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.

Positioning based on Brick and Mortar

The Positioning between Zara's Brick and Mortar Store and E-Commerce website are very similar. Zara differentiates itself from many other retailers based on their very simplistic and clean design. When entering a brick and mortar store all across the globe, a consumer feels welcome because stylistically, every store and every website looks exactly the same. This goes for many large chain retailers as well such as H&M and Uniqlo, its two largest competitors.

Zara updates their collections constantly based on their inventory management system of shipping small quantities, which keeps it very scarce and fresh. This also reduces repetitiveness in the market. Zara introduces fashion on a weekly or monthly basis, not seasonally, which draws in consumers constantly to their stores to know what's next!

Zara definitely sells the same items in their brick and mortar stores and their website as well. They have an excellent multichannel business model that features all products simultaneously. Although in many cases, due to the high turnover in styles, the Zara website frequently has styles much faster than their stores, this is because they are able to put items up on websites much faster than redoing a store.

Marketing Content

After reviewing the Zara.com, the website lacks any content that relate to trends and the styles they offer. Subscribing to their newsletter is a separate entity wherein the consumer clicks on +info then signs up for the newsletter versus it being right on the page where consumers are all the time. There is very little information about the company itself outside of information regarding their Mission Statement and global offices. Additionally, after signing up for the newsletter, Zara.com does not immediately send the most recent newsletter, they instead take a little longer in reaching out to their consumer through their emails.

Zara.com needs to drastically create more marketing content that would draw customers in through other websites such as blogs and other advertorial content. They are lacking in company information, trend insights and even product descriptions. Although this is in line with their "minimalistic" approach, I do think slight changes can improve traffic into the Zara.com website.

Merchandise Assortment

Zara has a very extensive Merchandise Assortment available on their website. Their pricepoints are moderate, a little more expensive than The Gap, H&M and Uniqlo, yet lower than Armani Exchange, Banana Republic or Benetton. 

Zara offers collections for Women, Men and Kids, along with special styles each day and a designated section for all New items. Their casual collection, TRF, short for trafaluc, is also featured as its own category within their website. 

Each subcategory is generally the same for all categories. They are broken out by clothing type. Their assortments are not broken out further than clothing type, and they do offer the same items that are currently in stores with some early offerings based on when new styles come out. 

Marketing Campaign

In creating this marketing campaign, I focused attention on targetting social media such as Twitter and Facebook, to grab attention from people who need to be aware of the Zara brand outside of their stores. Currently, Zara's twitter page is only a digital lookbook about what they are currently offering. They do not have extra information about events and coupons. Zara lacks what is currently the trend in e-commerce; daily deals or flash sales. 

This marketing campaign, focused on their current customers, will aim to drive sales through a daily or weekly deal that could also be a venue for Zara to purge excess inventory

Components of Zara's Marketing Campaign:

Product: Men's Houndstooth Three-Piece Suit 

Target: Male Audience subscribed to Zara's newsletter or a follower of their twitter page

Technology: Social Media (Twitter and Facebook)

ROI (Return-on-Investment): Drive Sales on a daily deal that offers 20% off or a substantial savings 

Process: If the deal is distributed daily, a specific time of the day would include sending out email blasts, facebook or twitter posts regarding the daily deal of the day

Zara currently has a little over 200,000 twitter followers, which is relatively low compared to H&M with 1.9Million Followers. This marketing campaign will be geared to creating a larger social media database that will enable Zara to open its distribution to more people on a daily basis. They will drive sales because it has been proven that flash sales and/or couponing has come back with a lot of sales and awareness of the brand. 

Website Aesthetics

As mentioned many times previously, Zara has a very minimalistic approach to their website aesthetics. This both helps and hinders the overall appeal of the website because although it is easy on the eye, it lacks many components that are essential to any e-commerce website.

