Zara, Success Story Essay

908 words - 4 pages

Assignment “ZARA”

1.Zara designs majority of it cloth in Spain (about 80 percent). It focuses on shorter response time enabling it to meet the constantly shifting fashion trends. However such moves do not take months, but this process is complete within in 30 days; during which Zara identifies the latest trends, design it clothes and supply material to its stores. Such strategy means catching up a trend when it is in vogue in the fashion circles. On the other hand H M company needs about two months to do the same job. It is this difference which makes Zara unique from others.
Zara has teams in the ...view middle of the document...

It is natural with all objects especially fashion products; they become more desirable making them more profitable for the company. Normally it is very rare to find a product in its early launch days, a customer has to request such item, which is taken into notice by the store manager and produced within a shortest period of time. Another benefit of this approach is that if the product does sell well, it can be easily scarped back due to lesser quantity, which is not possible for other retailers or in some cases it is moved to another location, where it is selling well.

Retailers foresee profit in mass sale and bulk production. Zara instead produce more styles (new items) than any other retail store; generating profit through greater number rather than bulk production. For example Zara produces about 12000 items per year, the sooner one item is sold next is on the offer. This innovative technique makes Zara different from other retailers who plan for months and years, yet they come up with few items and limited choice, while Zara offers more choices to consumers to choose from. This also helps in pulling the consumers to visit store more often, as there is always some thing new on offer, compared to its competitors who will sell similar items for months.
One main difference Zara has compered to its competitors is advertising costs. Zara advertising investment is only 0.3 percent of its total revenue compared to other retailers which usually invest about 3 to 4 percent of the annual revenue. This kind of strategy allows Zara's to reduce the cost and invest more in international expansion.
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