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ZARA
by Gunnlaugur Arnar Elasson, Sandra sk Kristbjarnardttir and Clara Soa Escobar Lopez
BRANDING PROJECT
COMPANY OVERVIEW
Zara is a Spanish chain store of Inditex Group, one of the worlds biggest retail store in the world, who are also owners of brands like Massimo Dutti, Pull and Bear, Oysho, Zara Home, Uterque, Stradivarius and Bershka. Founded by Amancio Ortega, he rst opened a Zara store in 1975 in downtown A Corua, Spain, where its still home to its headquarters today. At the beginning Zara sold low price clothes that resemble designs from the couture designers. Then he changed the design, manufacturing and distribution so he could make clothes quicker, and that way react to trends faster. This strategy proved so successful that between 1976-1984 Zara extended its network and opened stores all over Spain. In 1988 they opened their rst international store in Oporto, Portugal, and have been ever since expanding their stores. In 2007 Zaras shop number 1000 was open and in December 2008 they opened their rst Eco-efficient store in Athens, Greece. On 17th December 2009 an application for mobiles came out and it wasnt until last year on the September 2nd 2010 that merchandise became available online. Today there are 1688 stores in the largest cities in over 70 countries in Europe, Asia, Africa and America. What is the key to Zaras success is that it has a quick constant exchange of information. All is managed in one design and production centre in Corua, where there is 3 spacious halls, one for women, one for men and one for children; its much more expensive but they can work more efficiently.
BRANDING PROJECT
COMPANY IMAGE
Zara is a fast industry but its unique business model is based on innovation and exibility. They design and distribute a garment to market in just fteen days. They have always-new products but in limited supply. The costumer feels there is an exclusivity, since only few items are on display even thought stores are spacious; they feel they have to buy it because they wont nd it again. Zaras designers create approximately 40,000 new designs annually of which 10,000 are produced. These designs resemble latest couture creations or classic pieces. They are giving the costumer the same products made with less expensive fabrics and lower prices. Their production is massive, of each design they normally make 5 6 colours and 5 7 sizes. They also care about the environment, animals and workers. Two years ago they demanded their Bangladesh jeans supplier to close their factory and built a new one with better conditions for their workers after they found about the poor conditions in which they where working. As well, Zara stores are eco-friendly, is against fur and they use ecological fabrics, organic cotton and PVC-free footwear. Mr.Ortega transmits the values of the company which are freedom, perfectionism, responsibility, rapidness, exibility and respect to others to his Zara team.
BRANDING PROJECT
VALUE DRIVERS
Increase net margin on operation and their market capitalization and increase customer loyalty and brand recognition. Zaras business model provides great value to shareholders and makes them different from their competitors.
BRANDING PROJECT
METHODS OF TRADING
The stores are company owned, unless the countries regulations say otherwise and in these cases they franchise the store. The business model they have, avoids the main xed costs associated with international expansion because they dont have distribution centres per country and they dont advertise when entering a new market. They have in-store shopping and launched their online store last year. They have a web page where you can browse their catalogue, lookbook and all the new garments that are arriving every week. It also has a Store locator with directions and maps. All this information is also available in their application
BRANDING PROJECT
for iPhone and iPad. Zara online sales began just for France, UK, Italy, Germany, Portugal and Spain, then Austria, Ireland, Belgium, the Netherlands and Luxembourg. They have a strong commercial proposition and have had a satisfactory customer reception since they went on-line. They are planning to open online shopping for Japan, South Korea and Canada this year.
BRANDING PROJECT
The secondary target customer for Zara could be man in the same age range, 25 to 40. Classic men that like fashion but that are not going to the extremes. They want to be well dress to work and in their leisure time.
