SCHOOL YEAR 2014/2015
1. What makes Zara different from other specialty apparel retailers? What are the main differences in the business models of Zara and H&M?
Zara's greatest strength and at the same time the difference from other specialty apparel retailers lies in its supply chain , which allows Zara to turn over new styles in a fraction of the time ( three weeks ) it takes conventional retailers. It is interesting how the two leading fashion retailers ( Zara and H&M ) have totally opposite business models. The main difference is that H&M business model focuses on outsourcing and Zara's business model mainly focuses on in-house production. Zara cuts fabricks at it's La Coruna headquarters in
Northern Spain and then sends them to local cooperatives for sewing and then back to be driven and flown to Zara stores all over the world.
Zara rarely outsources to Asia, but when needed it does outsource in Europe, using cheap neighbouring countries from which the output can be quickly driven back to headqurters which allows fast turn over ( one of the advantages of Zara ) .
2. What role do marketing channels (Zara stores) play in Zara's business model?
Which marketing functions do marketing channels (stores) perform within
Zara's business model? Should Zara continue to own most of its stores?
The unique approach that Zara uses for marketing and advertising is an additional factor that contributes to their success. One important point to make here is that Zara spends only 0,3 % of total revenues on advertising and marketing, compared to other competitors that spend 3-4 % of their revenues on similar expenditures. Zara stores are the main marketing channels and they play a significant role in their success. According to the founder of Inditex, Ortega the advertising is just a pointless distraction.
The marketing functions that zara stores ( marketing channels ) perform are location, store layout,