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ZARA: Fast Fashion
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- ZARA: Fast Fashion By: Pankaj Ghemawat and Jose Luis Nueno
Zara's Secret for Fast Fashion
by Kasra Ferdows, Michael A. Lewis and Jose A.D. Machuca
Editor's note: With some 650 stores in 50 countries, Spanish clothing retailer Zara has hit on a formula for supply chain success that works by defying conventional wisdom. This excerpt from a recent Harvard Business Review profile zeros in on how Zara's supply chain communicates, allowing it to design, produce, and deliver a garment in fifteen days.
In Zara stores, customers can always find new products—but they're in limited supply. There is a sense of tantalizing exclusivity, since only a few items are on display even though stores are spacious (the average size is around 1,000 square meters). A customer thinks, "This green shirt fits me, and there is one on the rack. If I don't buy it now, I'll lose my chance."
Such a retail concept depends on the regular creation and rapid replenishment of small batches of new goods. Zara's designers create approximately 40,000 new designs annually, from which 10,000 are selected for production. Some of them resemble the latest couture creations. But Zara often beats the high-fashion houses to the market and offers almost the same products, made with less expensive fabric, at much lower prices. Since most garments come in five to six colors and five to seven sizes, Zara's system has to deal with something in the realm of 300,000 new stock-keeping units (SKUs), on average, every year.
This "fast fashion" system depends on a constant exchange of information throughout every part of Zara's supply chain—from customers to store managers, from store managers to market specialists and designers, from designers to production staff, from buyers to subcontractors, from warehouse managers to distributors, and so on. Most companies insert layers of bureaucracy that can bog down communication between departments. But Zara's organization, operational procedures, performance measures, and even its office layouts are all designed to make information transfer easy.
Zara's single, centralized design and production center is attached to Inditex (Zara's parent company) headquarters in La Coruña. It consists of three spacious halls—one for women's clothing lines, one for men's, and one for children's. Unlike most companies, which try to excise redundant labor to cut costs, Zara makes a point of running three parallel, but operationally distinct, product families. Accordingly, separate design, sales, and procurement and production-planning staffs are dedicated to each clothing line. A store may receive three different calls from La Coruña in one week from a market specialist in each channel; a factory making shirts may deal simultaneously with two Zara managers, one for men's shirts and another for children's shirts. Though it's more expensive to operate three channels, the information flow for each channel is fast, direct, and unencumbered by problems in other channels—making the overall supply chain more responsive.
| Zara's cadre of 200 designers sits right in the midst of the production process. |
In each hall, floor to ceiling windows overlooking the Spanish countryside reinforce a sense of cheery informality and openness. Unlike companies that sequester their design staffs, Zara's cadre of 200 designers sits right in the midst of the production process. Split among the three lines, these mostly twentysomething designers—hired because of their enthusiasm and talent, no prima donnas allowed—work next to the market specialists and procurement and production planners. Large circular tables play host to impromptu meetings. Racks of the latest fashion magazines and catalogs fill the walls. A small prototype shop has been set up in the corner of each hall, which encourages everyone to comment on new garments as they evolve.
The physical and organizational proximity of the three groups increases both the speed and the quality of the design process. Designers can quickly and informally check initial sketches with colleagues. Market specialists, who are in constant touch with store managers (and many of whom have been store managers themselves), provide quick feedback about the look of the new designs (style, color, fabric, and so on) and suggest possible market price points. Procurement and production planners make preliminary, but crucial, estimates of manufacturing costs and available capacity. The cross-functional teams can examine prototypes in the hall, choose a design, and commit resources for its production and introduction in a few hours, if necessary.
Zara is careful about the way it deploys the latest information technology tools to facilitate these informal exchanges. Customized handheld computers support the connection between the retail stores and La Coruña. These PDAs augment regular (often weekly) phone conversations between the store managers and the market specialists assigned to them. Through the PDAs and telephone conversations, stores transmit all kinds of information to La Coruña—such hard data as orders and sales trends and such soft data as customer reactions and the "buzz" around a new style. While any company can use PDAs to communicate, Zara's flat organization ensures that important conversations don't fall through the bureaucratic cracks.
