Zara Success Story: The story from 30 Euros to Over 6900 stores
Zara has come a long way to become world most popular fashion brand. The Zara brand offers men and women’s clothing, children’s clothing (Zara Kids), shoes and accessories and many more fashion products. Lets look at inspirational success story of Zara along with its competitive advantage.
History:Zara the world most successful fashion retail brand was founded in 1975 in Spain by Amancio Ortega and Rosalía Mera with the budget of 30 Euros. They wanted to name their shop Zorba after the film Zorba but there was already a bar in the same street with that name.Therefore they settled for Zara as two Zobra in same street would only make confusion. In initial days Zara used to sell low-priced lookalike products of popular, higher-end clothing and fashion.
During the 1980s, Zara changed the design, manufacturing, and distribution process to reduce lead times and react to new trends in a quicker way, which was called “instant fashions”.
The rise and rise of Zara
Soon Zara started to become popular and in no time it went beyond Spain and rest of the world.By 1990’s the store had entered into US, France and most of the European regions. Presently, Zara has over 6900 stores across 88 countries in the world and above 450 million items sold in a year. The company has opened about 400 stores annually on average over the past 5 years spread out among eight brands.
The competitive advantage of Zara
The brand is well known for its ability to deliver new clothes to stores quickly . Inorder to achieve this Zara follows a strict routine. Twice a week, at precise times, store managers order clothes, and twice a week, on schedule, new garments arrive. This culture is the foundation of Zara success story.Moreover Zara controls its supply chain effectively than most of the retailers. The major competitive advantage of Zara is its supply chain . In-house production allows it to be flexible in the amount, frequency, and variety of new products to be launched. Zara completes its designing, manufacturing and distribution cycle within 2 weeks of the original design first appearing on catwalks.
The core of Zara’s success story is its centralized enterprise resource planning. Central cloud-based software manages inventory, products, and logistics. Also zara gets 85 percent of the full price on its clothes, while the industry average is just 60 to 70 percent.
Zara is one typical example of the businesses who truly understand and tailor their customers. The company focuses on responding to actual fashion needs rather than forecasting fashion trends for a distant future. This has been the ultimate matra for Zara success story.