Zara

Introduction

Zara is the flagship brand of the Spanish retail group, Inditex SA, one of the super-heated performers in a soft retail market in recent years. The first Zara shop opened its doors in 1975 in La Coruña, GaliciaSpain, the city that saw the Group's early beginnings and which is now home of its central offices. Its stores can now be found in the most important shopping districts of more than 400 cities in Europe, the Americas, Asia and Africa. With year-on-year sales increasing at around 25% over the last 5 years, it has become one of the world’s fastest growing retailers. As of late last year, Zara had 350 shops in Europe, 18 in the Middle East, 52 in the Americas and five in Asia. With roughly 40% of Inditex shops, Zara brings in about 80% of the group's revenue. (Zara founder makes a mint, 2001)

As retailers like Marks & Spencer and Gap join retailers in reporting falling profits, what makes a Spanish retailer to announce profit and Growth and assume this post as forthcoming leader in the fashion retail industry? What Ortega, the founder of Inditex, saw that others didn’t see? What is Zara Business Model? What is Zara strategy? What are the factors behind the success of Zara? How scalable its model is? What are the challenges? How Zara would cope with the challenging environment of fashion retail business faced nowadays by the leaders in this industry? 

Amancio Oretga thought that customer would regard clothes as perishable commodity – no different from yogurt or bread- to be consumed rather than stored in closets, and has gone about building a retail business that provides “freshly baked clothes “. By Focusing on apparel as product for consumption Zara compete on speed. This business is all about reducing response time. In fashion stock is like food it goes bad quickly. So, Zara concentrates on three winning formulas: Offering fashionable variety with limited supply at affordable price (cost) with a quick response to market.(Devangshu Dutta...