Overview and Background of Zara

Zara, Fifth Avenue, New York City

Zara, a Spanish clothing and accessories retailer, was founded in 1975 by Amancio Ortega and Rosalia Mera. It is the flagship retail store of the Inditex group, a fashion group that owns other brands such as Massimo Dutti, Pull and Bear, Uterque, Stradivarius, and Bershka.

Amancio Ortega opened the first Zara store in a central street in Galicia, Spain under the name Zorba. Although another store a few blocks away was also named Zorba, the molds of the letters for the sign was already created and it was rearranged, thus coming up with the name Zara. In 1980, the company started its international expansion in Portugal. In 1989, they penetrated the US market and in 1990, they entered the French market.

Zara is a vertically integrated retailer, controlling the supply chain, design, manufacturing and distribution of all its products worldwide.

Zara currently has 1,751 stores worldwide. They incur an annual revenue of over $9 Billion dollars (2009).

Jackets awaiting inspection a Zara factory in Spain

Zara's Mission Statement aims to contribute to "the sustainable development of society and that of the environment with which we interact." In stores, Zara saves energy and is eco-friendly. They also create less waste and they continue to recycle. Each and every employee is aware of the environmental commitment of Zara. In their product, Zara uses ecological fabrics and organic cotton. They also manufacture PVC-free footwear. In transporting product, Zara uses biodiesel fuel, which reduces Co2 emissions by 500 tons per year.

Value Proposition

Zara offers fashionable and affordable clothing by continuously presenting styles that are trendy and "hot" for the season. They are trend-setters in the field with excellent response in trends, whether it is style, cut, or color. Zara's design team generate approximately 1,000 designs per month that is then sent to their manufacturing plants and checked back in the Zara Centre, located in Spain. Zara's supply chain is integrated vertically through their closely controlled facility in Spain. This ensures a faster turnover and delivery because every item is inspected and stored in this controlled facility. 

Store managers in their brick and mortar stores submit their orders based on quantity and it is sent to the store direct from Zara's facility in Spain. The products on their E-Commerce website is sent from various warehouses via expedited shipping, and in many countries, store pick-up is available. 

Zara uses a pull system in their supply chain and inventory management. They produce a small quantity of each style because of the numerous styles that they come out with on a month to month basis. This is beneficial to their own e-commerce website as the turnover is quick and easy. Zara is able to update their website constantly based on the changes in the trends and styles that they offer. 

Zara uses the just-in-time manufacturing method which can pose a lot of threats. Any disruptions in manufacturing due to weather, factory problems, etc., will slow down production due to the different steps it needs to take after manufacturing and into the stores. Factory wages is also higher because of their facilities in Spain, which is typically a higher wage because of the higher cost of living in Europe versus Asia and South America, where many of their factories are located. 

SWOT Analysis

Addressability, Accessibility and Memory
Strength - Zara.com keeps a good track of previous purchases and history. They also have a good customer relationship management system through their database. The Zara.com database also keeps track of addresses and other personal information to enable a more quick shopping experience that is very important to consumers. Shipping is free which once again is a large plus for e-commerce websites across the board.

Weaknesses - Zara.com is not as integrated for mobile devices since it only shows the same view as any consumer would when going on their desktop site.


Interactivity
Strength - Zara has a very simple yet interactive website that is easy on the eye.
Weaknesses - Information is lacking on descriptions of items

Control
Strength - Collections are controlled based on the types of clothing that Zara offers (Jackets, Blazers, Bermudas, Swimwear, Homewear, etc.)
Weaknesses - These collections may be too broad. For example, T-Shirts are only classified as one, and the filter button is a completely different entity versus a simple drop down menu or box.

Digitalization
Weaknesses - There is very little digitalization within Zara's website. A reason maybe because all websites for all countries look the same and are one. Zara.com should streamline different types of digitalization services based on the country's capabilities. For instance, the USA site should have a better digitalization process in terms of choosing colors versus a country such as the Philippines who should have a simple website due to the lack of a stable internet connection.