Zara: Fast Fashion Revolution - Supply Chain Strategies and IT Capabilities

Zara's Target Market

The Zara boutique-clothing store on Calle Real in the northern Spanish city of La Coruna is buzzing. Customers have made the journey here on a rainy Saturday morning to see what new exciting styles are available this week. The red tank tops and black blazers seem to be a hit, but customers also really like the beige and bright purple ones too. Faced with this problem most fashion companies would normally have to spend months retooling and restocking their range. Not Zara, however. Each store manager is able to spot these changes in trends and then type them into their handheld computer on Saturday in the safe knowledge that they will arrive on Monday or Tuesday the next week.

There is a very strong link between store managers and the central design team based at Zara’s head office in La Coruna in northern Spain. Each store is electronically linked back to head office so that they can view and assess sales on a real-time basis. This allows the company to make sure that they can adapt quickly to customer wants and desires. One example of this was a new khaki skirt that the company initially just stocked in Spain to see how it would sell. In the Coruna store it was sold out after only having been on the shelves for a couple of hours. After speaking to the Barcelona store, it was apparent that sales were brisk there too. It was then decided that the skirt should be tested out elsewhere, so overnight Zara sent out 33,000 skirts to more than 2,200 stores worldwide. The results were clear, the skirt was a hit and within the next few days stores in Europe, Asia, and North and South America were being stocked with the khaki skirt.

It is this mix of intelligence gathering, fashion instinct and technological savoir-faire that is allowing Zara to set in motion something unique in the clothing trade. The combination of being able to translate the latest trends into products in less than 15 days and delivering them to its stores twice a week means that it is able to catch fashion trends while they are hot and so respond quickly to the fast changing tastes of young urban consumers. ‘Nobody else can get new designs to stores as quickly,’ says Keith Mortimer, European-retail analyst.Unless you can do that, you won’t be in business in 10 years. It continuously analyzes its value chain and seeks to achieve control of as many sections of it as possible. By focusing on reducing time between design and sale, it has developed operations cycle that is entirely different from fashion sector norms. The design team is working throughout the season studying everything from what clothes are worn in hit TV series to how clubbers dress. This means there is a continuous stream of new designs that ensures customers keep coming back to see what’s new. Its clothing has filled an untapped niche: Prada at moderate prices

Customers seem to love the results of this high-velocity operation. They are often known to queue up in long lines at Zara’s stores on designated delivery days, a phenomenon that has been dubbed in the press as Zaramania’. And this popularity is generating tangible, bottom-line results as well as admiration from the fashion world. Zara is one of the world’s most successful apparel retailers with over 2,200 stores in 96 markets and annual sales over 16.6 billion euros in 2018

 1. What is the nature of the products that Zara sells? (6 marks)

2. What are Zara’s target markets? (4 marks)

3. What is (are) the order-winner(s) for Zara’s markets? Justify your answers. (8 marks)

4. What is (are) the order-qualifier(s) for Zara’s markets? Justify your answers. (8 marks)

5. What supply chain strategies does Zara use to win its markets? Elaborate your answers. (8 marks)

6. Identify and describe a distinctive set of IT capabilities that Zara has developed to facilitate its supply chain process. (12 marks)

7. How do Zara’s supply chain capabilities contribute to its global optimization? (12 marks)

8. How do Zara’s supply chain capabilities contribute to its uncertainty management ? (12 marks)