BRANDING PROJECT
PLACE
LOCATION
Their shops are always situated in a prime location, in the middle of the most commercial streets in Barcelona, that way they can attract their prime costumer into the store. Zara's target market is comprised of urban, fashion-conscious consumers who shop frequently for the latest trends. Normally Zara Its easy to reach by the metro, bus or walking. On weekdays the stores are packed with people that come for shopping, and also from the people that are just passing by in their way to work or study. On the weekends it gets really busy with people not only from Barcelona but also from the surroundings that comes for window-shopping, shopping and just to hang around for the day. The store locations are always located at prestigious, high-traffic locales. The stores are designed with wide-open spaces and welldened layouts to insure customers enjoy their shopping experience at Zara. Particularly Passeig de Gracia with Arago shop is very important for Zara because it gives her a little more of prestigious and also catches costumers that have a little more economic capacity in their shopping around Passeig de Gracia.
STORE DESIGN
The stores are huge, with big window displays. They are always very modern and very well organized. Zara has always characterized because they dont advertise so their windows are really important. They always have an amazing display to make the costumers come in, and you can notice they spend a lot of money in it. You just have to walk by to see their ultimate collections and be tempted to come in. The doors of the store are big to let in and out the large quantities of shoppers that come daily to the store. They are placed in all the corner of the to streets so it is accessible really easy. As soon as you get in you get a good vibe, it is kind of a boutique, but huge. The inside always goes with the window display. It looks luxurious.
BRANDING PROJECT
The lighting is yellow, comfortable, it invites you to stay and look around. The colour of the store are classy, they use brown and beige tones. They play music not so loud and melodies that are singed and that are relaxing. The store materials are shiny silver metal, glass and glossy wood. They have mirrors everywhere so people can try on things if they are in a hurry. The dressing rooms are easy to nd and they use curtains and have good space inside for trying outts.
You can nd mannequins that support the windows display everywhere showing the costumer how they can combine the different garments and showing what they have available. The clothes are separated by brand. The layout of the store displays clothes against the wall in a very particular way with some clothes hanging and accessories on the bottom and in the top. They alternate a lot of their clothing with shoes so the people want them even thought they where there just to buy clothes. The garments are displayed in racks all around the oor mixed with tables that have clothes folded on top. Their hangers are of metal and wood or the combination of both. The clothes are display by theme nor by trend or by colour. They look for clothes that can make a good combination and place them together. They have a section of formal clothes, other with more lay back clothing. They combine pants, blouses, t-shirts, tops, shoes and jackets in each section. The clothing is really well display making it easy to reach. The shops are comfortable to walk and to shop.
PRODUCT
BRAND
Zara has 5 brands: 1. Zara Woman, that it is a brand a little more formal. For women at their work or for women that go out but they like their looks to be more serious. They also have clothes that go with the trends and that are fabulous. 2. Zara Basic (woman), it is a brand that has all the basics. 3. Zara TRF, for younger women, it has the trendy clothes for young girls who love to be up to fashion.
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4. 5.
Zara Men, with all the clothes for men. Both casual and formal. Zara kids
PRODUCT MIX
In Zara they sell almost everything. Jeans, blouses, skirts, trousers, jackets, knitwear, coats, t-shirts, shorts, shirts, sunglasses, shoes, scarf, belts, hats, handbags, leggings, head accessories. As part of this corporate concept, the stores try to hold very low levels of inventory, often having their entire inventory out on display, in order to sell out and make room for the next wave of fashion.
Zara's global strategy is to offer cutting edge fashion at affordable prices by identifying which styles are "hot" at fashion shows and moving simulations into production even before the original designer can. They always have the latest trends. You can nd the trendiest pieces mixed with the basics.
Zara has sizes that go from the XS to the XL. Their quality is good; all their clothes are made in Europe with the exception of some pieces and jeans. They are well known for promoting better quality for the workers and they where involve with the improvement of installations in the fabrics that made their garments in Bangladesh.
