Zara keeps its stores spacious with little inventory to provide a pleasant shopping experience, focuses on customer service to increase sales, and relies on frequent replenishment of clothes almost daily rather than advertising. Zara's success is attributed to understanding customer demands through young designers, an open culture allowing broad input, and efficient supply chain producing half of products internally and delivering to stores twice monthly. Key factors include short design to store time, multiple local suppliers, high shipment efficiency, production responsive to demand, and automated centralized distribution.
Zara keeps its stores spacious with little inventory to provide a pleasant shopping experience, focuses on customer service to increase sales, and relies on frequent replenishment of clothes almost daily rather than advertising. Zara's success is attributed to understanding customer demands through young designers, an open culture allowing broad input, and efficient supply chain producing half of products internally and delivering to stores twice monthly. Key factors include short design to store time, multiple local suppliers, high shipment efficiency, production responsive to demand, and automated centralized distribution.
Zara keeps its stores spacious with little inventory to provide a pleasant shopping experience, focuses on customer service to increase sales, and relies on frequent replenishment of clothes almost daily rather than advertising. Zara's success is attributed to understanding customer demands through young designers, an open culture allowing broad input, and efficient supply chain producing half of products internally and delivering to stores twice monthly. Key factors include short design to store time, multiple local suppliers, high shipment efficiency, production responsive to demand, and automated centralized distribution.
Zara keeps its stores spacious with little inventory to provide a pleasant shopping experience, focuses on customer service to increase sales, and relies on frequent replenishment of clothes almost daily rather than advertising. Zara's success is attributed to understanding customer demands through young designers, an open culture allowing broad input, and efficient supply chain producing half of products internally and delivering to stores twice monthly. Key factors include short design to store time, multiple local suppliers, high shipment efficiency, production responsive to demand, and automated centralized distribution.
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Zara Case Study
Zara store keeps much of its floor space empty in order to provide a pleasant, spacious and uncluttered shopping experience for their customers. Zaras management instructs its store managers to focus on providing good customer service, thereby increasing sales. Additionally, Zara pays special attention to the location, traffic, and layout as it does not focus much on advertising. Furthermore, Zara has a low inventory policy, which means that the stores are reliant on the replenishment of clothes almost every day.
Much of Zara success can be attributed to their pull strategy, supply chain network efficiency, and understanding of the customers requirement.
Reason for success:
The average age of the designers in Zara is 26, which means that they are aware of the latest fashion and the management gets firsthand information regarding customer demands from these designers.
Zara has an open and an informal culture where the designers after drawing the design sketches with hand discuss them with not only the other designers but also the market specialist and planning and procurement team. This gives them a broad variety of inputs.
Zara produces about 50% of its products and the rest from 400 outside suppliers. This is a clever way of working as it is based on speed and expertise, cost effectiveness, delivery terms, etc.
Zara also outsources labor-intensive operations such as sewing. This
allows its own factories to focus on other important tasks.
The speed of delivery is one of the most important criteria for the Zara. The management measures distance in time and not in kilometers.
Retailers must place orders on time. The delivery to the retailers is
made twice in a month ensuring that the retailer has a minimum amount of inventory. 1
Retailers do not keep items in the store for more than two weeks. This means that the inventory carrying cost is reduced. Additionally, this creates floor space for new items as well.
Collaborative working among various departments of Inditex like
designers, market specialist and procurement and production planners and among managers at various locations.
For in-house production, the suppliers are located in Portugal and Spain and their close proximity ensure quick response to Zaras orders.
Multiple suppliers and sub-contractors in the supply chain network
ensuring less dependency on a single source.
High-efficiency rate in shipment (98.9%) with less than 0.5% shrinkage.
Production based mostly on pull strategy: Low production volumes in
the beginning of the season and then respond according to the market season demand.
Centralized distribution from a major distribution center at La Courna.
The distribution center has highly automated systems that contribute towards their distribution success.
Shipments are delivered to retailers at fixed time: twice a week. For
stores in Spain and southern Europe, shipments are being delivered before 3 pm Wednesday and 6 pm Saturday and for rest of the world on Tuesday 3 pm and Friday 6 pm.
Items on stores kept for more than 2 or weeks are kept out of stores or sent back to Spain.
