Introduction:-
Zara is Spanish clothing and accessories retail store in Arteixo, Galicia; was founded by Amancio Ortega and Rosalia Mera on 24th May, 1975. Zara just needs two weeks to develop a new product and get it to stores, compared to the six month industry average and launches around 10,000new designs each year. There are 1763 stores in around 78 countries worldwide. Zara has continually maintained its mission to provide fast and affordable fashion items and accessories. Their approach to design is closely linked to their customers. (Industria de Diseno Textil) Inditex of Spain, the owner of Zara and five other apparel retailing chains continued a trajectory of rapid, profitable growth by posting net income of €€340 million on revenues of €€3,250 million in its fiscal year 2001. (1)
Zara’s Brand Wheel:-
According to the case study, Zara includes 5 points in its brand wheel which leads the store to the success and helps to achieve the goal for profitability easily. First one can be said as Attributes which includes trendy colors, feminine cuts, fashionable clothes, varied assortment and so on. Second includes the Benefits like it is a customer centered business, consists of fashionable product lines for moderate costs, runaway trends adapted for the streets, etc. Third can be said as its Values, which mainly include fashion which is trendy in every situation, fashion oriented women, feeling good about looking good, and so on. Brand wheel of Zara’ fourth point was the Personality which consists clothes that are fashion friendly, feminine and also hot and trendy. And at last the Brand Essence of Zara which includes the High Street Fashion.(1)
Zara’s Vision: “Zara is committed to satisfying the desires of our customers. As a r...
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... unordinary supply chain, which gives them a highly competitive advantage. They also successfully introduced a new, unique business model into the apparel manufacturing and retail industry. Zara chose to handle design, production and distribution in-house and concentrate the whole production close to their headquarters in Spain. By the entire process, Zara can react much faster than its competitors do to both the ephemeral trends in the world of fashion and the capricious tastes of its customers. They have achieved their success by thinking out of the box. Their success is directly related to their ability to understand their customer’s most innate needs and desires and tie these to successful innovation strategies, which ultimately lead to these new and unique approaches to their business.
Reference:
1. Case Study
2. www.zarafashion2013.com
3. www.Google.com
However, Zara are usually compared to premium brands for instance Armani, Hugo Boss and others because of this Zara have some stores which are premium and others which are affordable. Zara mostly have a premium pricing strategy the pricing is made by optimising development and training costs (Hitesh Bhasin, Marketing mix of Zara) looking at pricing as portion strategy Zara are looking into high quality and high price. Zara pricing approach in my opinion is value-based for example a detail in a product and the quality of the product will mean the cost will be higher for instance a well designed detailed leather jacket will cost more compared to a basic design leather jacket because the difference of producing the detailed jacket which takes time to designing and material being used compared to the basic quick to make
Zappos is an online shoe and clothing store. The idea of an online shoe store originally came from Nick Swinmurn in the year 1999. He then pitched the idea to Alfred Lin and Zappos’ current CEO Tony Hsieh. Zappos quick rise to success is mostly attributed to their ten core values. These values vary from creating fun and weirdness to being humble. However, the root of this company’s success lies only on one important thing: their regard for customer service. They value the quality time spent with customers over the phone rather than the quantity of customers.
Moreover, the company’s president has emphasized the need to preserve the quality of its products as well as its reputation among customers, by not committing a large portion of their business to replica products. Essentially, the match between the market opportunities and organizational strengths is not present since the firm is not utilizing available opportunities to enhance its competitive power. For instance, one of their strength has been the quality of their supply chain, but with the rise of the mass merchandiser stores, the company has been unable to create strategies to avoid being eliminated by these stores.
3. Couto, J. and Tiago, M. (2009) ‘The Internationalization Process of Fashion Retailers’, The Business Review, 13(1), pp. 278-286. 4. Ericsson, D. and Sundstrom, M. (2012) ‘Value Innovation and Demand Chain Management - keys to future success in the fashion industry’, Nordic Textile Journal, pp. 82-90.
Zara sources fabric, other inputs, and finished products from external suppliers. It has purchasing offices in Barcelona and Hong Kong. This gives Zara a competitive advantage towards the costs of goods sold, as it can purchase from both Europe and Asia according to prices. Buying more from China in the future might reduce even more the costs of goods sold.
Analysis & Recommendation: Zara’s main strategy is the ability to respond very quickly to the demands of target customers which called for identifying trends of the customer in advance. The company has been able to identify the trends and meet the demand with the help of its autonomously organized structure and its effective value chain systems. The present system followed by Zara has been very effective and very easy to maintain, which as a result has persuaded the company to continue without any change in the present system so far. The problem that Zara faces right now is that the system that they use, P-O-S (Point of Sale terminals), runs on DOS which Microsoft does not support anymore and any hardware change in the POS terminal will not be compatible with the current POS software. Although the sense of urgency for the change may not be that high, investing in IT infrastructure is a must as MS Dos is an obsolete technology and there is no contract or guarantee from their POS terminal vendor that they will continue supplying the same terminal with out much changes in the hardware for any specific period of time, therefore change is unavoidable. The other main issue that Zara faces is that the stores don’t share inventory information electronically and hence inventory management becomes highly difficult and manual. The decision making process is based on the judgment of employees throughout the company instead of relying on a small set of decision makers; the majority of the decisions were made by store managers and as a result they placed orders for the items rather than simply accepting and displaying what headquarters decided to send them.