Once the team selects a prototype for production, the designers refine colors and textures on a computer-aided design system. If the item is to be made in one of Zara's factories, they transmit the specs directly to the relevant cutting machines and other systems in that factory. Bar codes track the cut pieces as they are converted into garments through the various steps involved in production (including sewing operations usually done by subcontractors), distribution, and delivery to the stores, where the communication cycle began.
The constant flow of updated data mitigates the so-called bullwhip effect—the tendency of supply chains (and all open-loop information systems) to amplify small disturbances. A small change in retail orders, for example, can result in wide fluctuations in factory orders after it's transmitted through wholesalers and distributors. In an industry that traditionally allows retailers to change a maximum of 20 percent of their orders once the season has started, Zara lets them adjust 40 percent to 50 percent. In this way, Zara avoids costly overproduction and the subsequent sales and discounting prevalent in the industry.
Excerpted with permission from "Rapid-Fire Fulfillment," Harvard Business Review , Vol. 82, No.11, November 2004.
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Kasra Ferdows is the Heisley Family Professor of Global Manufacturing at Georgetown University's McDonough School of Business in Washington DC.
Michael A. Lewis is a professor of operations and supply management at the University of Bath School of Management in the UK.
Jose A.D. Machuca is a professor of operations management at the University of Seville in Spain.
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 A Case Study on Zara's Digital Transformation This case study examines Zara’s current retail strategy and digital transformation. It details Zara’s current in-store and eCommerce retail strategy, the impact of digital on the retail environment and customer experience, and the growth opportunity provided by eCommerce. By providing a competitive analysis of the current market, this paper presents key opportunities, strategic questions, and possible solutions for retail brands to improve their digital strategy. This paper received First Class Honors in the Digital Marketing Strategy course at Trinity Business School. Related PapersLea Valentine F Steinlein  Dinh Nam Nguyen The successful implementation of an integrated supply chain strategy enhances total control over the operations and thus enhances speed and flexibility. 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The findings reveal that almost 50% of the leading European retailers signalled a commitment to the circular economy and to the principles underpinning it and a number of them looked to evidence their commitment within their retail operations. That said the authors suggest that If Europe's leading retailers' public commitments to a more circular economy are to become a reality then they will not only need to effect a radical change in their current business models and that this will need to be accompanied by radical changes in consumers consumption behaviour. More contentiously, there must be concerns that the leading European retailers might effectively capture the concept of the circular economy to justify continuing economic growth. Loading Preview Sorry, preview is currently unavailable. You can download the paper by clicking the button above. 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ZARA'S CASE STUDY - the Strategy of the Fast Fashion Pioneer detail that reflects its close attention on the custo mer. To tap into the emerging e-commerce trend, Zara launched its onlin e ...
ZARA'S CASE STUDY The Strategy of the Fast Fashion Pioneer Ana Mafalda Ricardo Morgado Costa Case study submitted as partial requirement for the conferral of Master in Management Supervisor: Prof. Mónica Ferreira, Invited Professor, ISCTE Business School, Marketing, Operations and General Management Department September 2017
ZARA: Fast Fashion Fashion is the imitation of a given example and satisfies the demand for social adaptation. . . . The more an article becomes subject to rapid changes of fashion, the greater the demand for cheap products of its kind. — Georg Simmel, "Fashion" (1904)
Picture 3: Frequency of visits to the store. Picture 4: Money spent by consumers per store visit. Picture 5: Type of clothes consumers are looking for at Zara stores. Picture 6: Evolution of brand image: Zara and General Stores. Picture 7: Reasons driving consumers to the stores: Zara and General Stores.