PRICES
Zara's pricing is lower than its competitors, but prot margins are higher due to direct efficiencies gained from a shortened, vertically integrated, supply chain. Zara's global target market is a young, educated one that likes fashion and is sensitive to fashion, but is price-conscious. Zara is a brand that it is really well positioned. They give to their costumer high fashion at low prices. Their quality it is in a good price for the value. They use the psychology of prices by ending their price tags in .99. Jackets from 139 to 49.99 Outwear from 49.99 to 39.99
BRANDING PROJECT
Knitwear from 19.99 to 14.99 Dresses from 119 to 25.99 Skirts from 39.99 to 29.99 Trousers from 35.99 to 19.99 Shirts from 39.99 to 19.99 T-shirts from 25.99 to 9.99 Shoes from 79.99 to 29.99
PROMOTIONAL ACTIVITIES
ADVERTISING
0.3% of revenue) compared with 3% to 4% for other specialty retailers. These helps lower expenses and preserve strong prot margins. Zara prefers to invests more money in renovating its storefronts and buying prime real estate for store locations where it gets all the promotion that it needs as visibility marketing. They just use posters in their windows whenever they are in sale with just a small word that reads sale and post it on Facebook and online.
BRANDING PROJECT
SALES PROMOTION
Zara uses the same sales period as the other brands, but Zara stock its low, and it is always being renewed, so the sales arent that important. Recently they have been posting on Facebook and on their web page whenever they have sales.
P.R.
They get a lot of publicity from the fact they dont advertise and because they are helping the people in the industries. Zara also has a Facebook page where they currently have 7818.477 people who Like them or follow them. They post videos, photos of new arrivals, making of the photos for the lookbook and catalogue, invitations to new stores opening events, sales information, new countries with online shopping available, etc. This way they are getting into the social network trend and reaching new and old costumers, strengthening their core values which are to Increase customer loyalty and brand recognition.
BRANDING PROJECT
They have developed a very successful vertically integrated company which can design, manufacture, and distribute garments to retail stores in just two weeks. By owning its in-house production, Zara is able to be exible in the variety, amount, and frequency of the new styles they produce Not advertising makes the costumer go by the store to check out what they have new and knowing that they dont have the same every week this make the costumer buy it immediately. The Zara costumer goes more than 17 times per year to the store. Having little stock makes it more exclusive. Zara stores have mens, womens and kids clothing, shoes and accessories. Great variety of colours and sizes. Design and produce products really quickly (only 2 weeks). Supply their stores twice a week with new products. Accessible prices for every one. Up to the trends. 50% of the products Zara sells are manufactured in Spain, so they give a lot of work to people in their country. They have an environmental and animal welfare policy. They tune with the customer. Make the customer feel they are buying exclusivity. They care about the workers of their suppliers Its a well-known brand around the world; the people recognize it and buy there. They know the product.
WEAKNESSES
There is a lot of competition around their locations. Sometimes its not easy to nd the displays from the windows inside the store. After certain time of the day the store gets really messy and it is difficult to nd the garments you are looking for. By not advertising they are missing people that dont like going to the store just to see what is new. They have little stock available and when you go you cant nd your size. Zara only has one manufacturing plant and distribution centre in the world, which can be a huge weakness and threat, if something goes wrong. Not good quality cant be worn for long.
BRANDING PROJECT
A lot of waste in their massive production because all their stuff cant be sell unless they have sells all the time. They use designs from other designers. Monopoly markets with low cost clothes, affecting smaller brands.
BIBLIOGRAPHY
Zara (clothing), Wikipedia. www.zara.com Zaras secret for fast fashion by Kasra Ferdows, 21 February 2005, Harvard business review. Zara is launching online shopping its about time! By Bee Shyuan, 17 September 2009, on-line article. Fashion novelties of Zara and Zara Home, 12 December 2009. Improving working conditions in Bangladesh garment factory, 20 January 2010, BBC radio. www.inditex.es Inditex company prole http://www.facebook.com/#!/Zara http://icheersapp.com/ipad/lifestyle-ipad/zara-shoppingonline.html
BRANDING PROJECT
http://www.bbc.co.uk/news/business-11155437 - Web page news http://www.inditex.es/en/press/press_releases/extend/ 00000800 -Web page news http://news.yahoo.com/s/afp/20110110/bs_afp/ spainretailfashiontextilecompanyearningsinditexzara - Stock market information on Zara news http://www.modernights.com/shop/zaraclothing/ - Article <http://www.123HelpMe.com/view.asp?id=97642> "Zaras Business Model, Information and Communication Technologies, and Competitive Analysis."