• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Analyse Reasons for Zara's Success in the Fashion Retailing Business

Extracts from this document...


´╗┐Several case studies mention that Zara is capable to produce on a lead time of less than 15 days compared to competitors like Gap which can operate in a lead time of about 3 to 9 months (Ghemawat and Nueno, 2006). Speed approaches that Zara follows like ?from sheep to shop? makes the retailer nearly 12 times faster than Gap which at the same time just offers 10% compared to what Zara offers. (Heft, 2002) giving the company a competitive advantage within the industry. Considering Coughlan et al., (2006) where mentions that a shopper in London visits Zara stores 17 times a year while other fashion retailers are only visited 4 times a year, we can confirm that the techniques that Zara is using are very effective and have strongly positioned the brand within the industry. Compared to other vertically integrated fashion retailers, Zara?s main factors of success are short lead-times, acquisition of latest technology, manufacture of small batches, Opposite to most competitors that concentrate on outsourcing, Zara produces over 50% of its products by itself. In house manufacturing also increase the company reputation as they are not as vulnerable to labour exploitation criticism as the companies that outsource from outside Europe. In addition, the expertise that the company has on design manufacturing and distribution allows each brand to have an advantage over the rest of the retailers. ...read more.


(Tokatli, 2008) Afterwards, Zara manufactures samples that are tested in certain key stores and only the successful items are appointed for mass-production hence the companies percentage of failure is just 1% compared to an average 10% within industry (Ghemawat and Nueno, 2006). Zara aproximately receives one half of the fabric undyed so the company can react quickly to new trends plus Zara has it own dyeing company which allows them to react last-minute changes even faster. Robots cut and dye the cloths in 23 greatly automated factories outside the distribution centre. Zara?s fast reaction is a result of its highly vertical integration, Zara is able to manufacture 40 % of its own cloths and use its own subsidiaries as a supplier of most of its dyes. Considering Gap which is one of Zara?s competitors, they have a very different approach as each of their stores purchase the products independently so clients have a different choice between stores but Zara believes in the opposite. The real-time system that Zara uses to transfer information from the store to the commercial group is decisive for the first part of the companies supply chain as it eases the cooperation between customers, store managers and designers which allows Zara to be up to speed to face latest trends. Zara?s market based approach when pricing make the company differentiate from their competitors again as fashion retailers normally decide the prices depending on the cost to produce the item plus a target margin. ...read more.


The stores are large, the racks are dispersed within the store leaving plenty of space for customers; all of the above plus music, temperature, store and window layout, etc are checked on regular basis by mistery shoppers so the company can quickly adjust to the market demands (Monllor, 2011). Kumar and Steenkamp (2007, pg39) explained that Zara does not focus on conventional advertising techniques as tv campaigns or magazines, instead their main marketing method are relied on their prime store locations, the store itself and store windows which are large, expressive and too keep it exciting and refreshed for customers eyes its changed every two weeks. Rather than spending millions in advertising Zara believes in word of mouth so if the customer enjoys their experience at one of their store then they will tell their friends about it. H&M which is one Zara?s biggest competitors spends about 3.5% of their profit in advertising when Zara only spends in average 0.3%, even though Zara does not have a formalized marketing department , in 2006 the company was included in the 50 companies with the best marketing strategies in the American Magazine Advertising Age. (Iglesias, 2008 pg 18) Sources: Christopher, 1998: 155?57; Burt, Dawson and Larke,2003;Retail Week21 Nov 2003: 16?17. Or Fernie, J and Sparks,L. 2004 Zara offers to customers a range of quality garments for women, men and kids, shoes, accessories, toiletries, and cosmetics at reasonable prices. Figure 1. Zara?s Product Line Source: Inditex (2012) ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Business Studies section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Business Studies essays

  1. Why is good product and service design important? Good design makes good business ...

    The main stock-holding costs are usually related to working capital, whereas the main order costs are usually associated with the transactions necessary to generate the information to place an order. The most common approach to determining the amount of inventory to order is the economic order quantity (EOQ)

  2. Thai Tuan Textile Company, Vietnam - Marketing Strategies

    Merit by the HCMC People's Committee * 5 Certificates of Merit by General Director of the HCMC Industry Department * Many Certificates of Merit by the People's Committee of Dist 12, HCMC Labour Federation, Social Insurance Department, etc. * 2006 Business Excellence Awards for Export by 53 Vietnam Overseas Commercial

  1. Business Plan. Dhaka fashion will be a magazine that is completely devoted to fashion. ...

    Some girls and some women wear a Salwar Kameez. Launched in the summer of 2000, Bibi is the longest-running, largest-circulated South Asian fashion magazine is the country and is seen as the benchmark in South Asian Bridal and Fashion publications.

  2. Advance Professional Development

    Objectives of Task 5 Following are the main objectives of the Task 5 * Identification of seven individuals paying attention to their background and area of work * Develop a skill audit form to gather information from those individuals * Use appropriate tool to perform skill audit * Write a

  1. starting a small business

    are that I need to be able to solve any problems, you need to work as a team member, respecting other people decisions, I must good technical skills, practical skills such as working quickly and be very punctual. And I have to be confident.

  2. Free essay

    Media Planning for BMW ActiveHybrid 7. The BMW ActiveHybrid 7 was introduced in 2010. ...

    However, it is still valuable for our advertisers since people will not stop watching TV. CCTV 2 is a nationwide satellite TV channel which focuses on carrying the professional financial information to the audiences. In 2010, CCTV 2 was labeled as the Top 10 TV Channel of China.

  1. The Business Environment of Coca Cola

    The EU?s trade policy is closely linked to its development policy. The Union has granted duty-free or cut-rate access to its market for most of the imports from developing countries under its generalized system of preferences. NAFTA /North American Free Trade Agreement/ NAFTA is an agreement signed by the governments

  2. Organisational Behaviour (in short called as OB) is concerned with the study of the ...

    Social needs include the need for friends and a sense of belonging. 4. Esteem: Self-esteem is needs which employees want satisfied, either externally or internally. These needs include attention and reputation. 5. Self-actualization: The need for self-actualization is the highest level in the hierarchy and is seldom ever reached by employees.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work