Zara is a Spanish clothing and accessories retailer based in Arteixo, Galicia, and founded
in 1975 by Amancio Ortega and Rosalía Mera.
It is the flagship chain store of the Inditex group, The world's largest apparel retailer,
the fashion group also owns brands such as Massimo Dutti, Pull and Bear, Uterqüe, Stradivarius
and Bershka.
It is claimed that Zara needs just two weeks to develop a new product and get it to stores,
compared to the six-month industry average, and launches around 10,000 new designs each
year.
Zara has resisted the industry-wide trend towards transferring fast fashion production
to low-cost countries.
Perhaps its most unusual strategy was its policy of zero advertising; the company preferred
to invest a percentage of revenues in opening new stores instead.
This has increased the idea of Zara as a "fashion imitator" company and low cost products.
Lack of advertisement is also in contrast to direct competitors such as Uniqlo and United
Colors of Benetton.
Zara was described by Louis Vuitton Fashion Director Daniel Piette as "possibly the most
innovative and devastating retailer in the world."
Zara has also been described as a "Spanish success story" by CNN.
Origins and history Amancio Ortega opened the first Zara store
in 1975 in a central street in downtown La Coruña, Galicia, Spain.
Ortega named his store Zorba after watching the classic film Zorba the Greek, but apparently
there was a bar that was called the same, Zorba, two blocks away, and the owner of the
bar came and said, "this is going to confuse things to have two Zorbas."
They had already made the molds for the letters in the sign, so they just rearranged them
to see what they could find, and they found Zara.
The first store featured low-priced lookalike products of popular, higher-end clothing fashions.
The store proved to be a success, and Ortega began opening more Zara stores throughout
Spain.
During the 1980s, Ortega started changing the design, manufacturing, and distribution
process to reduce lead times and react to new trends in a quicker way, in what he called
"instant fashions".
The company based its improvements in the use of information technologies and using
groups of designers instead of individuals.
In 1980, the company started its international expansion through Porto, Portugal.
In 1989 it entered the United States, and in 1990, France.
This international expansion was increased in the 1990s, with Mexico, Greece, Belgium
and Sweden, etc. until reaching its current presence in over 73 countries.
Zara stores are company-owned, except where local legislation forbids foreigner-owned
businesses; In those cases, Zara franchises the stores.
Products As of 2007, Zara stores have men's clothing
and women's clothing, each of these subdivided in Lower Garment, Upper Garment, Shoes, Cosmetics
and Complements, as well as children's clothing.
Currently their sizing on women's clothing goes to a US size 12 or a UK size 14 .
Manufacturing and distribution
Zara is a vertically integrated retailer.
Unlike similar apparel retailers, Zara controls most of the steps on the supply-chain, designing,
manufacturing, and distributing its products.
Zara set up its own factory in La Coruña in 1980, and upgraded to reverse milk-run-type
production and distribution facilities in 1990.
This approach, designed by Toyota Motor Corp., was called the just-in-time system.
It enabled the company to establish a business model that allows self-containment throughout
the stages of materials, manufacture, product completion and distribution to stores worldwide
within just a few days.
Regarding the design strategy, an article in Businessworld magazine describes it as
follows: "Zara was a fashion imitator.
It focused its attention on understanding the fashion items that its customers wanted
and then delivering them, rather than on promoting predicted season's trends via fashion shows
and similar channels of influence, which the fashion industry traditionally used.
50% of the products Zara sells are manufactured in Spain, 26% in the rest of Europe, and 24%
in Asian and African countries and the rest of the world.
So while some competitors outsource all production to Asia, Zara makes its most fashionable items—half
of all its merchandise—at a dozen company-owned factories in Spain and Portugal, particularly
in Galicia and northern Portugal where labour is somewhat cheaper than in most of Western
Europe.
Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost
suppliers, mainly in Asia and Turkey.
Zara can offer considerably more products than similar companies.
It produces about 11,000 distinct items annually compared with 2,000 to 4,000 items for its
key competitors.
The company can design a new product and have finished goods in its stores in four to five
weeks; it can modify existing items in as little as two weeks.
Shortening the product life cycle means greater success in meeting consumer preferences.
If a design doesn't sell well within a week, it is withdrawn from shops, further orders
are canceled and a new design is pursued.
Zara relies on sophisticated information technology, such as PDAs with wireless transmission capabilities,
in the hands of store managers, to monitor customers' fickle fashion changes.
Zara has a range of basic designs that are carried over from year to year, but some fashion
forward designs can stay on the shelves less than four weeks, which encourages Zara fans
to make repeat visits.
An average high-street store in Spain expects customers to visit three times a year.
That goes up to 17 times for Zara.
On September 6, 2010, Financial Times reported that Inditex launched the first online boutique
for its best-selling brand Zara.
The website will begin in Spain, the UK, Portugal, Italy, Germany and France—six countries
that are among the most important of the company's 76 markets.
When asked about the company's late arrival to internet retailing, Pablo Isla, chief executive,
said they have been waiting for online demand to build before launching into cyberspace.
All items on sale at its Zara outlets would be available online and at the same prices.
Customers can choose from the usual range of paying methods and opt either for a free
store pick-up or paid-for postal delivery.