Zara spends only 0.3% of its revenue on advertising as compared to 3%-4% of those of its competitors (McAfee et al., 2007). Zara is supported by various activities such as procurement, technology development, human-resource management, and firm's infrastructure. Most of the activities are common to other industries.
Industria de Diseño Textil SA (Inditex) and its flagship brand Zara had just come off a record 2022, with industry-leading sales, gross margins, and profits. They were also ahead of the industry with 25.8 per cent of sales through their online channels. However, the challenges the fast-fashion industry faced were significant for Zara and ...
Business growth Customer analysis Demand planning Global strategy Market analysis Production. Source: Harvard Business School. Product #: 703497-PDF-ENG. Length: 35 page (s) Focuses on Inditex, an apparel retailer from Spain, which has set up an extremely quick response system for its ZARA chain. Instead of predicting mont.
The section following this introduction will present the case study of Zara. The outcome will be presented and discussed in the results section. Finally, a conclusion will be drawn, followed by the cited sources. Zara's Case Study Zara is a fashion label and fashion chain stores established in 1975 by the Spanish group Inditex own by Amancio ...
[email protected]. Abstract. The research presented in this paper examined the structure and. consistency of the digital brand identity of the fast-fashion brand Zara. The research was ...
PDF | On Jun 27, 2022, Sofia Bernardino published Strategic Analysis of a Fast Fashion Organization: A ZARA Case Study | Find, read and cite all the research you need on ResearchGate
Powered by ZARA's success, Inditex has expanded into 39 countries, making it one of the most global retailers in the world. But in 2002, it faces important questions concerning its future growth. ... Harvard Business School Case 703-497, April 2003. (Revised December 2006.) Educators; Purchase; Related Work. April 2003 (Revised December 2006 ...
Source: Harvard Business School. Product #: 503050-PDF-ENG. Length: 26 page (s) Fashion retailer ZARA has achieved spectacular growth via a distinctive design-on-demand operating model. This case describes this model and outlines.
Zara should change its marketing. strategy so that it is able to adapt and survive in any market they choose to place a store. Inditex, which is the parent company of Zara, is a vertically integrated company which. means items are manufactured internally and then distributed to stores. Their marketing strategy.
The case describes how Zara, operating out of the Galician port of La Coruña in north-west Spain has managed to become a benchmark for speed and flexibility in the garment industry. The case ...
Zara's Secret for Fast Fashion. 2/21/2005. Spanish retailer Zara has hit on a formula for supply chain success that works. By defying conventional wisdom, Zara can design and distribute a garment to market in just fifteen days. From Harvard Business Review. by Kasra Ferdows, Michael A. Lewis and Jose A.D. Machuca.
STUDY. Zara is the flagship brand of the Spanish retail group, Inditex SA, one of the super-heated performers in a soft retail market in recent years. When Inditex offered a 23 per cent stake to the public in 2001, the issue was over-subscribed 26 times raising Euro2.1 billion for the company.
ty of Tra. sylvania, Cluj-Napoca, Romania [email protected]. The research presented in this paper examined the structure and consi. tency of the digital brand identity of the fast-fashion brand Zara. The research was based on the content analysis of Zara's brand page, the website of Zara's owner Inditex, and Zara's ...
This case study examines Zara's current retail strategy and digital transformation. It details Zara's current in-store and eCommerce retail strategy, the impact of digital on the retail environment and customer experience, and the growth opportunity provided by eCommerce. By providing a competitive analysis of the current market, this paper ...
review of various published case studies, articles and thesis; blogs and online news articles; company annual reports (2014-2017) and company website. 3. Inditex-Zara's Fast Fashion Product Offering Zara the pioneer and global leader in fast-fashion retailing were founded by Ignacio Amancio Ortega in Galicia, Spain in year 1975 (Ferdows et al ...
INTRODUCTION. This thesis examines the European apparel industry with a case study of the Spanish specialty apparel chain, Zara, as an example of excellence in supply chain practices. This research on the European apparel industry emphasizes the economic and supply chain aspects of Zara's operation.