Zara: Just getting started
BY KELLIE NEWSTEAD
As the rest of the Australian retailing economy was flailing in April 2011 after the global financial crisis, reporting lost consumer confidence and increasing online shopping, the Zara Sydney store was just gearing up to open its doors, on all three levels of the new 1830-square-metre Westfield store (Tadros, 2010).
And open they did, amid shopper mayhem. Customers queued for hours and were quick to swipe items before they could make it to the shelf. Some estimates quote 80 per cent (AU$1.2Â million) worth of stock being sold on the first dayâ€™s opening in Sydney (Burns, 2011). AÂ few months later, the Melbourne Bourke Street store opened, with hundreds of people lining up to get in.
So how do they do it? Zara has a unique business model that essentially boasts good quality, on-trend merchandise and aordable prices, resulting in staggering profits. Each year, the reported 200 designers on staput out around 20,000 items (Inditex, 2016). The global distribution centre in Spain moves around 2.5Â million items per week, and nothing stays in the warehouse for longer than 72 hours at a time (Kottke, 2015).
Chief Communications Oâ€‘cer Jesus Echevarria is quoted as saying the strategy of the fast-fashion retailers is â€˜the complete oppositeâ€™ to the traditional model. He says, â€˜itâ€™s a matter of customer feedback. We are pretty quick to reactâ€™ (Burns, 2011).
Zara puts the success down to using customer feedback to design their range. However, it is the business model that incorporates speed rather than unique innovation that sets Zara apart from the rest.
It is reported that Zara uses customer feedback and a daily sales analysis from all 1830 stores to compile manufacturing plans within 48 hours (Burns, 2011). These plans are then communicated to 1500 factories in Asia, Spain and Brazilâ€”the garments are then delivered to stores within three weeks (Burns, 2011). This means that Zara stores can be replenished with small-batch fashion choices twice a week.
Zara stocks many different products:Â apparel for men, women and kids, plus bags, accessories and shoes. While Zara has at times been criticised for copying major designers, they insist that it is the customer-driven focus that gives shape to the products that they design worldwide.
From humble beginnings in 1975, when the first Zara store opened in AÂ CoruÃ±a, Spain, Zara now operates in 88 countries, with online shopping also available (Inditex, 2016). Retailers like Zara represent a new wave of retailing, bringing production even closer to customer demands.
1 What can competitors learn from Zara?
2 How is Zara succeeding if they donâ€™t have a unique product to offer?
3 Where can Zara go from here?