Tuesday, February 5, 2013

Design and forecasting; the case of Zara Espana, S.A.

          [1]The Spanish clothing and accessories retailer founded in the mid 1970s by Rosalia Mera and Amancio Ortega. The global fashion giant has its headquarters at Arteixo Spain and it is part of the inditex group who owns other brands like Massimo Dutti, Pull and Bear, Uterque, Stradivarius and Bershka. Zara who started its international expansion through Portugal in the early 1990s later entered the USA and French market in the mid 1990s. Its international expansion was deepened in the late 1990s where they entered the Mexican, Greece, Belgian and the Swedish markets. Currently, Zara is present in about 73 countries, which a huge percentage of their stores are company owned except few places where legislation is a hindrance for foreign-owned companies; where they franchise the stores.

         The normal practice in the fashion industry in terms of new product design and getting the product into the market or stores is roughly six months that is the industry average. It is claimed by most fashion industry analyst that Zara needs only two weeks to design and develop new product and get it to its store. Consequently, Zara has resisted the normal fashion industry trend towards moving fast fashion production to relatively low cost economies and countries.

        Zara's success is based on the principles of vertical integration, quick response, in-house production, a single centralized distribution center and a relatively very low advertisement.  The global fashion giant controls most aspects of its supply chain; designing, manufacturing, distribution and retailing of its products to the companies retail shops. Looking in-depth into the design strategy of Zara its focused on the understanding the fashion items which its numerous customers wanted and deliver to them which is contrary to the normal fashion industry strategy of promoting predicted season’s trends through fashion shows, pageants which the traditional fashion industry uses. They use information systems to collect vital information for example, daily sales figures which allows its designers to estimate what type of clothes are selling very well. Their designer also has real-time information, which enables them to decide the type of fabric, color and cut to use when modifying or designing new clothes.

                                              Zara Operations Diagram

           Zara team uses information systems to track sales and preference of customers by PDAs, Internet, and other sources to get customers feedback on what product they would like to see more. This intelligence gathering is lead by Zara store managers, which finally determines what ends up on the companies store racks. In effect Zara uses this valuable data to allow the company to forecast on the products to be produced rather than guesswork. The goal of the company is to improve the frequency and quality of information systems to enable them provides the best designs trends to its customers. Zara uses software’s like C-Design and Corel Draw, which allows them to create and merchandise the company’s collections efficiently and quickly.

           In a nutshell, Zara’s design and forecasting has been described by the Business-world magazine of India as the “the fashion imitator“ whiles the Director of Louis Vuitton fashion Daniel Piette also describes Zara as “possible the most innovative and devastating retailer in the world“ lasting the CNN describes Zara as the “Spanish success“.


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