13 Jan Discussion 2.1 – Zara
Zara is a fast-fashion company from Spain. Although the Spanish economy has crumbled, Zara is a rare success story.
Fashion is highly perishable and quickly influenced by the latest thing seen on the catwalk or on the back of a celebrity. Zara’s designers follow fashion trends closely, but whereas a typical clothing company manufacturing in Asia could take six to nine months to get a new design into the shops, Zara completes the process in around five weeks.
It buys some garments and material from Asia, often partly finished or undyed, but approximately half of its clothing is manufactured in-house at its base in La Coruña in northwest Spain or by a cluster of small contractors in the same area. The clothing is delivered by truck to Europe and by air, to the stores, Zara is now opening in other parts of the world.
Zara avoids mass production. Although some stock is replenished, it's clothing, for both men and women, is deliberately made in small batches, which helps create a scarcity value: buy now in case it is gone tomorrow. It also keeps shops looking fresh and reduces markdowns. At Zara, the number of items that end up in a sale is about half the industry average.
Answer the following questions:
- What is Zara’s competitive advantage?
- How has Zara aligned its processes with its marketing requirements?
- What problems do you see looming for Zara?
- What opportunities has the company created through excellent SC&O management?
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