The fundamental business strategy of Zara is very simple which is linking customer demand to manufacturing, and liking manufacturing to distribution. Zara has been running their business in fashion industry which is susceptible to seasons and quick changing customer tastes. Zara has been approached to and considered their business as a perishable commodity business just like a fresh baked cake or bread to be consumed quickly.
Thanks to the excellent marketing strategies and governance of continuous supply chains, fast fashion is now booming in the apparel industry, there are rapid expansion of fast fashion retailers such as H&M, ZARA, Topshop and UNIQLO, etc. in different countries in recent years. (Mollá-Descals, Frasquet-Deltoro & Ruiz-Molina, 2011) Triumph of fast fashion makes the brands’ founders to become the richest people in the world: The Swedish
H&M is the world’s second largest retailer, only behind its main rival Zara of Inditex (Petro, 2012). The company currently has 3006 stores in 53 countries. The company does not own any factories. H&M outsources production to network of 800 independent suppliers; 75% in Asia and 25% in Europe. In order to increase the efficiency and productivity of its supply chain, the company strategically locates its network of 20 to 30 production offices close to its suppliers. According to Stockholm Newsroom, the pretax profit of the company for the month of June to August of 2013 is $907 million, which indicates an 11 rise in turnover (Pollard, 2013). The company continuous development plan facilitates its goal for both brick and mortar, and online stores expansion worldwide. The target segments for H&M, a category specialist store, are trendsetters and fashion/money conscious males and females ranging from 16 to 40 years old with income ranging $15,000 to $60,000 annually.
2.4 Segmentation: Some of the important bases for segmenting consumer markets are Demographic, Geographic, benefits, Psychographic and Usage rate segmentation. Geographic segmentation is the priority of Zara. It is a global brand and its supply chain management is very much perfect. It helps Zara in getting the latest trends into stores in three weeks’ time, based on consumer preferences. It’s a Spanish brand, so it would be a better option for Zara to open more stores in European countries.
Miuccia Prada once said that “What you wear is how you present yourself to the world, especially today, when human contacts are so quick. Fashion is instant language”. Miuccia Prada and the Prada brand have grown from humble beginnings making quality leather goods to a public traded company with a current market capitalization of over $26 billion (USD) . With the development of Prada as one of the world’s premier luxury brands it provides an excellent case study to examine how strategy paved the way for the success of the Prada brand. First, an examination of Prada’s strategic positioning against luxury brand rivals Louis Vuitton Hennessey Moet (LVHM) and Kering (Gucci). The acquisition history of Prada will be reviewed, where some preliminary conclusions can be made about what has been contributing factors to both the successes and failures. Then finally, an evaluation of what the future holds for Prada and the sustainability of its competitive advantage.
The business model that sets Zara apart from other clothing retailers is how rapidly the company changes stocks and releases new product lineups. The company averages 12-16 collections annually which equates to more than one lineup a month. Due to stock being limited and the rapid production Zara brings forth, their items are viewed as exclusive promoting further business. Their customers are happy knowing that their specific article of clothing is more “rare” due to only having an average of a two-week window to purchase the clothing. The company specifically targets current trends and has them in the store within 30 days. This maintains the brand’s uniqueness and relativity in fashion.
Marcel Planellas, secretary general of the Esade business school, describes the Mango fashion retail chain, as “gazelle-like,” because it has grown so quickly. The fashion retail chain opened its doors in 1984 when two brothers, Isaac and Nahman Andic launched the first Mango store in Barcelona. Less than 25 years later, there are 1,114 Mango stores on the leading shopping streets of big cities in more than 90 countries. It is now, according to Planellas, “one of the most valuable retail brands in the world.” Interbrand, the international consulting firm. Says that Mango’s revenues amount to about 700 million euros. Esade has developed a case study of Mango, recently published in Expomanagement, the largest managerial forum of Spain’s HSM management training firm.
This paper describes the various aspects of the Zappos case. The objective is to evaluate the depth analysis of the Zappos strategy. It enables to determine the Zappos strategy, business model & marketing strategy, and smartness of the Zappos acquisition.
Zappos.com is a website that started off just selling shoes but now sells items such as handbags, clothing, and housewares in addition to shoes. Their company logo includes their catchy name with an explanation point as the end in the shape of shoe print which leads consumers to believe Zappos has strong feelings about the service they provide to their consumers. Zappos believe that customer service is the number one priority and is focused on cultivating repeat customers which is why they have always provided free shipping on both orders and returns; occasionally provides upgraded shipping so customers can receive their shoes the same day that they are ordered even though this is very expensive to the company; and they only show products on their website that they actually have in stock albeit they lose 25 percent of their potential business by doing so (Walker, 2009). For a compa...