Zara Boutique Clothing Store (as Subsidiary of Index Sa)

Satisfactory Essays
Zara Boutique Clothing Store (as subsidiary of Index SA)
• Very strong link between store managers and central design team
• Real time sales tracking through the use of electronic equipment- helps to identify trends
• Trends translated to products within 15 days (catch the fashion while is still hot, thus responding quick to the fast changing taste of young urban consumers). Designs delivered quickly to stores
• Continuous analysis of value chain and seeks to achieve control on as many sections as possible
• Lead time reduced to 15 days (three weeks) – time between design and sales, as opposed to the industry average of 9months
• Design team works through-out the session to spot the latest fashion trends
• Profit growth – 30% growth (45% more that the competitors)
• It is a fastest-growing retail business across the world
• Successfully exported its formula internationally- many clothing companies couldn’t achieve this
• Has simple, singular message for its customers- that of upscale experience with good quality (but not best quality) product offering at a good price
• Low technical quality
• Great design product- fabric, colours, patterns and styles (product differentiation)

The challenging competition
• Continues to grow despite the recession and merchandising mistakes mainly due to its unusual structure (other rivals are downsizing)
• Other clothing retailer outsourced their manufacturing to developing countries to minimise cost and ensure greater efficiencies. Zara took a different approach to this.
• Developed a business that responds quickly to shifting customer needs. Driven by customer feedback
• Vertically integrated business model, spanning design, for the just-in-time production, marketing and sales
• Produces more than half of its clothes rather than relying on unpredictable suppliers (if you want something done, do it yourself)
• H&M (competitor) has 900 suppliers and no factories while Zara makes 40% of its fabric and produces

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