Why Zara Is Successful
Favored by fashion editors, bloggers and style-conscious citizens alike, Zara has become the first name on everyone’s lips when it comes to fast fashion. So much so that its success catapulted co-founder Amancio Ortega’s net worth to USD 67 billion in August 2019, making him the richest person in Europe, and the wealthiest retailer in the world. For everyone who has ever wondered about the secret formula behind Zara’s crowd-pulling fame, we noted down five of its main contributing elements.
1. Really Fast Fashion
Supply chain management is the key to Zara’s success and much of it relies on the fact that they refresh collections almost twice a week — that’s a total of one hundred and four collections annually. When compared to that of a ready-to-wear designer who only pulls out four to five collections a year (with pre-collections, couture and resort-wear included), it was brands like Zara that contributed to the see-now, buy-now runway model. The time gap between collection ideation to store delivery is as short as two weeks and worries like ‘dead stock’ hardly deter them as the refreshed batches are of small quantity, so there isn’t a ton of unsold inventory to get rid of.
2. Vertical Integration
In a supply chain, there are four main phases; sourcing, manufacturing, distribution, and retail. A company vertically integrates when it controls two or more of these stages. This operating model enables brands to change collections frequently and adapt to rapid demand changes while covering a vast customer base. Zara operates their own clothes factories, employ their own designers and run their own shops — this, in turn, offers them a huge advantage to translate the latest trend into new product and have it in stores in a couple of weeks.
3. Cashing In On Trends
The millennial and Gen Z shoppers are frugal, value-minded and demand quick, on-trend fashion. Instead of spending money on research and development in an aim to be the next trendsetter or innovator, Zara focuses on the latest and of-the-moment trends, armed with the responsive supply chain that helps it churn out smack in the middle of the season.
4. Limited Exclusivity
Most retailers and brands are used to working with a six month lead time — a tried-and-tested formula at that, but not without risk. By the time the stock rolls out, its at a higher risk of the trend turning outdated. With Zara’s on trend delivery, it also rolls out a limited amount of stock with each collection, that not only saves excess inventory but also gives the customers a sense of urgency to head out and buy the clothes before it gets replaced with the new or goes out of stock.
5. Consumer Is Key
Additionally, Zara boasts of a ‘data processing centre’ that’s open every hour of the day — it allows every single one of the stores to track sales data while another team zeroes in on customer feedback. Store managers actively monitor customers’ reactions on the basis of what they buy or don’t buy and what they say to a sales clerk. The Inditex sales staff is trained to draw out these sorts of comments from their customers and store managers report this information to the headquarters every day where it is then transmitted to a vast team of in-house designers, who quickly develop new designs and send them to factories to be turned into clothes.
