ZARA. A European fashion brand

Content's

I. Introduction

II. The Phenomenon ZARA

2.1 Situation of the Fashion Market
2.2 The Company
2.2.1 The Concept
2.2.2 Figures
2.2.3 Competitors
2.2.4 Strategy
2.3 Marketing Mix
2.3.1 Product Management
2.3.1.1Brand equity
2.3.1.2 Eurobrand
2.3.2 Price and Pricing
2.3.3 Communication
2.3.3.1 Corporate Identity
2.3.3.2 Advertising
2.3.3.3 Internet
2.3.4 Distribution

3. Zara’s Production and Design Process

4. Countries

III. Conclusion

IV. Bibliography

I. Introduction

“Galician Beauty: Spanish clothier Zara beats the competition at efficiency

– and just about everything else”

The Wallstreet Journal, May 18, 2001.

During the years 2000-2001, Inditex, an international fashion manufacture and distribution group, received widespread favourable press, touting Inditex ’ s success and attributing it to Zara’s unique integrated business model (Freimen, 2002).

In this case study we want to analyse this phenomenon called Zara, a strategic unit of the Inditex Group, and evaluate the strategies of Zara on the European fashion market.

II. The Phenomenon ZARA

2.1 Situation of the Fashion Market

The fashion market has changed considerably over the past few decades. Fashion products, which used to be an elite consumption product and now, are mass consumption market, are embodying what has been called “the democratisation process of fashion” (Mazaira et. al., 2003).

In the last years the fashion market has polarized. On the one hand there are producers and retailers of premium products on a high price level offering luxury products. On the other hand the low price young fashion producers, often foreign international operating chains like the Swedish chain Hennes & Mauritz, the Spanish chains Mango and Zara or the American chain Gap (Focus, 2003).

2.2 The Company

Zara is present in more than 30 countries with a network about 600 corporate stores in privileged sites in large cities.

It is part of the apparel Industria de Diseño Textil, S.A. (hereinafter Inditex) Group that is made up of fashion retail chains, textile manufacturing, purchasing, fabric treating, and also logistic and construction companies (Bresnik, 2003). The Group is best known for its Zara brand, but h as seven other chains: Kiddy's Class, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Zara Home.

The Group’s headquarter is located at Arteixo, near La Coruña in the Northwest of Spain. José María Castellano Ríos is chief executive officer of Inditex and joined the company from IBM in 1984 (Inditex, 2003). More than 34,000 employees work for the Inditex Group in a total of 34 countries (19,000 in Spain and 15 thousand abroad).

Inditex divided the market into different segments. Thus the company set up or purchased the chains. They all share the same philosophy of marketing and management: to be leaders in their market segment with a flexible business model expanding worldwide. Each of these chains enjoys a great deal of autonomy in the management of the business. Their management teams are free to make marketing decisions and act independently.

Belonging to a group, which has expanded to over thirty countries, has given them a high level of synergy in terms of organisation and knowledge management. In this way, each management team is able to focus on the development of its own business.

Inditex, the parent company of the group, is in charge of the central corporate services dealing with international growth, administration, the use of logistics technology, the general human resource policy, legal aspects and financial capacity. The unique management methods, based on innovation and flexibility, and its success have turned Inditex into one of the world’s larges fashion groups.

2.2.1 The Concept

The group manufactures high quality clothing and footwear and sells it worldwide at mid-market prices through its own branded retail stores. At Inditex all stages of the value generation process are controlled: design, production, management of the supply chain, logistics, and retail sales (Inditex, 2002).

Zara offers clothing for women (about 58% of sales) men (about 22%) and children (about 20%). Inditex describes Zara in this way (Inditex, 2004):

“Zara is a high fashion concept offering apparel, footwear and accessories for women men and children, from newborns to adults aged 45. Zara stores offer a compelling blend of fashion, quality and price offered in attractive stores in prime locations on premier commercial streets and in upscale shopping centres. Our in-house design and production capabilities enable us to offer fresh designs at out Zara stores twice a week throughout the year.”

The first Zara store was opened by its founder Amancio Ortega Gaona, a native of Galicia, in La Coruña in 1975. Before Ortega had worked as a clerk it a ladies apparel retailer and started his own housecoat manufacturing business in 1963. By 1989, there were 82 stores in Spain and Ortega began international expansion with Zara stores in Portugal, Paris and New York (Fraiman, 2002). In May 2001 Inditex made an initial public offering at stock and is by then the world’s third largest clothing retailer (Fraiman, 2002).

2.2.2 Figures

Sales of Zara and other companies of the Inditex Group in the years 2002 and 2001 are shown in the figure 1 below.

illustration not visible in this excerpt

The following graph shows the weight of store sales by geographic areas:

illustration not visible in this excerpt

Figure 2: Store sales by geographic area

European markets without Spain are absorbing the greatest part of the international growth (330 basis points of participation), compared to the reduction of weight of the Rest of the World and of the Americas (Inditex, 2003).

2.2.3 Competitors

Today’s clothing industry is highly competitive. One-brand stores chains like H&M and Zara in particular have a tendency to compete for the same costumer profile.

But companies must also compete with local, national and international department stores, individual shops or boutiques, markets, and companies operating sales by catalogue or on the Internet (Mazaira, 2003).

Zara’s competitors are one the hand companies which distribute fashion and other products like El Corte Inglés and Carrefour and on the other fashion companies like Gap, C&A, H&M, Benetton, Cortefiel, Mango and Adolfo Dominguez (Inditex, 2003).

[...]