Home, and Uterqüe.
Zara stores have men's clothing and women's clothing, as well as children's clothing (Zara Kids). Zara's products are supplied based on consumer trends. It’s highly responsive supply chain ships new products to stores twice a week. After products are designed, they take ten to fifteen days to reach the stores. All of the clothing is processed through the distribution center in Spain. New items are inspected, sorted, tagged, and loaded into trucks. In most cases, the clothing is delivered within 48 hours. Zara produces over 450 million items per year.
The company can design a new product and have finished goods in its stores in four to five weeks, compared to the six-month industry average, and launches around 12,000 new designs each year. It can modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences. If a design does not sell well within a week, it is withdrawn from shops, further orders are canceled and a new design is pursued. Zara monitors customers' fashion changes.
Interesting fact, Zara has a policy of zero advertising; the company preferred to invest a percentage of revenues in opening new stores instead.
Most of the products Zara sells are manufactured in proximity countries like Spain, Portugal, Turkey and Morocco. While some competitors outsource all production to Asia, Zara manufactures its most fashionable items—half of all its merchandise—at a dozen company-owned factories in Spain and Portugal and Turkey, particularly in Galicia and northern Portugal and Turkey. Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia.
The company’s ability to respond quickly to customer taste has long been the subject of industry study. Now its American rivals are emulating some of the short cuts that have helped Inditex expand to more than 7,000 stores in 92 countries and earn €20.9 billion ($22.1 billion) in sales last year, double what it earned in 2008.
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