To What Extent You Feel the Business Model of Zara Is Sustainable? Critically Evaluate the Impact Zara Has Had on the Fashion Industry.

Only available on StudyMode
  • Download(s) : 514
  • Published : August 9, 2010
Open Document
Text Preview
To what extent you feel the business model of Zara is sustainable? Critically evaluate the impact Zara has had on the fashion industry.

The Fashion Imitator
Established in 1975, Zara is one of the most successful retailers of today’s world. Their clear focus and vision has made them to tap the power of the fashion. Operating in 62 different countries it has nearly around 2500 stores all over the world. Zara under the flagship of Inditex, (a holding company located in Northwest Spain) is a fashion imitator, it comprehends what its customer’s desire and then designs and manufactures according to their expectations. Zara’s business working model is quite diverse from the other retailers; this makes them set out in the market. It has promoted the message of high fashion at a lesser cost across all countries through its unique and different selling techniques. The Sustainability of Zara

Understanding and comparing the Business strategy and the financial differences of Inditex and its major competitor will help in understanding the sustainability of Zara in the international apparel market. Gap which is one of Zara’s major competitors sells the same range of merchandise with a less trendy style. H&M (Hennes and Mauritz) a threatening competitor too has been quick to “internationalize”, which allows them to gain sales in countries outside their native Sweden.

H&M also is more attentive when entering new markets and tends to enter one country at a time, as opposed to Zara who multitasks globally. [pic]
The above image shows the suppliers chain of Zara and it’s major competitors. It’s been known that H&M has 85% current assets in its business where as Zara has only 50% of current assets. This shows that Zara has more of fixed assets and its current assets are quite fast moving as seen in its business model. [pic]

Zara and its major competitor H&M
Spain’s well-liked brand Zara, aims to offer the latest catwalk style at the most affordable price. With a unique product strategy Zara comes up with 14,000 designs per year, with new designs appearing in the stores globally, twice a week. It generally focuses on performing key activities differently in its supply chain which is 2-2.5 months that makes it sustainable and sets challenges for its competitors. [pic]

One of Zara’s designs
The key factor that makes Zara’s design sustainable is the wide assortments of whisking budget interpretations of catwalk products as customers these days prefer spending on education, healthcare, electronics and travel, then on clothing due to recession.

Another factor that makes Zara prolonged is its store location and layout. Although products are at inexpensive rates, their aristocratic store’s layout makes it feel exclusive as they are large, swish and centrally located. The company doesn’t spend much on advertising as it believes to give the added value to their customers rather than spending on brand promotion. [pic]

One of the store layout of Zara
While its rivals start planning their lines on average nine months before they hit the shelves, Zara has a reputation for instant reaction to fashion trends and rapid restocking of stores. Zara can make on new line, from the initial concept to when it arrives in the shop, in just three weeks. In addition the Zara technology makes the designers in daily contact with store managers, discussing which items are most in demand and which are not (Hannocks.P 2004). Zara recruits talented young designers and trains them to take swift decision. This way it has re-thought the fashion business and developed into a concept of its own and its efforts are therefore focused on reducing the time between design and sale which means that its production cycle is entirely different from fashion sector norms. The focus on market changes means that 85 percent of products are manufactured in the season they are sold. [pic]

Latest window display of Zara- Christmas sale 2009, London
The Retail Environment
In the...
tracking img