Zara (retailer)


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


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