Zara: Vertical Retailer

Topics: Retailing, Vertical integration, Product Pages: 3 (1057 words) Published: March 21, 2008
According to Inditex, the Group's business model is characterized by a highly integrated vertical structure. In contrast to the model that has been adopted by competing international corporations, the Group handles all the processes required in the apparel industry—design, production, logistics, distribution to retail outlets—on its own. This model is based on a desire for structural flexibility and a belief that the customer should come first in every aspect of the company's operations. The main elements of this vertical structure can be seen in the retail outlets. The stores are designed with an eye for detail, providing a comfortable venue for the customer to encounter fashion. At the same time, it serves as a site for acquiring the information needed to adjust supplies in response to demand.

The key to this business model is fulfilling the customers' wishes as soon as possible. For Inditex, time is the most important element, the element that they consider ahead of costs. Their vertically integrated structure not only makes it possible to shorten the response time but also allows flexibility and keeps the size of inventories to a minimum, thus controlling the significant source of risk in the fashion industry as much as possible.

What makes the collections a success is that Inditex creates opportunities for many people to review the collections, continually incorporates changes in fashion, and offers new designs that respond to customers' wishes. Making use of the flexibility of its business model, Inditex tries to deliver new products to its stores in as short a time as possible, responding to changes that occur throughout the season. The models for each season (more than 30,000 of them last year alone) are developed together by the creative departments of the various brands. The sources of inspiration for the 300 designers (of whom 200 work just for Zara) include not just the trends that control the market but the wishes of customers, based on...
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