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. Zara Home: Home goods and decoration objects founded in 2003. Operating 620 stores . Pull & Bear: Casual laid back clothing and accessories for the young founded in 1991. Operates 979 stores. Massimo Dutti: High end clothing and accessories for cosmopolitan men and women acquired in 1995. Operates 780 stores Bershka: Blends urban styles and modern fashion for young women and men founded in 1998. Operates 1,098 stores. Stradivarius: Casual and feminine clothes for young women acquired in 1999. Operates 1,017 stores. Oysho: Lingerie, casual outerwear, lounge wear and original accessories founded in 2001. Operating 670 stores. . Uterque: High-quality fashion accessories at attractive prices founded in 2008. Operating 90 stores The Zara brand strategy In 2017, Zara was ranked 24th on global brand consultancy Interbrand's list of best global brands. Its core values are found in four simple terms: beauty, clarity, functionality and sustainability. The secret to Zara's success has largely being driven by its ability to keep up with rapidly changing fashion trends and showcase it in its collections with very little delay. From the very beginning, Zara found a significant gap in the market that few clothing brands had effectively addressed. This was to keep pace with latest fashion trends, but offer clothing collections that are a combination of high quality and yet, are affordable. The brand keeps a close watch on how fashion is changing and evolving every day across the world. Based on latest styles and trends, it creates new designs and puts them into stores in a week or two. In stark comparison, most other fashion brands would take close to six months to get new designs and collections into the market. It is through this strategic ability of introducing new collections based on latest trends in a rapid manner that enabled Zara to beat other competitors. It quickly became the people's favourite brand, especially with those who want to keep up with fashion trends. Founder Amancio Ortega is famously known for his views on clothes as a perishable commodity. According to him, people should love to use and wear clothes for a short while and then they should throw them away, just like yogurt, bread or fish, rather than store them in cupboards. The media often quotes that the brand produces "freshly baked clothes", which survive fashion trends for less than a month or two. Zara concentrates on three areas to effectively "bake" its fresh fashions:Shorter lead times (and more fashionable clothes): Shorter lead times allow Zara to ensure that its stores stock clothes that customers want at that time (e.g. specific spring/ summer or autumn/ winter collections, recent trend that is catching up, sudden popularity of an item worn by a celebrity/ socialite/ actor/ actress, latest collection of a top designer etc.). While many retailers try to forecast what customers might buy months in the future, Zara moves in step with its customers and offers them what they want to buy at a given point in time. Lower quantities (through scarce supply): By reducing the quantity manufactured for a particular style, Zara not only reduces its exposure to any single product but also creates artificial scarcity. Similar to the principle that applies to all fashion items (and more specifically luxury), the lesser the availability, the more desirable an object becomes. Another benefit of producing lower quantities is that if a style does not generate traction and suffers from poor sales, there is not a high volume to be disposed of. Zara only has two time bound sales a year rather than constant markdowns, and it discounts a very small proportion of its products, approximately half compared to its competitors, which is a very impressive feat. More styles: Rather than producing more quantities per style, Zara produces more styles, roughly 12,000 a year. Even if a style sells out very quickly, there are new styles waiting to take up the space. This means more choices and higher chance of getting it right with the consumer. Zara only allows its designs to remain on the shop floor for three to four weeks. This practice pushes consumers to keep visiting the brand's stores because if they were just a week late, all the clothes of a particular style or trend would be gone and replaced with a new trend. At the same time, this constant refreshing of the lines and styles carried by its stores also entices customers to visit its shops more frequently. In the following sections, the key components of Zara's winning formula in the fashion retailing industry are illustrated. Customer co-creation: Zara's principal designer is the customer Zara's unrelenting focus on the customer is at the core of the brand's success and the heights it has achieved today. There was a fascinating story around how Zara co-creates its products leveraging its customers' input. In 2015, a lady named Miko walked into a Zara store in Tokyo and asked the store assistant for a pink scarf, but the store did not have any pink scarves. The same happened almost simultaneously for Michelle in Toronto, Elaine in San Francisco, and Giselle in Frankfurt, who all walked into Zara stores and asked for pink scarves. They all left the stores without any scarves - an experience many other Zara fans encountered globally in different Zara stores over the next few days. 47 days later, more than 2,000 Zara stores globally started selling pink scarves 500,000 pink scarves were dispatched - to be exact. They sold out in 3 days. How did such lightning fast stocking of pink scarves happen? Customer insights are the holy grail of modern business, and the more companies know about their customers, the better they can innovate and compete. But it can prove challenging to have the right insights, at the right time, and have access to them consistently over time. One of the secrets of Zara's success is that the brand trains and empowers its store employees and managers to be particularly sensitive to customer needs and wants, and how