Zara Case Study

3584 words - 15 pages

Zara: Fast Fashion
Case Study
IEOR 153
Logistics Network Design and Supply Chain Management

Niko Katigbak
Regine Labog
Kevin Leung
Ruoyun Li
Miranda Ortiz
Michelle Papilla

Spring 2011
Professor Kaminsky
UC Berkeley

I. Background
Inditex, founded by Amancio Ortega, operates six different chains: Zara, Massimo Dutti,
Pull&Bear, Bershka, Stradivarius, and Oysho. Since 2006 when the case was written, Inditex has
added Zara Home and Uterque to its collection.1 The retail chains were meant to operate as
separate business units within a structure, which included six support areas and nine corporate
departments. Each chain addressed different segments of the market, but all ...view middle of the document...

Despite the seemingly counterintuitive business model Zara operates, it has become one of the leading fashion retailers in the
world.
II. Business Model
As the first retail chain established by Inditex, Zara has become the largest and most expansive.
It had three product lines (men, women, and children), each with its own creative team of
designers, sourcing specialists, and product development personnel. The creative team relied
on feedback -- from store managers, staff, and fashion-forward young people that populated
universities and discotheques -- to create the product line and to make adjustments for
manufacturing later in the season. Zara’s clothing line changed continuously throughout the
season. Therefore, its design team had to not only create the collection months ahead of time
like other apparel brands, but it must also aggregate information from market feedback usin g
Zara’s IT system to create the proper alterations to the clothes. The design teams bridged the
merchandising and back-end production aspect of the retail industry, but these functions are
normally performed by two separate management teams in other companies. By maintaining a
flat organizational system with designs originating from multiple sources rather than one key
designer, Zara was able to make adjustments to their products throughout the season and had
a product failure rate of 1% compared to the industry standard of 10%.
Although Zara has proven that its success comes from being a quick-response fashion follower,
1

http://tortora.wordpress.com/2009/11/18/zaras-organizational-structure/

1|Zara: Fast Fashion

that is where they draw the line in following fashion norms. In an industry where massive
media advertising has always had a positively linear relationship with production sales, Zara
spends only a tenth of what other clothing brands spend to advertise their merchandise. There
is no identifiable “face” for Zara, and its clothing is first released in its stores rather than the
runway.
To attract its consumer base, Zara focuses heavily on the brick-and-mortar design and location
of the stores as well and creates the illusion of scarcity for its products. Each store shared
similar window displays and interior presentations to highlight the bran d image. The location of
a Zara store would always be at the center of a fashion district and would either be renovated
or relocated every 3-4 years to maintain high standards. Customers possessed a sense of
urgency to purchase a Zara product because the clothing had a two-week shelf life. However,
there was also a freshness to Zara because the floor would be replenished with new products
every two weeks. Zara segmented the product lines further by price, fashion content, and
target age group to maintain variety, and its prices were also kept lower than comparable
products from a competitor.
III. Supply Chain Characteristics
Zara is a vertically integrated company that owns...

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