With more than 7,400 stores in 96 countries, Zara is one of the largest international fashion companies in the world. To begin with, they are renowned for their ability to develop a new product and get it to stores within two weeks, while other retailers take six months. Zara also does an amazing job at placing the customer at the heart of their business model. Learn more about Zara’s dominance in the retail industry!
The Zara Story
Zara was founded by Amancio Ortega and Rosalía Mera in 1975. Zara’s approach towards fashion intrigued the Spanish consumer which led to the opening of 9 new stores in the biggest cities of Spain. In 1985, Inditex began operating Zara which laid the foundation for a distribution system capable of responding to the quick market trends. Their first store featured low-priced products similar to higher-end clothing and in the next decade, Zara quickly expanded into the global market which included Portugal, New York, Paris, Mexico, Greece, Belgium, Sweden, Malta, Cyprus, Norway, and Israel. Today, Inditex is the world’s largest fashion group with more than 170,000 employees operating in 96 markets worldwide.
Innovation is key.
Earlier this year, Zara unveiled its first pop-up store in London’s Westfield Stratford shopping center which was designed primarily for ordering and collecting online orders. This pop-up store will include product recommendation systems embedded in their mirrors. Customers would be able to scan an item with the mirror using their radio frequency identification (RFID) technology, and the mirror would bring the right size, multiple choices for coordinating and combining the item that they are trying on with other garments and accessories. Zara is also set to launch an AR experience that will enable in-store customers to hold their phones up and see models come to life on their screens. This app is launching on April 18 and will work when shoppers are located at one of its 120 flagships globally.
The Zara Brand Strategy
Moreover, in 2017, Zara was ranked #24 as one of the best global brands. The secret to Zara’s success stems from their ability with keeping up with rapidly changing fashion trends. Their shorter lead times allow Zara to ensure that its stores stock clothes that customers want at that time, for example, specific spring/ summer or autumn/ winter collections, new trends, or sudden popularities of an item worn by a celebrity/ socialite/ actor/ actress. Trend information flows daily into the database of their headquarters, which is used by designers to create new lines and modify existing ones. Zara’s warehouses have standardized product information which allows quick and accurate preparation of designs with clear manufacturing instructions.
Super efficient supply chain
Furthermore, rather than setting fashion trends, Zara keeps a close watch on how fashion is changing and evolving every day across the world and then waits for trends to develop. Based on latest styles and trends, it creates new designs and puts them into stores in a week or two. It is through this strategic ability to introduce new collections based on latest trends in a rapid manner that enabled Zara to beat other competitors. Zara only allows its designs to remain on the shop floor for three to four weeks. This practice pushes consumers to keep visiting the brand’s stores because if they were just a week late, all the clothes of a particular style or trend would be gone and replaced with a new trend. At the same time, this constant refreshing of the lines and styles carried by its stores also entices customers to visit its shops more frequently. Zara’s state-of-the-art distribution facility functions with a minimal human intervention which allows for the distribution of more than 60,000 items of clothing an hour.
Zara’s Principal Designer is the Customer
Lastly, Zara only spends 0.3% of sales on advertising while the industry average marketing spent for retail is 3.5%. Instead, Zara invests their money in location and appeal of its stores. Many of their customers are attracted to the stores’ exclusivity and the fact that the brand isn’t on every billboard in the world. Customers like to know that if they buy a clothing piece from Zara, it’s most likely that five other people would have the same item at work or school. The fact that their stores stock a small amount of inventory helps with that exclusivity factor. Another secret to Zara’s success is that the brand trains and empowers its store employees and managers to be particularly sensitive to customer needs and wants. Zara empowers its sales associates and store managers to be at the forefront of customer research such as take notes on customer comments, ideas for fabrics and new styles. Zara makes sure to keep an eye on its customers and understand, predict, and deliver on its customers’ preferences for quality fashion at affordable prices.