customers enact them on the shop floors. Zara empowers its sales associates and store managers to be at the forefront of customer research - they intently listen and note down customer comments, ideas for cuts, fabrics or a new line, and keenly observe new styles that its customers are wearing that have the potential to be converted into unique Zara styles. In comparison, traditional daily sales reports can hardly provide such a dynamic updated picture of the market. The Zara empire is built on two basic rules: "to give customers what they want", and "get it to them faster than anyone else". Due to Zara's competitive customer research capabilities, its product offerings across its stores globally reflect unique customer needs and wants in terms of physical, climate or cultural differences. It offers smaller sizes in Japan, special women's clothes in Arab countries, and clothes of different seasonality in South America. These differences in product offerings across countries are greatly facilitated by the frequent interactions between Zara's local store managers and its creative team. In the fashion world, a trend starts small, but develops fast. Zara employees are trained to listen, watch and be attentive to even the smallest seismographic signals from their customers, which can be an initial sign that a new trend is taking shape. Zara knows that the quicker it can respond, the more likely it is to succeed in supplying the right fashion merchandise at the right time across its global retail chain. Zara has set up sophisticated technology driven systems, which enable information to travel quickly from the stores back to its headquarters in Arteixo in Spain, enabling decision makers to act fast and respond effectively to a developing trend. Its design teams regularly visit university campuses; nightclubs and other venues to observe what young fashion leaders are wearing. In its headquarters, the design team uses flat-screen monitors linked by webcam to offices in Shanghai, Tokyo and New York (the leading cities for fashion trends), which act as trend spotters. The 'Trends' team never goes to fashion shows but tracks bloggers and listens closely to the brand's customers. The fact that Zara's designers and customers are inextricably linked is a crucial part of the brand strategy. Specialist teams receive constant feedback on the decisions its customers are making at every Zara store, which continuously inspires the Zara creative team. Zara's super-efficient supply chain 5Zara's highly responsive, vertically integrated supply chain enables the export of garments 24 hours, 365 days of the year, resulting in the shipping of new products to stores twice a week. After products are designed, they take around 10 to 15 days to reach the stores. All clothing items are processed through the distribution center in Spain, where new items are inspected, sorted, tagged, and loaded into trucks. In most cases, clothing items are delivered to stores within 48 hours. This vertical integration allows Zara to retain control over areas like dyeing and processing and have fabric-processing capacity available on-demand to provide the correct fabrics for new styles according to customer preferences. It also eliminates the need for warehouses and helps reduce the impact of demand fluctuations. Zara produces over 450 million items and launches around 12,000 new designs annually, so the efficiency of the supply chain is critical to ensure that this constant refreshment of store level collections goes off smoothly and efficiently. Here are some of the characteristics of Zara's supply chain that highlight the reasons behind its success: . Frequency of customer insights collection: Trend information flows daily into a database at head office, which is used by designers to create new lines and modify existing ones. Standardization of product information: Zara warehouses have standardised product information with common definitions, allowing quick and accurate preparation of designs with clear manufacturing instructions. Product information and inventory management: By effectively managing thousands of fabric, trim and design specifications and their physical inventory, Zara is capable of designing a garment with available stock of required raw materials. . Procurement strategy: Around two-thirds of fabrics are undyed and are purchased before designs are finalized so as to obtain savings through demand aggregation. Manufacturing approach: Zara uses a "make and buy" approach - it produces the more fashionable and riskier items (which need testing and piloting) in Spain, and outsources production of more standard designs with more predictable demand to Morocco, Turkey and Asia to reduce production cost. The more fashionable and riskier items (which are around half of its merchandise) are manufactured at a dozen company-owned factories in Spain (Galicia), northern Portugal and Turkey. Clothes with longer shelf life (i.e. the one with more predictable demand patterns), such as basic T-shirts, are outsourced to low cost suppliers, mainly in Asia. Even when manufacturing in Europe, Zara manages to keep its costs down by outsourcing the assembly workshops and leveraging the informal economy of mothers and grandmothers. 