The online return and exchange policy is identical to the store system, with shoppers given 30
days to change their minds.
Queries will be handled by customer service operators or via e-mail or chat messaging.
Inditex said that iPhone and iPad applications that allowed purchasing would soon be available.
On November 4, 2010, Zara Online extended the service to five more countries: Austria,
Ireland, the Netherlands, Belgium and Luxembourg.
Online stores will begin operating in the United States and South Korea in 2011.
The simple website allows shoppers to filter a search for garments by; type of garment,
colours, sizes, prices, reference number, etc.
Customers can view products in precise detail from different angles and use a SuperZoom
feature to get an exceptional close-up look at the details of each item.
In 2011, Zara entered the Australian market with a three story, 1400sqm store in the Westfield
Sydney complex opened on April 21, 2011 and a second three story 1800sqm store at Bourke
Street Mall Melbourne which opened on 15 June 2011.
Zara will open its third Australian store in November 2011 at Burnside Village Shopping
Centre in Adelaide, South Australia.
It will be Australia's largest at 2,300sqm, and modelled on the design of their Fifth
Avenue, New York store.
In November 2011, Zara entered the South African market with a flagship store in the upmarket
suburb of Sandton, in Sandton City Shopping Complex, Johannesburg.
In March 2012, Zara opened their second store in South Africa, at Gateway Theatre of Shopping
in Durban.
Later in 2012, a third store was opened in Cape Town at the Victoria & Alfred Waterfront
mall.
Toxic-free production In 2011, Greenpeace started a dialog with
Zara to ban harmful toxins from the clothing production.
In November 2012, Greenpeace published the "Toxic threads: the big fashion stitch-up"
report, in which Zara was identified as the worst polluter.
In 6 of the 10 clothes that were examined, nonylphenol ethoxylates were found, and in
2 cases cancer-inducing amines from azo dyes were found.
After this publication, Zara was chosen as an example as biggest retailer in the world
to raise awareness.
Multiple protests were held at Zara shops all over the world, demanding Zara to come
up with an ambitious plan to detox its clothes and value chain.
After 9 days of intense public pressure, Zara decided to switch to a fully toxic-free production.
The fashion retailer promised to stop discharging toxins for its clothing production, which
also affects 7 other brands in the Inditex Group: Pull & Bear, Massimo Dutti, Bershka,
Stradivarius, Oysho, Zara Home and Üterque.
Some of the most damaging toxins will be refrained of earlier, for example PFC's will be banned
by 2015.
Zara also promised to make information about its suppliers discharging of toxins publicly
available for at least 100 suppliers by the end of 2013.
With this commitment, Zara follows Nike, Adidas, Puma, H&M, Marks & Spencer, C&A and Li-Ning,
who implemented a Detox-policy as well.
Human rights concerns Sweatshops
On August 16, 2011, a Brazil television show called A Liga accused the company of using
suppliers who were running sweatshops for their outsourced production.
On August 17, 2011, the Regional Superintendency of Labour and Employment of São Paulo, Brazil,
closed a factory that produced Zara's clothing for its poor labour conditions.
Bolivians were brought illegally to Brazil, locked in small apartments and sewed clothes
for 12–14 hours a day.
They could not leave the apartment without the consent of the supervisor and didn't have
hot water for taking showers or food for lunch.
The Bolivians earned about 1 USD for each dress they sewed, although the retail price
in Brazilian stores was about 70 USD for the same dress.
Many of the workers were forced into paying their wages to human traffickers who had smuggled
them into the country.
In a statement, Zara’s representatives said that the accusations of slave labour made
against the retailer represent a “serious breach in accordance with the Code of Conduct
for External Manufacturers and Workshops of Inditex.”
They also countered that all factories responsible for unauthorized outsourcing have been asked
to regularize immediately the situation of the workers involved.
“The Inditex group, along with Brazil’s Ministry of Work, will strengthen the supervision
of the production system of all its suppliers in the country to ensure that such cases do
not occur again.”
After the 2013 Savar building collapse, Zara's parent company Inditex with other retailers
signed the Accord on Factory and Building Safety in Bangladesh.
Shop staff abuse On March 21, 2012, the Swedish investigative
journalism television program Uppdrag Granskning reported stories of 25 Zara employees, both
shop managers and staff, that testified about severe abuse and terror against Zara employees
in Sweden and Europe.
Zara's representative responded that the company will investigate and solve these problems.
The union of shop workers, Handels, responded that Zara had promised improvement and was
breaking its legal agreements and Unionen, which organises white-collar workers such
as shop managers, called Zara's management style "management by fear".
Stores There are over 2,000 Zara stores located across
88 countries.
Some Zara stores operate as Lefties stores instead of Zara, a brand for low-cost fashion.
The number of Zara stores in each country, as of April 30, 2014:
References
Ferdows, K., M.A.
Lewis, J.A.D.
Machuca. 2004.
"Rapid-fire fulfillment".
Harvard Business Review, 82(11) Butler, Sarah.
"Zara's owner bucks the economic gloom to outgrow Spain's retail banks".
The Observer.
External links Official website
Zara on Facebook