The site is very nice and well maintained, as it looks the same as any other of their global websites, and it translates very well to their stores which only feature white and black. There are many lacking features on their website aesthetics such as compelling copy and better photography.

One thing I noticed also is that the consumer is only able to view (above the fold) about two styles, and the other feature of viewing "six" at a time is too small.

Based on the styles offered by Zara, I do believe that their website aesthetics reaches their target audience. Their target audience is also an avid user of social media, which once again is lacking in their websites. There is no option whatsoever of sharing products through email, Twitter, Pinterest or Facebook. 

A full overhaul may not be in the midst of Zara.com's future, yet it is important that they keep the website up-to-date with technological and social advancements. They need copy that features the benefits of their clothing such as a short back-story and description of the style and written clean and care instructions.

One thing that is very good about their product pages is that it shows shipping options and their simple return process. It is very important for the consumer to understand exactly what they will be paying before they add a product to a cart. Although many other websites such as Gap, show right on the main page that they have shipping terms such as "Free Shipping on orders over $50" or "TODAY ONLY! 20% off Select Styles!" which draws consumers in further. Zara.com may not have this retail business model, but it is imperative to every business wanting to create a large database of loyal customers. 

Editorial and Descriptive Writing

After further research, I have noticed that Zara's e-commerce websites shows very little editorial about the product that is featured on each page. This can pose a large problem because in addition to photography, copy is very very important when selling something that the end consumer has no way of physically seeing or feeling the item.

I can see that this may pose a problem as it lacks this very simple and important aspect of every e-commerce websites.

Fraud and Security

It is written in Zara.com's Terms and Conditions that their consumer is to not make any fraudulent or false orders. Further action includes canceling the order and alerting the appropriate authorities.

Zara also does not tolerate phishing or spam emails in conducting their online businesses. Each and every consumer receiving Zara emails has agreed and approved receiving them through their own website.

Zara uses a secure payment system that is authorized and authenticated when purchasing with a credit card online.

Ethical and Compliance Issues

According to Zara's Mission Statement, they are complaint with environmental and social protocols in order to conduct an ethical business. Their commitment not only extends to their own staff, but also to their outsourced factories in using ecological fabrics and sustainable transport.


Zara is aware of what is going on with the world, such as giving 2 Million Euros to the victims of the Haiti Earthquake in cash, not clothes. Clothing is always essential, yet Zara, or its parent company Inditex, understands that complete reconstruction requires money and not products. Zara has stood behind their ethical issues by giving money because they care, and not because they just want to get their name out there.

Zara's overall Code of Conduct, from its parent Company Inditex is as follows (taken from the Inditex website):

All Inditex's operations are developed under an ethical and responsible perspective.
All individuals or entities, who maintain, directly or indirectly, any kind of employment, economic, social and/or industrial relationship with Inditex, are treated fairly and with dignity.
All Inditex's activities are carried out in a manner that most respects the environment.
All manufacturers and suppliers (production centres that are not property of Inditex) fully adhere to these commitments and undertake to ensure that the standards which are set forth in the Code are met.

1. No Forced Labour
2. No Child Labour
3. No Discrimination
4. Respect for freedom of association and collective bargaining
5. No harsh or inhumane treatment
6. Safe and hygienic working conditions
7. Wages are paid
8. Working hours are not excessive
9. Regular employment
10. Traceability of production
11. Health and Safety of Products
12. Environmental Awareness
13. Confidentiality of information

References

www.zara.com

www.inditex.es/en


http://researchingsustainability.files.wordpress.com/2012/01/zara-harvard-case.pdf

http://www.slate.com/articles/arts/operations/2012/06/zara_s_fast_fashion_how_the_company_gets_new_styles_to_stores_so_quickly_.html

http://www.forbes.com/sites/gregpetro/2012/10/25/the-future-of-fashion-retailing-the-zara-approach-part-2-of-3/

http://cmuscm.blogspot.com/2012/09/fashion-forward-zaras-supply-chain.html