Zara's Supply Chain Management Practices

 
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Case Details:

Case Code : OPER055
Case Length : 13 Pages
Period : 2002-05
Organization : Zara
Pub Date : 2006
Teaching Note :Not Available
Countries : Spain
Retail

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"Zara has managed to fill a hole and seize an opportunity in Spain. It has done for fashion what IKEA did for furniture, filling the gap between hypermarket and designer clothing in a very desirable way."1

- Valerie Van den Boffche, Head Wolff Olins, Spain, in 2004.

"Zara is nimbler and faster to the market. This will be important as fashion trends globalize."2

- Keith Wills, European Retail Analyst, Goldman Sachs3, in 2000.

Zara's Fast Fashion Strategy

In 2004, a famous pop star toured Spain to give a series of concerts. Her outfits attracted instant attention from teenagers and young girls across Spain. By the time the pop star had reached the last leg of her tour, Spanish girls were sporting outfits similar to the ones she had worn during her first concert. The outfits were designed and distributed by apparel retailer Zara, which quickly gauged the demand for them and stocked up its stores across Spain in less than two weeks.

According to a survey conducted by Interbrand4, Zara was the only Spanish brand to be featured in the list of 'The 100 Top Global Brands' in 2005. It was featured at the 77th position in the list that featured Coca-Cola, Microsoft, and IBM in the first three positions.

Operations Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

The survey featured only those brands with a value of more than US$ 1 billion, which derived around 33% of their revenues outside their country of origin and whose financial data was publicly available.

Interbrand describing Zara, said, "Cutting-edge Spanish apparel retailer epitomizes cheap chic knocking out mass-produced copies of catwalk fashions almost overnight."5 Zara introduced about 12,000 designs every year; the shelf life of each design was about four weeks. In January 2006, Zara had 853 stores, located across the world (Refer to Exhibit I for the geographical spread of Zara's stores). These stores received two deliveries from Zara's central distribution center every week. The deliveries were customized in accordance with the data sent by them every day. Zara pioneered the concept of customized retailing and was able to conceptualize the garment, develop, and deliver it to the stores within two to three weeks.

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1]  Doonar, Joanna, "Branding España to the Rest of the World," Brand Strategy, March 2004.

2] Echikson, William, "The Mark of Zara," BusinessWeek, May 29, 2000.

3] Goldman Sachs Inc. is one of the world's oldest investment banks founded in 1869. It is a primary dealer in the US treasury securities market. Goldman offers its clients mergers & acquisitions advisory, provides underwriting services, engages in proprietary trading, invests in private equity deals and also manages the wealth of affluent individuals and families.

4] Interbrand Corporation is a leading brand consultancy, serving clients worldwide. Founded in London, Interbrand is headquartered in New York.

5] "Global Brand, The 100 Top Brands," BusinessWeek, August 01, 2005.

 

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