6Distribution management: Zara's state-of-the-art distribution facility functions with minimal human intervention. Optical reading devices sort out and distribute more than 60,000 items of clothing an hour. In addition to these supply chain efficiencies, Zara can also modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences. If a design does not sell well within a week, it is withdrawn from shops, further orders are cancelled and a new design is pursued. Zara closely monitors changes in customer preferences towards fashion. It has a range of basic designs that are carried over from year to year, but some in-vogue, high fashion, inspired by latest trends items can stay on the shelves for less than four weeks, which encourages Zara fans to make repeat visits. An average high- street store in Spain expects customers to visit thrice a year, but for Zara, the expectation is that customers should visit around 17 times in a year. This expectation for such a high frequency of repeat visits is evidence of Zara's confidence that it is keeping on top of changing consumer needs and preferences and is helping them shape their ideas, opinions and taste for fashion. In reality, Zara is also helping in giving birth to new trends through its stores or even helping in extending the longevity of some seasonal styles by offering affordable lines. Sustainability at the core of Zara's operations Sustainability has been a hot topic in business for the last decade and is now quickly becoming a must-have hygiene factor for companies that want to resonate with and win the loyalty of its global customers. For Inditex, this means having a commitment to people and the environment. . Commitment to people: Inditex ensures that its employees have a shared vision of value built on sustainability through professional development, equality and diversity and volunteering. It also ensure that its suppliers have fundamental rights at work and by initiating continuous improvement programs for them. Inditex also spends over USD 49 million annually on social and community programmes and initiatives. For example, its 'for&from' programme is aimed to enable the social integration of people with physical and mental disabilities, by providing over 150 stable employment opportunities. Commitment to environment: Being in a business where it taps on natural resources to create its products, Inditex makes efforts to ensure that the environmental impact of its business complies with UNSDGs (United Nations Sustainable Developmental Goals). Inditex takes wide-ranging measures to protect biodiversity, reduce our consumption of water, energy and other resources, avoid waste, and combat climate change. For example, it has outlined a Global Water Management Strategy, specifically committing to zero discharge of hazardous chemicals. It also has a waste reduction programme through which customers can drop off their used clothing, footwear and accessories at collection points in 598 stores in eight markets. Zara's culture: The word "impossible" does not exist1. For Zara to effectively compete and maintain its strategic advantage, the focus needs to shift away from price but towards quality. Define what is 'strategic advantage'. With reference to the case study, discuss what are Zara's strategic advantages? (20 marks) 2. The secret to Zara's success has largely being driven by its ability to keep up with rapidly changing fashion trends and showcase it in its collections with very little delay. Explain how Zara could be able to cope with the rapid changes? (20 marks) 3. Describe the brand strategy deployed by Zara. Do you think that Zara need to move to the new trend of branding strategy? Discuss. (20 marks) 4. "More recently in March 2018, the brand launched online in Australia and New Zealand. As at 2017, online sales made up 10% of Zara's total global sales. Discuss on whether it is a good move taken by Zara by going online? Justify your answer. (20 marks) 5. Discuss what are Zara's global success and how could Zara's maintain it market positioning? (20 marks)The Secret of Zara's Success: A Culture of Customer Co-creation Zara is one of the world's most successful fashion retail brands - if not the most successful one. With its dramatic introduction of the concept of "fast fashion" retail since it was founded in 1975 in Spain, Zara aspires to create responsible passion for fashion amongst a broad spectrum of consumers, spread across different cultures and age groups. There are many factors that have contributed to the success of Zara but one of its key strengths, which has played a strong role in it becoming a global fashion powerhouse as it is today, is its ability to put customers first. Zara is obsessed with its customers, and they have defined the company and the brand's culture right from the very beginning. The Zara brand offers men and women's clothing, children's clothing (Zara Kids), shoes and accessories. The sub-brand Zara TRF offers trendier and sometimes edgier items to younger women and teenagers. The Zara brand story Zara was founded by Amancio Ortega and Rosalia Mera in 1975 in downtown Galicia in the northern part of Spain. Its first store featured low-priced lookalike products of popular, higher-end clothing and fashion. Amancio Ortega named Zara as such because his preferred name Zorba was already taken. In the next 8 years Zara's approach towards fashion and its business model gradually generated traction with the Spanish consumer. This led to the opening of 9 new stores in the biggest cities of Spain. In 1985, Inditex was incorporated as a holding company, which laid the foundations for a distribution system capable of reacting to shifting market trends extremely quickly. Ortega created a new design, manufacturing, and distribution process that could reduce lead times and react to new trends in a quicker way, which he called "instant fashion". This was driven by heavy investments in information technology and utilising groups instead of individual designers for the critical "design" element. In the next decade, Zara began aggressively expanding into global markets, which included Portugal, New York (USA), Paris (France), Mexico, Greece, Belgium, Sweden, Malta, Cyprus, Norway and Israel. Today, there is hardly a developed country without a Zara store. Zara now has 2,251 stores strategically located in leading cities across 96 countries. It is no surprise that Zara, which started off as a small store in Spain, is now the world's largest fast fashion retailer and its founder, Amancio Ortega, is the sixth richest man in the world according to Forbes magazine. Today, Inditex is the world's largest fashion group with more than 170,000 employees operating more than 7,400 stores in 96 markets worldwide and 49 online markets. The revenues of Inditex was USD 31.1 billion in 2017. The other fashion brands in the Inditex portfolio are: 2