Zara Case Study Group

ZARA:  History and Background

Founding of Zara

Zara is a Spanish clothing and accessories retailer based in Arteixco, Galicia, and was founded in 1975 by Amanico Ortega and Rosalia Mera. It is the flagship chain store of the Inditex group; the fashion group also owns brands such as Massimo Dutti, Pull and Bear, Oysho, Stradivarius and Bershka. According to a report in business week (April 4,2006), Zara needed just two weeks to develop a new product and get it into stores compared to the six month industry average, and launches around 10,000 new designs each year. Zara has resisted the industry-wide trend towards transferring fast fashion production to low cost countries. Perhaps its most unusual strategy was its policy of zero advertising; the company preferred to invest a percentage of revenues in opening new stores instead. Lack of advertisement is also in contrast to direct competitors such as Benetton (vertically integrated)

Initial product market.

Zara’s first store featured low-priced lookalike products of popular, higher-end clothing fashions. The store proved to be a success, and Ortega began opening more Zara stores throughout Spain. During the 1980s, Ortega started changing the design, manufacturing, and distribution process to reduce lead times and react to new trends in a quicker way, in what he called "instant fashions". The company based its improvements in the use of information technologies and using groups of designers instead of individuals

The role of the corporate center at Inditex’s headquarters is that of a “strategic controller” only, and is involved in setting the corporate strategy, approving the business strategies of the individual chains, and controlling their overall performance rather than as an “operator” functionally involved in running the chains.  This gives Zara autonomy to operate independently and be responsible for its own strategy, product design, sourcing & manufacturing, distribution, image, personnel and...