Zara's performance in the EU.
Zara is the largest and most internationalized of Inditex (Industria de Diseno Textil) chain based on Spain. Zara had built up their business in the Spanish market by 1990, and started to expand their business into global market. At the same time, according to the case, they started to make major investments in manufacturing logistics and IT, including establishment of a just-in-time manufacturing system, a 130,000-square-meter warehouse close to corporate headquarters in Arteixo, outside La Coruna, and an advanced telecommunications system to connect headquarters and supply, production, and sales locations. Since Zara’s business system is consist of Design, Sourcing & Manufacturing, Distribution and Retailing under one umbrella, such an investment could add more value on their unique system. Based on this system, Zara takes only 4 to 5 weeks to design and a week to produce it. On the other hand, other competitor such as Gap, H&M, and Benetton usually takes approximately 6 months to design and 3 months to produce it. This is the core competency of Zara, since Fashion industry changes its trend so fast like daily product which easily turns bad. As minimizing the time to deliver their fashion item, they also can reduce a risk, just in case of misleading a trend or any mistake. In other words, Zara could take a competitive advantage, as they do concentrate on controlling over entire process from design to distribution. Another interesting fact is that Zara only spent 0.3% of revenue compared with other company in the fashion industry spent on 3.5%. They believed that store window in Europe play an advertizing role.
I can summarize Zara’s adding value in 3 categories; 1) High topline: trend-leading fashion items and focus on customer need that reduce a loss of sales, 2) Minimize a production cost and lead time: no outsourcing strategy (A to Z under one umbrella), 3) Hedging a financial risk: