Zara

Zara is the flagship chain store for Inditex Group owned by Spanish tycoon Amancio Ortega. The group also owns brands such as Massimo Dutti, Pull and Bear, Stradivarius and Bershka. Inditex is headquartered in Arteixa, in northern Spain, where the first Zara store opened in 1975. Today, the group is among the world’s fastest growing retailers. It has a business model which has enabled it to expand quickly by opening additionaing stores, and compete with quality brands at reasonable prices. It is the third-ranking distributor of fashion in the world behing Gap and H&M. This empire has allowed Ortega to become one of the richest men in the world. He is 23rd on Forbes magazine’s list of the world's richest people.

Its first store featured low-priced lookalike products of popular, higher-end clothing fashions. On a large scale, the clothing industry followed design and production processes that required a long lead times, usually up to six months, between the original design of a garment and its delivery to retailers. This modus operandi effectively limited manufacturers and distributors to just two or three collections a year.

Ortega looked for a means of breaking the model by inventing what he called “instant fashions” that allowed him to quickly respond to shifts in consumer tastes and to newly emerging tendencies. Under a computerized system, Zara reduced its design to distribution process to 10 to 15 days. Instead of placing the design load on a single designer, the company developed its own integrated team of designers; more than 200 of them by 2000. They started developing clothes based on popular fashions, while in the meantime issuing the company’s own design. Doing so, the team was able to respond immediately to emerging consumer trends as well as the demands of the company’s own fans. Warehousing procedures, as well as the installation of computerized inventory systems linking stores to the company’s growing number of factories, helped Zara avoid taking the risk of maintaining a large back inventory.

Zara has now 2,690 stores located in 62 countries around the globe. The average Zara store is about 16,000 square feet. Zara strategically opens its stores in heavily trafficked, high-end retail areas. And Zara offers considerably more goods than competitor companies. It manufactures about 11,000 distinct products yearly compared with 2,000 to 4,000 items for its principal competitors. Zara can design a new item and have finished items in its shops within four to five weeks, and it can modify existing goods in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences.

They managed to triple the average cycle for simple reasons.

Zara is a vertically integrated retailer. It designs, produces and distributes itself. Unlike most similar retailers, Zara controls most of the steps on the supply-chain. About 50% of the goods the company puts up for sale are manufactured in Spain, 26% in the rest of Europe, and 24% in Asia and the rest of the world. While key competitors contract out production to Asian countries, Zara fabricates its most fashionable items at a dozen company-owned factories in Spain. Items with a longer shelf life (T-shirts), are outsourced to low-cost suppliers, principally in Asia and Turkey.