Zara Case Study

ZARA CASE STUDY

INTRODUCTION

Inditex, Industria de Diseño Textil, is a group of more than 100 companies operating in textile, design, manufacturing and distribution. The group's success and its unique business model based on innovation and flexibility have made Inditex one of the biggest fashion retailers in the World.

Zara Company has been established in La Coruña, Spain. The first Zara's store opened in 1975. The firm has had an extraordinary growth, especially in the fashion retail sector. In fact, there are 1763 stores, based in 60 countries. Every three weeks, a new store has opened.

Zara is the Inditex's "crown jewel" and its business model is unique and very efficient. For example, the company limits its cost thru minimal advertising as much as possible. They have a just-in-time business model and they prefer having a local production thanks to a vertical integration (the company owns more links in the production chain).

But is this business model viable, and efficient in the future?

IDENTIFY PROBLEM

The main issue in Zara Company is to maintain its leadership and its unique business model.

More in the retail sector, the unique business model of Zara firm is based on both strengths and weaknesses. First, the most significant problem about this model is the constant manufacturing cost, which are significantly higher than competitors in the same field.

Second, because of the constant change in trends and items (collections changed twice weekly), the clothes' quality is affected. For the company the most important is to propose to its customer a permanent renewal, rather than the quality.

Third, there is not enough manufacturing factories. In fact, the production is just centralized in Spain factories. So, if there are any dysfunctions in Spain, the whole production is impacted.

To finish the last problem of this business model is the shipping costs that strictly depend on fuel evolution cost.

Zara Company clearly relies on its...