Zara is a fashion brand that was established in 1975 and is headquartered in Arteixo, Spain. Its parent company, Inditex is the largest apparel retailer in the world ( Ghemawat et al., 2003 ). Zara’s portfolio includes men’s, women’s and children’s clothes. The company has devised one of the most responsive supply chains with new products being released into the market on a weekly basis ( Zhelyazkov, 2011 ). This implies that the brand’s efficiency with regard to design, production, distribution, and delivery is unrivaled. One of Zara's biggest competitors is Gap, an American brand.
The two brands share many similarities. For instance, their operations boast a physical as well as online presence. Likewise, manufacture of the majority of their products takes place outside the United States (U.S). A key difference is that while seasonal fashion trends inform Gap's products, the real-time client needs inform Zara's products. As a result, Zara's success over Gap cannot be overstated. This paper seeks to expound on the counterintuitive nature of Zara’s model and how this model has made the brand a better performer in comparison to Gap and other competitors.
Delegate your assignment to our experts and they will do the rest.
The fall of Gap and Emergence of Zara
The rise of Gap as a fashion brand is attributed to the adoption of the company's khakis and button-down shirts by the American populace. This combination eventually became the most embraced casual outfit, particularly in the 1990s. Following a decline in sales in the 2000s, Gap's management responded by using teenage apparels to stock its stores. While this move was aimed at revitalizing the brand at a crucial time, it led to the loss of the brand's most ardent customers ( Lopez & Fan , 2009 ). Specifically, the customers embraced retailers that stocked styles similar to those of Gap.
The loss of customers led to an unprecedented loss of revenue for Gap and with this a decline in profitability. Likewise, the brand was forced to close hundreds of its stores in a bid to address the challenge. However, this move did not bear fruit owing to the brand's poor selection of styles and color in the remaining stores. Moreover, the brand's chief marketing model was the use of television promotions backed by huge budgets. This model had also collapsed. The rise of Zara can thus be attributed to Gap’s downfall, and particularly its ability to leverage Gap’s weaknesses ( Ghemawat et al., 2003).
The Success of Zara’s Counter-intuitive Model
Focus on Data and Design
Zara ensures that its customers are at the center of all its decisions. For instance, in a bid to ensure that all its stores stock products that customers are interested in, the managers make inquiries from the customers ( Ghemawat et al., 2003 ). This is made possible by personal digital assistants (PDA). These gadgets aid in collecting customer inputs and obtaining feedback from customers regarding their preferences. To ensure the success of this approach, Zara's employees are paid commissions for the sales made. Inferences into the customer preferences are made by paying attention to the items that are not sold.
The PDAs are crucial components of the point-of-sale system (POS). Besides capturing the relevant customer information, this system also ranks a store’s offerings by sales. The hard data is combined with insights collected from clients. The brand uses this data in planning its styles and issuing rebuy orders. As a result, the brand's actions are backed with data ( Zhelyazkov, 2011 ). For instance, the data improves the quality and frequency of the decisions embraced by the planning and design teams. The design team is comprised of young, energetic designers who are rotated to foster innovation and cross-pollination of experience.
Efficient Manufacture, Logistics, and Use of Technology
A typical Zara design takes fifteen days to move from an idea to actual stocking ( Zhelyazkov, 2011 ). This is unlike Gap and other competitors that introduce new items once or twice a given season. The responsive nature of Zara is also aided by vertical integration coupled with the use of technology to coordinate suppliers. This is further supported by precise logistics and ‘just-in-time’ manufacture that is aided by technology hence fostering efficiency ( Ghemawat et al., 2003) . The brand also leverages inventory optimization and contract manufacturers. It is such attributes that keep Zara ahead of Gap and other competitors.
References
Ghemawat, P., Nueno, J. L., & Dailey, M. (2003). ZARA: Fast fashion (Vol. 1). Boston, MA: Harvard Business School.
Lopez, C., & Fan, Y. (2009). Internationalisation of the Spanish fashion brand Zara. Journal of Fashion Marketing and Management: An International Journal , 13 (2), 279-296.
Zhelyazkov, G. (2011). Agile Supply Chain: Zara's case study analysis. Personal Website .
